Homebuyers in Victoria will save tens of thousands of dollars in stamp duty on off-the-plan apartments, townhouses and units bought in the next 12 months, under a state government initiative aimed at stimulating development.
The premier, Jacinta Allan, on Monday announced the policy, which came into effect immediately and was open to all buyers – including investors – for properties at any price point.
She said the idea came from a series of meetings she held with industry, in which they told her interest rate rises had slowed sales of new developments, preventing them from beginning.
By making it easier for people to buy off-the-plan, Allan said she expected developers would be able to finance requirements faster and start the construction of new homes sooner.
“It will mean more buyers into the market and it will get those projects [under way] sooner,” she told reporters.
“Whether you want to live in an apartment, a unit or a townhouse – it provides more opportunities for more Victorians to be able to find a home where they want to live.”
Prior to the announcement, first home buyers did not have to pay stamp duty on new or established properties worth $600,000 or less, with a reduced rate charged for properties worth up to $750,000.
Stamp duty discounts were also available for non-first home buyer owner occupiers who bought a new or existing homes valued at up to $550,000.
The government said under the new policy, the amount of stamp duty paid would be calculated based on the cost of the land prior to construction, not the total price of the finished property. It estimated this would cut the stamp duty paid on a new, off-the-plan $620,000 apartment to just $4,000 – a saving of $28,000.
The treasurer, Tim Pallas, said the concession would cost the government about $55m over the 12 months and was designed to be a short-term intervention at a “difficult” time for the sector.
“Making sure we facilitate developers having a level of comfort that they can proceed to [begin] these projects, I think, is in everybody’s interests,” he said.
“Will we see examples of projects being mooted but not ultimately realised? Yes, of course we will, it’s the nature of the industry. But this, once again, facilitates projects being able to [begin], and we should see less of that.”.
Pallas said it was his expectation material costs and interest rates would be “modestly” lower within a year.
While he said the state’s tax settings “are not chiseled in granite”, he ruled out major wholesale changes to stamp duty, given it makes up a third of the state’s taxation revenue.
“Stamp duty raises about $8bn dollars a year, and the state would not be able to deliver its services without a revenue base of that magnitude,” Pallas said.
To be eligible for the concession, apartments, townhouses and units must be in strata subdivision – meaning they retain common property such as a driveway or a shared hallway.
House and land packages or other dwellings that are not part of a strata subdivision are not eligible – though the government said the existing concession on these properties would continue.
A parliamentary inquiry last year found stamp duty was “inefficient, unpredictable and inequitable” but would be difficult to scrap entirely without affecting the state’s service delivery.
It instead called for a national reform of stamp duty to “better address its negative impact on housing affordability, economic mobility and market efficiency, for more Australians”.
It’s a view shared by Jonathan O’Brien from Yimby Melbourne, who welcomed the Victorian government’s policy but urged federal intervention.
“This policy threads the needle: it makes new supply more abundant and more affordable, by tackling one of the worst taxes in the state,” O’Brien said.
“Now is the time for the Albanese government to take meaningful action and support Victoria in abolishing stamp duty altogether, in favour of a broad-based land tax.”
The Property Council and the Urban Development Institute of Australia also welcomed the announcement, respectively describing it as a “big step in the right direction” and a “good start”.
It is the second significant policy measure by the Allan government in what is expected to be a week of announcements that aim to provide Victorians with more affordable housing options.
On Sunday, the government announced a plan to seize planning controls in 50 inner-Melbourne areas located near public transport, including the affluent, Liberal-held electorates of Brighton, Hawthorn and Malvern, to allow for greater density.
Allan on Monday said the suburbs had lacked development due to a “nimby-style” approach from “Liberals, conservative politicians” in the electorate, who had “chased local votes and blocked the building of more homes in their community”.
She said it was only “fair” to help “younger Victorians” who were “locked out of being able to afford or buy a home” where they grew up.
“They’re being denied choice and opportunity, and that is not fair, and they need someone in their corner fighting for them,” Allan said.
