The idea of the Government abolishing stamp duty for first-time buyers is not the first budget kite flown, but it is one that is dividing opinion.

Fianna Fáil TD Seamus McGrath said such a move would help hard-pressed first-time buyers get on the property market.

He points out that they already have to come up with a 10 per cent deposit, solicitors’ fees, surveyors’ fees and furnishings. The 1 per cent stamp duty tax is another financial burden on top of that, he argues.

But experts are not convinced it will help cool matters at all.

What are the current rates of stamp duty?

Currently all property buyers, except those buying multiple properties, pay stamp duty at 1 per cent on house purchases up to €1 million. It rises to 2 per cent between €1 million and €1.5 million and to 6 per cent for purchases of more than €1.5 million.

How much would the abolition of stamp duty for first-time buyers cost?

According to the Revenue Commissioners, the abolition of stamp duty for first-time buyers would cost €83.6 million. It is pocket change in the context of an estimated €125.5 billion budget.

Why abolish stamp duty for first-time buyers?

Stamp duty is regarded as an unfair imposition on first-time buyers. They are often competing with investors or those moving up the property ladder who have greater equity behind them and can afford the stamp duty.

“It’s a very positive move,” said the Institute of Professional Auctioneers & Valuers chief executive Genevieve McGuirk of the proposed abolition.

“Affordability remains a challenge for first-time buyers. This would shave off some of the time that they need to save. That money could be better used towards the deposit or for renovations or furniture.”

Are there any reasons why stamp duty for first-time buyers should not be abolished?

Yes, says Lorcan Sirr, a senior lecturer in housing at the Technological University Dublin. Putting money back into the pockets of first-time buyers will only add to housing prices.

“The quickest way to moderate house price inflation is to give people less money,” he said.

“Every time there is a wage increase, there is an increase in house prices. A 1 per cent rise in wages leads to a 3 per cent rise in house prices.”

If a bank is able to discount the cost of stamp duty when lending to a first-time buyers, the amount it can lend goes up substantially, he argues.

For example, if a couple want to buy a €400,000 house, they will have to save at least €44,000 (excluding solicitor’s fees) for a 10 per cent deposit and 1 per cent stamp duty.

That is €40,000 for the deposit and €4,000 for stamp duty.

Without having to set money aside for stamp duty, they will now be able to borrow up to €440,000 if a 10 per cent deposit is required.

“It won’t be a huge inflationary effect, but it will be inflationary,” Sirr believes.

What is the likelihood that it will happen?

McGrath’s constituency colleague, Taoiseach Micheál Martin, has said he is “favourably disposed” towards the measure and the Minister for Housing James Browne said it should be something that is considered in the forthcoming budget.

But Tánaiste and Minister for Finance Simon Harris has also publicly sceptical about abolishing stamp duty for first-time buyers. He believes that any announcement before the budget would have a detrimental impact on the housing market as many purchases would not go through before the new regime comes into place.

What happens now?

The potential abolition of stamp duty for first-time buyers is part of the budgetary back and forth between Fine Gael and Fianna Fáil

The Government parties will be mindful of the law of unintended consequences in relation to housing where legislation brought forward to ease the burden of first-time buyers ends up having the opposite effect by contributing to house inflation.