As first home buyers struggle to stump up stamp duty on top of other home buying costs, a leading real estate body has suggested an innovative means of easing this tax burden and stimulating the property market.
According to the Real Estate Institute of New South Wales (REINSW), as well as reducing the overall rate of stamp duty, a ‘pay as you go’ system that allows home buyers to stagger their stamp duty payments over the course of three years would drastically reduce the cost burden associated with buying a property and stimulate the slow moving property market.
“Housing supply and affordability are the key issues facing NSW which need to be tackled head on in the upcoming state budget,” said REINSW president Christian Payne.
Speaking on the situation in Sydney, he added that convoluted planning controls are delaying the delivery of new housing stock that is urgently needed to meet the growing demand of thousands of people flocking to live in the Harbour City.
“As a result, housing affordability is being squeezed with many simply unable to afford their own home,” he said. “Add the significant additional burden of stamp duty to the already high price of real estate in Sydney and you have a market that is pushing the Australian dream beyond the reach of many.”
The introduction of a ‘pay as you go’ stamp duty plan for first homebuyers that allows a staged payment plan of property transfer taxes over three years, claimed the REINSW, would reduce the burden of upfront stamp duty on top of a house deposit – providing practical assistance to first homebuyers.
Additional suggestions include:
Cutting the rate of stamp duty in order to increase Government revenue. According to REINSW research, when property transfers taxes were cut in Western Australia and the Northern Territory, government revenues actually increased. Between 2003 and 2006, Western Australian cut property transfer duties by 0.9%, yet related revenues rose by $706 million. Similarly in the Northern Territory, property transfer rates were cut by 0.45% and resulted in an increase of $20 million in related revenue – a rise of 20%.
Urgent reform of planning controls. There is an urgent need for planning controls to be reformed in order to reduce red tape and costs, as well as providing greater certainty for developers, claimed the REINW. Housing supply is failing to meet existing demand and this problem will only be further exacerbated as more and more people move to Sydney.
“There is a real opportunity now to deliver innovative solutions that will not only increase government revenues, but will bring the great Australian dream back into the reach of many thousands of young first homebuyers in NSW,” said Payne.
The news comes as newly elected Queensland Premier Campell Newman pledges to reinstate stamp duty concessions for principle places of residence in the state.
Announcing a raft of measures designed to reduce the cost of living in the Sunshine State, Newman stated that “cabinet also formally approved the reinstatement of the principal place of residence stamp duty concession from 1 July 2012, which will save Queenslanders up to $7,000 when they purchase an average family home".
How would you solve the stamp duty problem? Have your say on our property investment forum.
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