Stamp duty may be altered for first-time buyers

The Government is examining whether to ease the burden on first-time buyers of second-hand homes by reducing their exposure to stamp duty, senior political sources said last night.

The move is being considered as part of a package of housing measures in tomorrow's Budget, which is very likely to include a significant additional funding for social housing. Such funding would be included in the package of capital spending measures that were held over from the Book of Estimates a fortnight ago.

The sources said it was not certain that the Government would proceed with changes to the stamp duty regime when the Cabinet finalises the Budget today.

However, they believed it was considered very recently by the Minister for Finance, Mr Cowen. There was no question of reinstating the first-time buyer's grant, the sources said.

Instead, they believed the Minister was assessing the extent to which he could increase the thresholds at which the different stamp duty rates kick in.

If the Minister adopted the measure, he would be aiming to make a concession to hard-pressed home-buyers while seeking to avoid an excessive dilution in the take from what has been a strong revenue earner for the Exchequer.

Any such measure would be likely to change the thresholds for the lowest stamp duty band applying to first-time buyers. The 3 per cent rate currently applies to second-hand homes priced in the €190,501 to €254,000 range.

With the Cabinet considered certain to significantly increase expenditure on social housing, Mr Cowen is also expected to signal that the Government will adopt an aggressive stance with local authorities who fail to meet their commitments on social housing.

The increase in funding will be part of a capital expenditure envelope worth some €5.7 billion next year. The entire package will be valued at some €30 billion over the next five years.

The Estimates contained a provision of €1.2 billion for social and affordable housing next year, 6 per cent more than in 2004.

Some sources said it was possible that the Government would allocate up to €1 billion in additional funding to social housing in the Budget. They said the objective was to bring the production of social housing nearer to 8,000 homes in 2005, up from about 6,500 this year.The St Vincent de Paul Society said yesterday that the Government should be building up to 12,000 social housing units annually and said 8,500 units should be produced in 2005.