Stamp-duty concessions for boomers downsizing touted to free up family homes

Older homeowners would get a one-off stamp duty reprieve on their final home purchase under a property industry pitch to free up tens of thousands of under-utilised family homes across Melbourne.

In a submission to the state government’s Plan for Victoria review, the Property Council of Australia has argued home buyers older than 60 and wanting to downsize should be exempt from paying stamp duty under a last home buyer concession.

Prospective home buyers at an auction in Brunswick.Credit: Penny Stephens

The submission also calls for a major overhaul of the state’s current strata title laws, with new research finding Melbourne could have an extra 100,000 homes within 15 kilometres of the city if Victoria were to follow other states by making it easier for joint owners of unit blocks to collectively sell.

The push comes almost a year after the state government released its much-publicised housing statement, with a promise to boost housing affordability by focusing on supply, including a target to build 800,000 new homes over the next decade.

But the Property Council submission suggests there is also scope to use Melbourne’s existing housing stock more efficiently.

Stamp duty has long been singled out as a major barrier preventing so-called empty nesters from moving to more appropriately sized homes once their children have moved out, leaving a growing number of family-sized homes in middle-ring suburbs underutilised as the baby boomer generation ages.

Under the plan, the exemption would be a one-time benefit, meaning any subsequent transactions would be subject to stamp duty.

Property Council Victorian executive director Cath Evans.Credit: Justin McManus

The Property Council of Australia’s Victorian executive director Cath Evans said: “An obstacle to homes becoming available for Victorian first home buyers is the inability of older homeowners to overcome the barrier posed by their stamp duty liability on a new purchase.”

Richard Temlett, director of research and strategy at property consulting firm Charter Keck Cramer, said in the current climate it often did not make financial sense for people to downsize, with a combination of stamp duty and the high cost of new townhouses and apartments offsetting any potential gains.

“It is locking up the market,” Temlett said. “It is preventing people from rightsizing into the right type of space to suit their needs. As it stands right now we’ve got a huge ageing baby-boomer segment of the market that is asset-rich and cash flow-poor. They can’t move.”

Temlett said a consequence was that people’s children and grandchildren could not afford to live in the same area and were being pushed into growth areas on Melbourne’s fringes, which worked against the government’s aspiration to increase density in Melbourne’s existing suburbs.

The Property Council Australia wants stamp duty concessions for older people wanting to downsize to smaller homes. Credit: Paul Rovere

The Property Council is also calling for a major overhaul of Victorian strata title laws, which cover properties such as apartment blocks that have multiple owners. Strata-titled properties can currently only be sold in Victoria if all the owners agree.

The requirement for a 100 per cent majority leaves Victoria out of step with New South Wales, Queensland and South Australia, where a jointly owned block of homes can be offloaded with a three-quarters majority.

Fine-grained spacial analysis by urban consulting firm Urbis provided to The Age suggests as many as 100,000 dwellings in Melbourne could potentially be created if Victoria were to follow other jurisdictions and allow collective sales with 75 per cent agreement.

The Property Council also wants an overhaul of strata title laws for apartment blocks. Credit: Wayne Taylor

Evans said the relatively simple change to the law could have a “massive impact” on the efficient use of land within Melbourne’s inner suburbs.

“Given the state’s housing targets and the priority placed on delivering new housing in established suburbs, this reform is a no-brainer,” she said.

The government on Tuesday confirmed it will consider the rules around the collective sale of strata developments as part of a review of Victoria’s Owners Corporation Act.

Asked about the prospect of stamp duty concessions for older Victorians wanting to downsize, a spokesman for Treasurer Tim Pallas said the government had already abolished stamp duty for eligible pensioners when buying a home valued up to $600,000, or stamp duty concessions for pensioners buying a home valued between $600,000 and $750,000.

The Urbis study suggests the majority of strata titles that would benefit from this proposed reform were constructed between the 1960s and 1990s. It found about half of the new dwellings were located in the City of Melbourne, with growing numbers of essential workers unable to find affordable housing close to employment.

It said the government’s ambition to deliver 70 per cent of new housing in existing suburbs would be boosted if the government made it easier to sell strata properties.

”A number of sites in the cities of Maribyrnong, Boroondara and Port Phillip, each located along major transport corridors, present opportunities,” it said.

The submission follows a study suggesting as many as one in 20 Melbourne homes are not being lived in.

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