- There has been a push to introduce a land tax in lieu of upfront stamp duty
- For those who opt-in and are eligible, owners will pay $400 + 0.3% of land value in tax per year
- Has been welcomed by the Property Council
The New South Wales government has today confirmed first home buyers will be able to choose between paying upfront stamp duty on a property as is the current case, or opt for an annual property tax.
Called the First Home Buyer Choice, the reform falls under a multi-billion dollar housing package announced in the 2022-23 NSW Budget that is seeking to deliver more affordable housing across the state.
NSW Premier Dominic Perrottet said a priority of the state government was to make home ownership a reality for more families.
“We want to lower the barriers to owning a home for first home buyers seeking a place of their own,” Mr Perrottet said.
“In the past two decades, the share of first home buyers under 35 years of age has declined from 67 per cent to 61 per cent. Lifting home ownership is part of this Government’s efforts and ambition to help families who are feeling the squeeze.
Dominic Perrottet, NSW Premier
“The First Home Buyer Choice will remove one of the largest upfront costs to buying a home and help deliver a brighter future for first home buyers.”
Treasurer Matt Kean added that $728.6 million has been allocated across the next four years to assist first home buyers.
“We know that first home buyers are being forced to enter the property market later in life and this reform will make the property market more accessible for them,” Mr Kean said.
“It will mean more NSW residents will get into their first home at an earlier age and achieve the great Australian dream of home ownership.”
The state government said that data shows that the median NSW household which saves 15% of their income will need to wait an extra two years to save enough up-front costs for the median NSW dwelling.
The annual tax will be eligible for properties up to $1.5 million. In conjunction with existing first home buyer initiatives, about 97% of all first home buyers will receive support from the state government.
The annual property tax will equate to $400 plus 0.3% of the land value of the property.
“This Government will use every lever at its disposal – including tax, planning, supply, or working with the Commonwealth — to give more people in NSW the opportunity to own their own home,” said Anthony Roberts, the Minister for Planning and Homes.
“The NSW Government is also looking at initiatives to help boost housing supply by cutting planning assessment timeframes, co-funding enabling infrastructure and investing in new and improved social housing.”
Legislation is scheduled to be introduced later this year, with the opt-in option to begin from January 2023. Those entering into sales contracts between the enactment of legislation and January 2023 will be eligible for a refund if they wish to opt in.
A full stamp duty exemption will still apply for properties up to $650,000, and concessions up to $800,000.
“It’s great to see the NSW Government’s commitment to help Australian’s achieve home ownership and put housing front and centre,” Mr Achterstraat said.
“There is no doubt we are experiencing a housing supply crisis in NSW which is putting a strain on affordability, both in terms of ownership and rentals.
“The emphasis on assisting some of the state’s most vulnerable people through this assistance program is a well-intentioned endeavour. For many Australians, their home is their most valuable financial asset so housing security can create financial security.”
Real Estate Institute of New South Wales (REINSW) CEO, Tim McKibbin – who has frequently noted the billions of dollars the state government receives thanks to stamp duty – said the reform gives buyers an extra factor to consider when purchasing property.
“Whenever a tax is a consideration of a transaction, not merely a consequence of it, then we believe it falls under the label of a ‘bad tax’,” he said.
Great Southern Bank has welcomed the announcement, and other housing measures.
“Giving first homebuyers more choice around whether to pay upfront stamp duty or a deferred land tax – particularly those purchasing a home from $800,000 up to $1.5 million – provides homebuyers more options to make that first step on to the property ladder more attainable,” said Megan Keleher, Chief Customer Officer at Great Southern Bank.
“We are pleased to see the NSW Government offering another pathway for single parents, key workers and older citizens experiencing vulnerability to buy a home using shared equity.
“Great Southern Bank has been a strong advocate of shared equity for a number of years, helping many Victorians to buy a home through a similar scheme. We look forward to seeing more details of the NSW scheme.”