NSW Budget 2022 stamp duty changes likely to be opposed by Labor

A historic reform proposal giving first-home buyers the option to pay an annual property tax instead of a lump-sum stamp duty is shaping up as a major policy fight ahead of the next year’s election.

A historic reform proposal giving first-home buyers the option to pay an annual property tax instead of a lump-sum stamp duty is shaping up as a major policy fight ahead of the next year’s election.

Labor on Tuesday said it would “never support” the centrepiece reform of the state budget to remove one of the largest upfront costs first-home buyers face when entering the property market.

The budget measure would give first-home buyers the option of paying an annual land tax of $400 plus 0.3 per cent of the land value of the property.

It would be available for homes up to $1.5m in value.

“What we’re doing is making it as easy as possible for people to enter the housing market,” Treasurer Matt Kean said.

Bronte couple Sally and Jarrod are fans of anything that would help them get a foot on the property ladder. Picture: Jonathan Ng

Mr Kean reiterated the NSW government’s view that “widescale” stamp duty reform to gradually introduce a property tax for all buyers would not be possible without “significant investment from the commonwealth”.

Legislation required to implement the change will be introduced later in the year.

But Labor is poised to oppose the move, with leader Chris Minns on Tuesday saying his party would reject imposing a “never-ending land tax, particularly on first-home buyers”.

“If (Dominic Perrottet) is re-elected in March, there’s no doubt that he will introduce a broad-based land tax on residential properties for every household in NSW,” he said.

Mr Minns said the government should have instead granted first-home buyers stamp duty concessions on properties over $800,000.

“If you’re going to put money on the table for first-home buyers, why introduce a brand new land tax system for NSW … rather than just extending the exemptions?”

Mr Minns would not commit to increasing stamp duty concession thresholds in his upcoming budget reply.

The government’s property tax plan, worth $730m over four years, is part of a $2.8bn investment in housing in the state budget.

The policy includes $500m for infrastructure to unlock more land for housing developments and a pilot program to help single parents, older singles and key workers buy a home through a shared equity scheme.

Bronte couple Sally and Jarrod said the removal of stamp duty would help them get into the market.

“Any more help getting a foot on the ladder would be great,” Sally, a youth worker, said.

Jarrod, who works in finance, said: “The land tax proposal would go a long way to helping first-home buyers like us get over the hurdle of saving a lump sum for stamp duty.”