November 14, 2024 by Anna Ruffo
The Victorian Government has recently introduced a 12-month stamp duty concession with the intention to help buyers by cutting up-front costs and to support the construction industry, particularly struggling builders. This initiative should also boost housing accessibility and affordability in high-demand areas.
What is the Stamp Duty concession?
This targeted policy, which focuses on all off-the-plan properties like apartments and townhouses (with a strata subdivision), where the contract is entered into from 21 October 2024, for 12 months.
The concession allows construction costs to be deducted from the sale price of the dwelling when calculating the stamp duty owed on the transaction.
In the past, first-home buyers and owner-occupiers could receive a concession, only if their property values were under $750,000 for first-home buyers and $550,000 for owner-occupiers. Now, this cap has been lifted, allowing the discount to apply to homes of any value and to all buyers. The government estimates that this concession will enable someone purchasing an off-the-plan apartment to pay roughly 25% of the usual stamp duty they would otherwise incur.
What does it mean for first home buyers and investors?
The price of property is skyrocketing in certain suburbs and high demand areas and this new concession is an attractive prospect for buyers looking to enter the market affordably and strategically.
For first-home buyers, stamp duty has long been a challenge, often pushing entry-level homes out of reach. Under the new relief measures, first-home buyers can benefit from reduced upfront costs, helping them secure a home with less initial financial strain. Off-the-plan purchases offer additional advantages to buyers who can secure property at current market prices, which may appreciate by the time construction is complete. This potential for capital growth—along with the reduced entry cost due to stamp duty relief.
While first-home buyers stand to gain, the policy also opens up opportunities for investors. Victoria’s property market, particularly in urban and suburban areas, has seen high demand, with limited supply of new apartments and townhouses. Lower stamp duty on these properties creates a financial incentive for investors to purchase in these areas, promoting more vibrant urban development and supporting rental demand. Investors are likely to respond to these tax incentives by increasing their portfolios in metropolitan regions, potentially boosting the supply of rental units—a positive shift for renters in high-demand areas.
This relief is not only addressed to first home buyers or investors but also to buyers considering downsizing when their current home is too big or their lifestyle has changed.
Few things to note:
- The concession does not apply to house-and-land packages or other dwellings without strata subdivisions
- Contracts signed before the commencement date of this concession, but settled during the 12-month window, are ineligible.
This stamp duty relief could be a game-changer for many in Victoria, turning property dreams into reality.
If you are planning to buy an off-the-plan property in the next 12 months, you should consider reaching out to your broker to check if you qualify and to get an estimate of how much you might be able to borrow.
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