- 21 Oct 2024
The Victorian State Government has announced a controversial tax will no longer apply to properties bought off-the-plan, with no price cap imposed.
The Victorian Government is giving off-the-plan apartment, unit and townhouse buyers in the state a one year reprieve from hefty stamp duty costs.
For a new $620,000 apartment bought off-the-plan, the government estimates stamp duty would be reduced to $4000, representing a saving of $28,000.
The state government is hoping the slashing of stamp duty for these buyers will help residential multi-dwelling building projects get off the ground faster.
It applies from 21 October 2024 for 12 months and will allow 100 per cent of outstanding construction and refurbishment costs to be deducted. Stamp duty for those properties will instead be calculated on the cost of land before construction, not the total of the finished property.
Anyone buying an apartment, unit or townhouse off-the-plan can claim the concession – not just first home buyers and owner-occupiers. Thresholds will be removed so the concession is available for apartments, units and townhouses of any value.
Announcing the changes on Monday (21 October), Premier Jacinta Allan said the 12-month stimulus plan was a response to a cry for help from under-pressure builders as interest rate rises cool the market.
“We asked industry what they need to build more homes sooner – and this is what they said.”
“More apartments and townhouses getting built means more homes for young people and families to rent or buy.”
“Bringing more projects to market sooner will boost housing supply, support the construction sector, and grow the amount of housing available for rent.
“Alongside delivering new social and affordable homes and Australia’s largest housing project – the Suburban Rail Loop and its six housing precincts – this stimulus is just one of the ways Government is building more homes,” Ms Allan said.
The Victorian Government’s announcement stated that an eligible apartment, unit or townhouse is one that is in a 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 for the extended concession, but first home buyers and owner occupiers can still utilise the existing concession on these properties. The existing concession will continue to apply during and after this 12-month extension.
“Melbourne is Australia’s biggest city and we’ve got to provide more opportunities, particularly for those under the age of 40, to be able to get the chance that other generations have had in the past,” Ms Allan said.
The premier said she would release more housing policies and initiatives during the week.
The Real Estate Institute of Victoria (REIV) welcomed the stamp duty concessions.
Kelly Ryan, the peak body’s CEO, said the announced scheme is an important next step toward comprehensive stamp duty reform.
“We’re pleased the Allan Government is introducing tax concession measures that seek to incentivise private investment in Victoria’s housing ecosystem,” said Ms Ryan.
“While we recognise this is a first step, our hope is that these concessions will not only help stimulate development of urgently needed higher density homes across the state, but also establish a clearer pathway for broader stamp duty reform.
“The REIV has long advocated for tax reforms including a comprehensive review of stamp duty, a burdensome tax that restricts investment and mobility in Victoria’s property market.”
This announcement comes on the back of an expansion of the Activity Centre program which introduced 50 new “train and tram zones” for high density development, another step aimed at boosting much needed housing supply in Victoria.
The so-called “activity centres” would help deliver more than 30,000 additional homes across Melbourne by 2051, Ms Allan said.
The dwellings would be a mixture of townhouses and apartments centred on 50 high-frequency train stations and tram stops, including in Melbourne’s leafiest and most expensive areas such as Toorak, Armadale and Brighton.
Residents in Brighton have expressed anger at the scheme, saying it paved the way for taller buildings but the Labor leader remained unphased.
“I’m determined to fight for those Victorians who need the government to fight back against this NIMBY-style approach,” she said.
