The State Government has announced it will cut stamp duty for a year in a bid to stimulate high-density developments and ease pressure on the housing crisis.
Stamp Duty Concession for Off-the-Plan Purchases
The 12-month stamp duty concession begins immediately, and applies to anyone buying off-the-plan units, townhouses, or apartments at all price points, not just those at the cheaper end. Up until now, stamp duty concessions have been restricted to first-home buyers and owner-occupiers and have been capped to below $750,000 for first-homers and $550,000 for owner-occupiers.
Savings on Stamp Duty for New Home Buyers
The Government estimates the average buyer of a new apartment worth around $600,000 will see their stamp duty slashed from $30,000 to just $4,000. As mentioned, buyers will have to move quickly as the concession is only in place for 12 months and only applies to properties that are strata subdivided off-the-plan dwellings.
How much each buyer will save on their stamp duty will depend on how much of the building construction has already started. Whatever part of the building has been completed already will incur stamp duty and the rest of the uncompleted build will receive the concessions. Dwellings that have not begun construction at all will be eligible for the full stamp duty cut.
Encouraging High-Density Builds Amid Rising Interest Rates
It is hoped the incentive picks up the pace of new high-density builds, which have slowed thanks to higher interest rates. “We asked industry what they need to build more homes sooner – and this is what they said,” Victorian Premier Jacinta Allan told The Age.
“More apartments and townhouses getting built means more homes for young people and families to rent or buy.”
Property industry expert and Urban Development Institute of Victoria CEO Linda Allison supported the move when speaking to The Age. “Victoria’s property taxes have been a barrier to homeownership and home building. Today’s announcement to expand off-the-plan concessions is a positive step,” she said.
Industry Experts Support Expanded Concessions
“While we recognise the challenging budgetary position for the Victorian government at present, tax reform is key to reducing the cost of housing and giving consumers and investors confidence to buy an apartment or townhouse in Victoria. These expanded concessions are a good start.”
Another industry figure, Cath Evans from the Property Council Victoria, also supported the move but went on to say an extension to the concession would be a good idea if the first 12 months was a success. “Current analysis of the build-to-sell apartment market by Charter Keck Cramer shows apartment commencements in Melbourne have declined to less than 4,000 a year,” she told The Age.
“Off-the-plan concessions for all purchasers will help bring back new buyers to this important part of the housing market. Increasing off-the-plan purchases has been proven to support the feasibility of new housing projects, which in turn unlocks further development. With Victoria’s ambitious housing supply targets in mind, this is a big step in the right direction.”
