Conveyance tax lowered to two percent for one year

30th June 2011, Comments 0 comments

The cabinet wants to give the stagnating housing market a boost by lowering the conveyance tax from six to two percent for a one-year period.

The conveyance tax is seen as a serious obstacle to mobility in the housing market, which has taken a serious blow as a result of the financial crisis. Many potential buyers have great difficulty arranging a mortgage, and home owners face serious problems selling their homes. Many homes are on the market for a long time before they are sold.

The cabinet is to take a final decision on the proposed measure, which would take effect retroactively last week. The proposed measure forms part of a more extensive cabinet vision on the future of the housing market. At present, revenue from the conveyance tax is at 3.5 billion euros. The 2.3 billion euro shortfall in tax revenue is to be made up by a new bank tax.

Initially, it looked like the cabinet would not present its proposal until after the summer recess. Just last week, Deputy Prime Minister advised prospective buyers to go ahead and not wait for possible cabinet measures. However, Mr Verhagen did guarantee that the cabinet would not tinker with the current system of mortgage interest relief.

Real estate brokers reacted positively to the proposed measure. The sector organisation NVM said it was pleased the ‘moving-house fine’ would be scrapped. Most political parties are in favour of lowering the conveyance tax, but disagree on the best way to do this.

Labour Party MP Ronald Plasterk said “It is a temporary and half-hearted measure, but it’s better than nothing.” He said he was pleased that the cabinet had decided to introduce a bank tax. The Socialist party, as was to be expected, agreed.

The Green Left party said the cabinet proposal was unacceptable. According to MP Bruno Braakhuis: “We would like to see the conveyance tax rate adjusted, but only in conjunction with a ceiling on mortgage interest relief. Introducing a bank tax to this end only means the banks will pass on the costs, and tenants will end up paying part of the bill for lowering the conveyance tax rate for buyers. That’s unfair.”

MP Betty de Boer of the conservative coalition party VVD said it would be “Very nice, if true”. The other coalition party, the Christian democratic CDA, and the Freedom Party - which provides the minority cabinet with parliamentary support - said they did not yet have any comment.

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