Calls to nix stamp duty in Victoria has resurfaced as industry groups urged the state government to consider "innovative" tax reforms.
In a joint statement released ahead of the State/Territory Treasurer’s Forum, the Real Estate Institute of Victoria (REIV), Australian Property Institute, and Housing Industry Association (HIA) urged the Victorian government to lead the necessary dialogue in rethinking stamp duty as part of a review on property taxation policy.
REIV CEO Quentin Kilian said there is a united view across the industry and property sector leaders that there is a need for an urgent review of the tax structure that affects the Victorian real estate market.
“As an industry, we are determined to seize this opportunity to fundamentally reform outdated and ineffective tax policy so that we can ensure more Victorians own their own home and can invest in property,” he said.
Mr Killian said property sector leaders are open to supporting any tax reform initiatives that would make homeownership and property investment more affordable and accessible for a larger number of Victorians.
“The knowledge and expertise of the sector are at the Victorian government’s disposal, and we offer support to build a better approach that is in the best interests of aspiring and existing homeowners and investors, as well as businesses and employees of the industry.”
HIA executive director for Victoria Fiona Nield said a review of the taxation policies continues to be relevant as new homes and land in Victoria are already heavily taxed.
“The combined contribution of property, housing and development taxes is forecast to increase to over 50% of state revenue this financial year — if improving housing affordability is a goal for the state government, reform is needed now,” she said.
Last month, the NSW government announced a new policy offering first-home buyers with an option to either pay a one-off lump sum tax or annual land tax for their home purchase.
By next year, first-home buyers whose purchase transactions are valued up to $1.5m can choose to pay an annual property tax of $400 plus 0.3% of the land value of the property instead of stamp duty.
New tax commencing in 2024
Early this year, the state government of Victoria announced a new property tax to boost the local social housing fund.
Set to commence in July 2024, the new tax will require newly built projects with three dwellings or more and three or more lot subdivisions to contribute 1.75% of the “as-if-complete-project value” to the Social Housing Growth Fund.
Minister for Housing Richard Wynne said the change will affect less than 30% of all residential planning permits.
“This is an investment in more new homes, more jobs and more training opportunities for local tragedies, with every dollar re-invested in the Victorian construction sector to build more social and affordable homes,” he said.
Ms Nield said this would lead to an increase in the cost of new homes after July 2024, creating more burden for homebuyers.
“In Melbourne 38% of a new home build is made up of taxes, fees and charges — this new tax will see land and house prices being pushed further out of reach of new home buyers,” she said.
“Ultimately it is new home buyers who will lose out as the taxes must be passed on in higher land and house prices.”
Ms Nield said while it is crucial for the state government to push for initiatives that would provide social housing, the means to achieve the goals should be “equitable”.
“It simply doesn’t make sense to suggest that making houses for those that can afford to buy a new house cost more is the right solution to support those that can’t afford to buy one,” she said.
“The tax also comes at a time when the government is implementing a new windfall gains tax in regional Victoria which will raise land prices significantly, increasing building code requirements that will add to construction costs and just last week increased builder registration fees by between 40% and 200%.”
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Photo by Jenn Miranda’s Images on Canva
