Fine Gael has proposed the abolition of stamp duty for first-time buyers of second-hand houses worth up to £100,000. Speaking after a party front-bench meeting in Limerick, the party's finance spokesman, Mr Michael Noonan, said his proposal was designed to make it easier to buy a house.
"Charlie McCreevy, by slashing Capital Gains Tax in December's Budget, drove up house prices and left the market open for speculators to exploit while young couples on average incomes are priced out of the most modest of homes," he said.
The party leader, Mr John Bruton, said: "We believe that the present situation in regard to house price inflation is intolerable. It is not possible today for a couple on normal incomes now to aspire to owning their own home. There needs to be a projection of a new supply of houses that will enable prices to reach a more reasonable level." The Labour Party's finance spokesman, Mr Derek McDowell, last night welcomed the Fine Gael announcement but said it did not go far enough. The Capital Gains Tax cut should be reversed and stamp duty should be imposed on new houses bought by non-first-time buyers, he said.
Fine Gael's proposal was announced after its front bench met in Limerick yesterday as the party raises its profile there in advance of the Limerick East by election, due in just over three weeks' time.
Mr Noonan said his proposal would allow people to buy second-hand houses in established areas with existing services. "It will be a major boost for young couples, providing a saving of up to £6,000 at a crucial time in their lives". The proposal will be contained in an amendment to the Finance Bill to be tabled in the Dail this week. Fine Gael's proposal would abolish stamp duty on second-hand homes worth up to £100,000. When a house cost over £100,000 then stamp duty would apply only on the amount over £100,000. Mr Noonan said the measure would stimulate the second-hand market and reduce the enormous demand for new houses.
Mr McDowell said in a statement that house purchases by investors were a major factor in pushing up prices. "Recent reports by estate agents have estimated that up to 35 per cent of property purchases in some urban areas are being made by investors."
His party would table a number of amendments to the Finance Bill aimed at tackling speculation in the housing market. "It is now time for Government policy to pro-actively support the first-time buyer," he said. "Traditionally, policy has been directed at supporting the construction industry but with that industry thriving at the moment, it is time to shift priorities."