THE State Government will introduce a stamp duty rebate for off-the-plan apartments, a move intended to stimulate the property and construction sectors.
From today, buyers who sign pre-construction contracts to purchase a new residential unit or apartment in a multi-tiered development will be eligible for a 75 per cent transfer duty rebate of up to $50,000.
The rebate will be available for two years.
No cap will be placed on the purchase price and multiple rebates will be available to the same applicant for additional unit or apartment purchases within the same or different developments.
The announcement was welcomed by the property industry.
Under current conditions multi-unit dwellings are pre-sold off-the-plan with stamp duty payable on the full sales price of the new dwelling, in contrast, stamp duty is typically payable on the land component only for new single-dwelling lots sales, not the separate home building contract.
Reiwa president Damian Collins said it was a significant win for property buyers and addressed this imbalance.
“By reducing the tax for off-the-plan sales, not only will it help the government to meet its target of 47 per cent of new dwellings in infill locations, but will help increase the speed of transition from apartment sales to actual construction activity,” he said.
MBA WA executive director John Gelavis said the tax break would remove a major obstacle for buyers and promote multi-storey apartment construction.
“This is a smart move to relieve the ongoing difficulties in the state’s building industry,” he said.
“Residential construction is at an alarmingly low level in WA and the predictions aren’t improving.
“Stamp duty has been a big cost for people buying off-the-plan apartments until now, which was a drag on multi-storey apartment construction and therefore on infill development in WA.
“The WA Government’s new stamp duty rebates will help to revive residential construction, which means more jobs for local tradies, opportunities for apprentices and trainees and a boost for the wider economy.”
UDIA WA chief executive Tanya Steinbeck said the announcement was another step toward turning the market around.
“With immediate implementation, we are expecting to see a positive reaction from the market given the generous and potentially multiple rebates on offer,” she said.
“This opens the door for seniors looking to right-size into a more appropriate dwelling, and will support the state government’s infill agenda.
“With a two-year time period for the rebate, this provides a much-needed injection of activity to stimulate jobs growth in the construction sector and the flow on impacts of that to the broader economy will be positive.”
HIA WA executive director Cath Hart said the market was facing some of the toughest conditions in living memory and was pleased the Government understood the challenge industry was facing and had responded with today’s announcement.
“This will mean a swift boost for building activity which will be great for local jobs and give industry the confidence to retain and train more workers,” she said.
“With more than 120,000 people employed in construction in WA, the positive impact of this initiative will be felt across the entire home building supply chain.”
WA apartment developer Paul Blackburne also endorsed the decision, saying a similar reduction in Victoria’s played a significant role in reviving the economy and was a key factor in making Melbourne one of the most liveable, connected and vibrant cities in the world.
“The Government’s reduction in stamp duty will absolutely help buyers to make that decision to purchase off the plan and downsize, upsize or invest,” he said.
“It is one of the most significant initiatives for WA’s economy in 20 years.
“Stamp duty is a major inhibitor to economic growth.
“It is a highly inefficient tax that costs jobs and makes it difficult for more people to afford an off-the-plan apartment.”
Last week members of the property industry met with government ministers to present a plan to stimulate the flagging residential property market.
While today’s announcement is seen as a step in the right direction, they feel more still needs to be done and are also seeking to:
• Increase Keystart purchase price cap to $550,000
• Combine and match Keystart’s ‘Couples’ and ‘Families’ income categories to match the new family limit of $155,000
• Increase the Stamp Duty exemption for First Home Buyers to $550,000 for existing stock in line with revised Keystart purchase price cap
• Adjust the rate of the Foreign Buyers Surcharge to 4 per cent
• Deliver an additional 300 social housing dwellings
• Support population growth by reinstating Perth with regional migration status
Mr Collins said the WA Government needed to look at other ways that they could help more people in owning their own homes.
“In the current real estate climate, we need to help encourage more people to buy,” he said.
“With first-home buyers accounting for one third of all sales in WA, they are the oil of the property engine and we should be making it easier for them to get into the market, with the help of all sectors.
“Enabling first-home buyers to purchase established properties provides the opportunity to live closer to the city and also has major economic flow-on effects to the other sectors as buyers often then spending a significant amount on renovations.”
Mr Collins said it was also pleasing to see the WA Liberal Party committing to making a healthy property industry a focus of the next WA Election by committing to stamp duty exemptions for downsizing seniors and removing the foreign owner’s duty surcharge.
Ms Steinbeck congratulated the State Government on its swift action and openness in engaging with the industry and looked forward to continuing the conversation.