Stamp duty slashed on units, apartments – but you’ll have to get in quick

Stamp duty will be slashed for all off-the-plan units, townhouses and apartments starting today under a 12-month stimulus plan by the Allan government to encourage denser developments and save buyers tens of thousands of dollars.

The expanded concession will be uncapped and open to all buyers, with the government estimating it would cut the stamp duty of buyers of a new $620,000 apartment down to just $4000, a saving of $28,000.

Victoria will provide stamp duty concessions to encourage demand in units and townhouses.Credit: Louie Douvis

Premier Jacinta Allan will reveal the move on Monday, the second significant policy measure in what is expected to be a week of announcements that aim to give developers an incentive to build and Victorians broader and more affordable housing options.

On Sunday, the government’s first big policy pledge, a plan to add 50 new activity centres allowing more density around railway and tram lines, prompted a protest in Brighton as Liberal MP James Newbury led a crowd to chant “shame, premier, shame” outside Allan’s press conference.

The opposition attacked the activity centre proposal, declaring it denied Victorians a voice and choice of housing as they fronted a separate community rally from concerned locals in the Labor heartland of Moonee Ponds.

Under the Victorian government’s stamp duty plan, anyone buying an apartment, unit or townhouse off the plan can claim the stamp duty concession.

This is currently only available to first-home buyers and owner occupiers buying under thresholds of $750,000 and $550,000 respectively.

It will be available immediately, from Monday, October 21, and be in place for 12 months and available for properties at any price point.

Premier Jacinta Allan at Sunday’s housing announcement.Credit: Kieran Rooney

But eligible properties must be off the plan and part of a strata subdivision, meaning detached homes or house and land packages are not included.

Savings will depend on how much construction has already occurred. A property that is half-complete will incur stamp duty on the value already finished, but a buyer can receive the concession for the other half. A home that hasn’t started will be able to access the full cut.

The government estimates someone buying an off-the-plan apartment that has not yet started would pay about a quarter of the stamp duty they typically pay.

The property industry has long campaigned for stamp duty reform and more recently said sales have slowed with higher interest rates. It has caused projects to stall as developers wait longer to start construction so they can accumulate enough pre-sales for plans to financially stack up.

“We asked industry what they need to build more homes sooner – and this is what they said,” Allan said.

“More apartments and townhouses getting built means more homes for young people and families to rent or buy.”

Urban Development Institute of Victoria chief executive Linda Allison said the concession would help get investors and homebuyers back into the market.

“Victoria’s property taxes have been a barrier to homeownership and home building; today’s announcement to expand off the plan concessions is a positive step,” she said.

“While we recognise the challenging budgetary position for the Victorian government at present, tax reform is key to reducing the cost of housing and giving consumers and investors confidence to buy an apartment or townhouse in Victoria. These expanded concessions are a good start.”

Allison said she recommended the measures extend past the 12-month deadline to give buyers time to save and search for homes, and also called for a review of other taxes such as those limiting foreign investment.

“Victoria is a global destination; to ensure we have a variety of housing options, we need to be welcoming global investment – not putting up barriers by way of punitive taxes,” she said.

Property Council Victorian executive director Cath Evans said the change would support the feasibility of new housing projects even with its tight timeline.

But she also supported a possible extension if it was shown to have succeeded in boosting supply.

“Current analysis of the build-to-sell apartment market by Charter Keck Cramer shows apartment commencements in Melbourne have declined to less than 4000 a year,” Evans said.

“Off-the-plan concessions for all purchasers will help bring back new buyers to this important part of the housing market.

“Increasing off-the-plan purchases has been proven to support the feasibility of new housing projects, which in turn unlocks further development. With Victoria’s ambitious housing supply targets in mind, this is a big step in the right direction.”

Evans said it was good the concession applied to townhouses, which could be found across Victoria.

Treasurer Tim Pallas said the change would significantly reduce upfront costs for buyers and builders.

Allan said Victorians would hear more announcements over the coming days about housing and how the government would provide more services around the areas where thousands of new homes will be built.

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