- REIWA President has labelled stamp duty as inefficient
- One step includes the option for buyers to pay an annual tax
- Other steps include relief senior Australians and off-the-plan purchases
The biggest financial hurdle for Western Australians seeking property continues to be stamp duty, according to the Real Estate Institute of Western Australia (REIWA).
While acknowledging stamp duty is an important revenue earner for the WA government, REIWA President Damian Collins labelled the tax as ‘inefficient’ and ‘inequitable’, arguing it acts as a handbrake on the economy.
“Stamp duty actively discourages home ownership and makes it significantly more difficult for people to move frequently. 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.
“If there was ever a time for the WA Government to implement bold reform to help alleviate housing affordability pressures on West Aussies, now is it.”
As part of its pre-budget submission to the Western Government – which will be delivered by the Premier and Treasurer, Mark McGowan, on 9 September – REIWA has revealed four key areas of reform it argued could improve the efficiency and equity of the property market.
Step 1 – Allow annual payments
Firstly, Mr Collins recommended introducing a two-stream collection model.
Such a model has been proposed throughout Australia before, and gives the purchasers a choice to either pay stamp duty upfront as present or opt for an ongoing annual fee based on the purchase price of the property.
“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.”
Damian Collins, REIWA President
“This additional cost is too big of a burden for many buyers, pushing their dream of homeownership out of reach.
“It also penalises those who move house more frequently. Often these people are simply moving for work and are unfairly burdened with a tax that has no relationship to any economic output,” Mr Collins said.
A previous survey conducted by REIWA revealed that 90% consider stamp duty as a significant barrier. 60% said they would opt for the annual fee.
Step 2 – Concession for over 65s
Secondly, REIWA is calling for a $10,000 stamp duty concession for all buyers aged 65 and over, arguing the tax disincentives senior Australians from downsizing.
“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.”
Step 3 – Lock in off the plan rebate
Thirdly, REIWA wishes the state government to lock in the stamp duty rebate for off-the-plan purchases, which is due to expire in October.
Mr Collins said this is vital given one-third of all unit purchasers were off-the-plan last year.
“The current 75% stamp duty rebate for off-the-plan construction apartments has been essential in ensuring an ongoing pipeline of projects. 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.”
Step 4 – Remove for small business purchases
Lastly, Mr Collins has called for the removal of stamp duty on the purchase of small businesses. This is already occurring in Victoria, New South Wales, Tasmania, South Australia and the Australian Capital Territory.
Mr Collins noted that while WA has been “incredibly lucky” throughout the pandemic thus far, small businesses have often been hit the hardest by lockdowns and restrictions.
“They need our support more than ever, so it’s essential the WA Government does not stand in the way and that they implement policies that boost productivity,” Mr Collins said.
“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.
“With more people making career changes than ever before, we need to pave the way for those who want to have a go.”