States singing from the same song book | KPMG | GLOBAL

No harmonisation, but States singing from the same song book

States singing from the same song book

Primose Mroczkowski and Jenny Lee review housing affordability measures announced by various State Governments in recent weeks.

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Hand holding house keys

In measures that appear to reflect a wider trend (as demonstrated by the 2017 Budget announcements in the Northern Territory and Victoria), the New South Wales (NSW) Government has announced housing affordability measures ahead of the 2017 State Budget to be delivered on 20 June 2017.

The measures, proposed to take effect from 1 July 2017, are intended to boost housing supply and deliver infrastructure to growing communities. Concessions which could fuel demand by first home buyers are countered by surcharges which could cool that of investors and foreign buyers.

For first home buyers, the measures include:

  • abolishing stamp duty on all homes (existing and new) up to $650,000
  • reducing stamp duty for all homes (existing and new) between $650,000 and $800,000
  • abolishing insurance duty on lenders mortgage insurance (Note: this applies to all home buyers).

For property investors and foreign purchasers and landowners, the measures include:

  • doubling the foreign purchaser duty surcharge applicable to residential land from 4 percent to 8 percent
  • increasing the land tax surcharge for residential land owned by foreign persons from 0.75 percent to 2 percent
  • removing the entitlement to defer payment of stamp duty for 12 months on off the plan purchases by investors.

The foreign developers will be exempt from the increased surcharges with transitional provisions yet to be announced.

NSW appears to be following Victoria with both the enhanced first home buyer concessions and the increase in these 'disincentive' measures.  It remains to be seen whether Queensland will also follow suit being the only other jurisdiction to impose these foreign surcharges.

  Foreign purchaser duty surcharge (residential land only) Absentee owner land tax surcharge
NSW Original rate: 4 percent
From 1 July 2017: 8 percent 
Current: 0.75 percent
2018: 2 percent (residential land only)
Victoria Initial rate: 3 percent
Current rate: 7 percent
2016 year: 0.5 percent
Current: 1.5 percent
Queensland Initial/Current: 3 percent Higher companies/trustees rate applies to absentee owners rather than individual rates 

The recent Australian Capital Territory (ACT) Government Budget also announced measures that appear to be influenced by recent reforms in other States. Media reports relating to the measures suggest the following changes:

  • a new 'vacant property' land tax from 1 July 2018 (somewhat similar to that introduced in Victoria from July 2017) by extending land tax to all residential dwellings (that is not the principal place of residence of the owner), whether rented or not
  • abolition of transfer duty on commercial properties worth less than $1.5 million from 1 July 2018 (from which date South Australia will abolish all duty on commercial property transfers).
     

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