The decision by the New South Wales Government to levy additional property taxes on foreign buyers is set to have a wide ranging impact on all property transactions in the state.
While the higher stamp duty and land tax charges that came into force on 21 June only apply to foreign buyers, every property transaction in NSW will have to deal with additional paperwork as a result.
Issued by the NSW Office of State Revenue (OSR) anybody purchasing property within NSW will now need to complete a Purchaser Declaration to show whether or not they are a foreign buyer.
“This new purchaser statement that’s been introduced on the back of the foreign buyer stamp duty and land tax surcharges applies to all buyers,” Richie Muir, legal director at law firm lawlab told Your Investment Property.
“The default position is that you’re assumed to be a foreign buyer unless you advise otherwise,” Muir said.
While filling out one more form may not seem like a huge addition to the process of buying a property, Muir said the new declaration requires more than just a quick scribble of a signature.
“It’s quite an onerous obligation on all buyers to have to sign this form and have it witnessed by a qualified witness. So it a needs to be witnessed by a JP or lawyer essentially,” he told Your Investment Property.
“With a large part of the market being investment based you have a lot of people buying interstate and using interstate lawyers and they can’t just pop into the office to do something like fill this form out.
“If they try to use another lawyer as a witness they might decline because they’re not a client and finding a JP can be quite difficult as well. It really is an impost on buyers.”
The fact that the form must completed as hard copy in the presence of a qualified witness is also a serious road block for efforts to move to an electronic conveyancing system.
“The trend of late in the industry has been to move towards electronic conveyancing and a much more streamlined transaction,” he told Your Investment Property.
“That’s really been the trend and there has been some great advancements towards that recently.
“For a while there in New South Wales, in the right circumstances, it was possible to a do an end to end electronic transaction, from contract signing… all the way through to an electronic settlement.”
lawlab has been heavily involved in the push to electronic conveyancing by developing Rundl, an online platform that allows for the creation, distribution and completion of documents such as a contract used in the sale of property.
With firms like his so heavily invested in electronic conveyancing, Muir said lawlab was surprised the NSW government had not consulted the with the conveyancing industry prior to constructing the declaration.
“There was no industry consultation as far as we’re aware; it appears to be a bit of a rushed job by all accounts.
The Commonwealth Government have a lot of online forms and appear to be pushing [an electronic system]. “For example the FIRB application form is done online, the ATO foreign buyer capital gain withholding application is now done online as well.”
Muir said the NSW government’s stance on the issue also goes against consumer sentiment, with the public increasingly demanding the use of electronic systems to increase efficiency and security.
“Customers these days do expect to have professional services delivered electronically. People want things delivered to their phones these days.
“Particularly with things being lost in the post these days. It’s amazing how many times contract exchange and settlements are delayed because something goes missing in the post.
“When you’re using a secure platform like our Rundl people have that added feeling of security. It also means all their documents are in one place, you don’t have to go digging through files or emails to find something you might suddenly need.”
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