IQI OPI

MAP: Buyers in Victoria will save tens of thousands of dollars in stamp duty when purchasing apartments, townhouses, etc., in the next 12 months, according to a proposal by the state government aimed at stimulating housing development.

On October 21st, Premier Jacinta Allan announced a regulation to reduce stamp duty for off-the-plan homes. This policy is effective immediately and applies to all homebuyers.

The increase in interest rates has caused the real estate market to slow down over the past year, particularly for new projects. The implementation of this tax reduction will help developers quickly restart construction and create favorable conditions for homebuyers.

"People in Victoria now have more opportunities to choose a suitable place to live."

Before the announcement, first-time homebuyers were exempt from stamp duty on new or existing properties valued at $600,000 or less. The current tax reduction applies to properties valued up to $750,000.

The stamp duty reduction policy also applies to non-first-time buyers purchasing new or existing homes worth up to $550,000.

According to the government, under the new policy, the stamp duty amount will be calculated based on the land value before construction, not the total value of the completed property. For example, a $620,000 apartment will have a reduced stamp duty of $4,000, saving $28,000.

Finance Minister Tim Pallas stated that this policy will cost the government approximately $55 million over 12 months. However, it is considered a short-term intervention to stimulate the market during the current challenging period.

He expects material costs and interest rates to "slightly decrease" within the next year. This is crucial because the state's tax policy is a significant source of revenue, accounting for one-third of the state’s budget, with "stamp duty bringing in $8 billion annually."

To qualify for the benefits, apartments, townhouses, etc., must be part of a property managed by Strata. House and land packages or other types of properties not managed by Strata are considered ineligible.

A parliamentary inquiry last year found that stamp duty was "ineffective and unfair," but difficult to abolish entirely. The inquiry called for national reforms on stamp duty to "address its negative impacts on affordability for Australian homebuyers."

This is also the viewpoint of Jonathan O'Brien from Yimby Melbourne, who supports the Victorian Government's policy but calls for intervention from the Federal Government.

"This is the time for the Albanese Government to act and support Victoria in fully abolishing stamp duty and replacing it with a comprehensive land tax."

The Real Estate Council and the Urban Development Institute of Australia also support this announcement, calling it "the beginning of a major step forward."

On Sunday, the Government also announced plans to take control of planning in 50 areas in central Melbourne adjacent to public transport systems, including wealthy areas held by the Liberal Party, such as Brighton, Hawthorn, and Malvern.

Source: The Guardian, 2024. Victoria rolls out stamp duty concessions for off-the-plan homes in bid to boost housing development.