Current system called outdated and discouraging for homeownership
When MPA quizzed brokers on what they want to see from Australia’s next government, a number of common themes cropped up.
Serviceability buffers emerged as a prevalent topic, as did the issues of clawbacks, negative gearing and capital gains taxes. Stamp duty, however, was perhaps most vehemently cited by brokers as the number one issue that they would like to see dealt with.
Whether incumbent Labor leader Anthony Albanese or LNP challenger Peter Dutton wins out on 3 May, Australia’s next prime minister is likely to face mounting calls to reassess the current stamp duty regime and make some much-needed reforms.
Andrea Svenson (pictured), director and finance broker at New South Wales-based Empire Finance Co., is one such broker calling for reforms.
“One of the primary concerns with the existing system is its outdated structure,” Svenson said in an interview with MPA. She said that stamp duty is a substantial upfront cost that can add tens of thousands of dollars to the purchase price of a property.
“This not only discourages homeownership but also reduces mobility within the property market,” Svenson said, adding: “Many homeowners who would otherwise consider moving – whether to accommodate a growing family or to downsize after retirement – are deterred by the excessive financial burden.”
In Svenson’s view, creating a more progressive and fair approach to stamp duty is essential to supporting first-home buyers.
One idea being tossed around is the concept of a broad-based land tax, which would theoretically spread the prohibitive up-front cost of stamp duty over a longer period.
“This would encourage market fluidity and allow more Australians to enter and move within the property market without being penalised financially,” said Svenson.
Another idea is to increase exemptions to alleviate the burden for those who need it most. For Svenson, this includes first-home buyers, downsizers and essential workers.
Whatever the approach, Svenson believes the end goal with stamp duty reform should be to create a more favourable environment for housing development, all the while providing brokers with greater opportunities to assist clients in securing finance without excessive upfront tax charges.
“A national approach to stamp duty reform would create consistency and fairness across all states and territories,” she said.
Leading by example
For the moment, Western Australia is leading the charge on implementing progressive stamp duty exemptions.
On the back of a landslide win in March, the WA Labor government announced a raft of stamp duty changes on new and existing homes.
Key changes included stamp duty concessions on off-the-plan homes valued up to $750,000, while those above $850,000 receive a 50% concession. First-home buyers were also gifted with higher exemption thresholds, which the WA government reckons will benefit 22,000 new entrants to the property market.
Meanwhile, in New South Wales, the stamp duty exemption has been capped at $800,000 since July 2023. That sounds like a high threshold until you remember that due to skyrocketing property prices, the mean price of a NSW residential dwelling is close to a million dollars.
Western Australia’s recent stamp duty exemptions have been a positive step in addressing affordability issues,” said Svenson. “This initiative has made it far more attractive for buyers to invest in new developments, thereby boosting supply and supporting the housing industry.”
Whether other states will follow suit, however, “remains uncertain”, she added, although “there is hope that similar measures could be implemented nationwide which will create a more balanced and accessible property market”.
Simply put, “stamp duty reform is long overdue”, said Svenson. “The industry must continue advocating for changes that support homeownership and economic growth.
“A fairer taxation approach – whether through reduced rates, exemptions, or a shift to a land tax – would provide long-term benefits for buyers and brokers alike.
“The property market should foster opportunity and accessibility rather than pose unnecessary financial obstacles.”
Lenders join the cause
It is not just brokers and first-home buyers wishing upon a star for stamp duty reforms.
Mel Evans, the local chief executive of Australia’s sixth-largest mortgage lender ING, recently suggested that state governments should cut stamp duty for retirees seeking to downsize their residential properties.
“It’s an opportunity lost if we don’t look at (existing) stock and whether or not we have incentives or disincentives in the system to get a more productive use of housing stock,” Evans said at a recent banking summit. “Family homes that once housed four or five Aussies are now often resided in by a couple in retirement.”
