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The state is looking to rev up activity in the off-the-plan apartment market.
Premier Jacinta Allan has announced a new one-year tax concession for new apartments, units and townhouses which will not be subject to any threshold, and will be claimable by any buyer.
As of 21 October, a 12-month concession will be available to any buyer purchasing an eligible apartment, unit or townhouse off-the plan regardless of a property’s value, and will offer a 100 per cent deduction of outstanding construction and refurbishment costs when calculating stamp duty.
Prior to this introduction, only the state’s first home buyers and owner-occupiers were able to claim a stamp duty concession when purchasing off the plan, provided that the reduced value for stamp duty calculations following the deduction of construction costs was under the threshold of $750,000 for first home buyers and $550,000 for owner-occupiers, respectively.
In a statement announcing the new concession, Allan said that the new policy was a response to industry feedback around what the state could do to “build more homes sooner”. This policy looks to reduce state taxes for certain buyers while incentivising building in the medium- to high-density market.
“More apartments and townhouses getting built means more homes for young people and families to rent or buy,” Allan said.
The Victorian government clarified that eligible apartments, units or townhouses must be part of a strata subdivision and include common property, such as a driveway or shared hallway.
While houses, land packages and other dwellings not part of a strata subdivision are not eligible for the extended concession, the government stated that first home buyers and owner-occupiers will still be able to access the existing concession on these properties.
By extending the tax concession to a wider pool of buyers, the Victorian government emphasised that developers would be able to secure more pre-sales, enabling them to meet finance requirements faster and start construction on new homes sooner.
Treasurer Tim Pallas noted that this process would “significantly reduce upfront costs” and described the new concession as a “huge win for all buyers and builders”.
This sentiment was echoed by Minister for Planning, Sonya Kilkenny, who commented: “We can get more homes built where young Victorians and families are telling us where they want to live – close to transport, jobs and their families.”
Responding to the announcement, the Property Council of Australia welcomed the news, with Victorian executive director Cath Evans saying that the announcement translates “directly to the feasibility of new housing projects”.
“Increasing off-the-plan purchasers 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.
She pushed for the program to last more than a year, stating that it was “vital for the performance of the concessions to be closely monitored during the next 12 months, with a view to an extension”.
“We have long advocated for positive changes in taxation policy to stimulate the construction of new homes. If this policy directly translates to housing supply, we strongly believe it should continue beyond this initial 12-month period,” she said.
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