Irish Finance Minister Brian Cowen has published proposed legislation that will exempt first-time house buyers from paying a stamp duty levy on their new homes...

The bill, which Cowen hopes to get enacted before lawmakers begin their summer break on July 5, will end months of uncertainty that analysts have blamed, along with rising interest rates, for a sharp slowing in Ireland's housing market.

"This bill implements the commitment, contained in the Programme for Government, to abolish stamp duty for all first-time purchasers," Cowen said in a statement.

"It will apply to instruments executed on or after 31 March 2007," he said. That means the new conditions will be backdated by a month more than originally envisaged in his Fianna Fail party's manifesto ahead of a general election last month.

Stamp duty will effectively be abolished

Under existing legislation, all house buyers have to pay anything up to 9 percent of the value of their new home to the Government. First-time buyers already enjoy some exemptions but the new law will effectively abolish the tax for them.

"The bill, when it is enacted, will in effect reduce all these first-time purchaser rates to nil so that every first-time purchaser, who acquires as his or her only or principal place of residence a new or second-hand house or apartment, will not be liable to stamp duty," Ireland's finance ministry said.

Irish house prices staged their first monthly decline in over five years in March and dipped again in April, meaning that at 306,619 euros the average price of a house in Ireland was 4,000 euros below where it stood at the end of 2006.

Debate to run until the general election

The falls pushed the annual rate of price growth down to 5.1 percent in April versus a surge of 11.8 percent in 2006. A Reuters poll of 11 economists published at the end of May showed they expect house price rises to average 4 percent this year.

Economists say that while higher euro zone interest rates have hurt demand, a debate over the future of stamp duty in the run-up to a May 24 general election may have added to uncertainty and kept some potential buyers out of the market.

Source: http://www.reuters.co.uk