The move aims to deliver more houses for buyers and renters
Victoria’s Allan Labor government is set to abolish the stamp duty on off-the-plan apartments, units, and townhouses in order to cut upfront costs, speed up the pace of building, and make homes more available for people to buy off-the-plan.
Victoria Premier Jacinta Allan (pictured left) announced the one-year stimulus of the abolishment of stamp duties to increase the housing supply for buyers and renters.
“More apartments and townhouses getting built means more homes for young people and families to rent or buy,” said Allan.
The current regulations surrounding stamp duty concession allow first-home buyers and owner-occupiers to access it when they buy off-the-plan. This allows the deduction in construction costs from the sale price when the stamp duty owed is being calculated.
In order for first-home buyers and owner-occupiers to access the concession, the value for the calculation for the stamp duty after the construction costs deduction need to be $750,000 and $550,000, respectively.
With the proposed changes, the concession will not only be limited to first home buyers and owner-occupiers and the set thresholds will be removed so that it will be available for apartments, units, and townhouses, regardless of their value.
As the 12-month extended concession allows a 100% deduction of outstanding and refurbishment costs when it comes to determining how much stamp duty is owed, house and land packages as well as other dwellings which are not a part of a strata subdivision will not be eligible for it. However, first home buyers and owner occupiers will be able to utilize the extended concession.
The move served as the government’s response to the interest rate that has slowed down the sales and stopped developments from getting away.
However, economist and Esho Capital founder Peter Esho (pictured right) noted that the government’s decision to abolish the stamp duty for brand-new properties signalled a “measure of desperation.”
“This initiative is designed to jump-start demand for brand-new properties, which has stalled in Victoria since the interstate migration driven by the pandemic and lockdowns,” said Esho.
“Prior to the changes, Victoria's stamp duty regime was one of the most discouraging for investors, further compounded by land tax changes. The new rules aim to reverse negative sentiment, and, in turn, help stimulate new housing supply,” he said.
