The Real Estate Institute of Western Australia (REIWA) has proposed four ways on how the state government can reform stamp duty to ease its negative impacts on the property market.
REIWA president Damian Collins said stamp duty has already served as a "handbrake" on the economy despite it becoming an important earner for WA.
"Stamp duty actively discourages home ownership and makes it significantly more difficult for people to move frequently,” Mr Collins said.
“Our state’s finances are enviable. We have navigated the challenges of COVID-19 relatively unscathed and are one of the only economies in the world thriving right now.”
REIWA's 2021-22 Pre-Budget Submission has laid out four "bold reforms" on stamp duty to help ease the pressure it puts on housing affordability.
Two-stream revenue collection method
Mr Collins said the stamp duty, in its current form, is a huge pain point for buyers in the state.
"Stamp duty adds a considerable amount of money to the savings required to purchase a home, as well as adding to the debt buyers take on, which adds thousands of extra dollars over the life of the loan,” he said.
“This additional cost is too big of a burden for many buyers, pushing their dream of home ownership out of reach.”
The proposal is to introduce a two-stream collection model for stamp duty that would provide buyers the option to pay an upfront or ongoing annual fee.
A REIWA survey published last year said three in five homebuyers would opt for an ongoing annual fee for stamp duty if given the choice.
"Reforming stamp duty by implementing a two-stream revenue collection method would remove one of the biggest financial hurdles buyers face and result in a significant productivity boost for our economy," Mr Collins said.
$10,000 relief for senior buyers
Another proposal is to provide a $10,000 stamp duty for buyers over aged 65.
Mr Collins believes stamp duty prevents many senior buyers from right-sizing into more suitable accommodation.
He said this proposal will have an indirect effect on housing supply.
"Targeted stamp duty relief for seniors would assist with these upfront costs and help them to right-size into more suitable accommodation, which would free up housing stock and assist with mobility across the whole market.”
Rebate for off-the-plan purchases
In 2019, the state government rolled out stamp duty rebates for buyers of off-the-plan apartments to try and boost construction activity and alleviate some of the costs of buying an off-the-plan unit.
However, this rebate is set to expire in October.
REIWA proposes this be a permanent program to help incentivise the purchase of multi-unit dwellings.
"The current 75% stamp duty rebate for off-the-plan construction apartments has been essential in ensuring an ongoing pipeline of projects,” Mr Collins said.
“We believe that without this ongoing incentive, the demand for apartments will soften, impacting the steady supply of diverse housing and the creation of jobs for West Australians.”
Removal of stamp duty on business assets
REIWA urges the state to join the likes of Victoria, New South Wales, Tasmania, South Australia and the Australian Capital Territory in removing stamp duty for the purchase of small businesses.
Mr Collins said doing so is crucial as small businesses have been the most affected amid the lockdowns and restrictions.
He believes removing this tax would support businesses and improve their productivity.
“As one of the only places in the country that still collects stamp duty on business assets, we are creating a business environment that is less competitive than the eastern states and placing a cost burden on small businesses which discourages productivity and the entrepreneurial spirit,” he said.
“With more people making career changes than ever before, we need to pave the way for those who want to have a go.”
