Stamp duty cuts are making headlines in Melbourne, and for good reason. The Victorian Government recently announced significant reductions to stamp duty on off-the-plan properties for the next 12 months, a move aimed at boosting the housing supply and helping more people into the market.
What’s Changed with Stamp Duty?
Starting from 21 October 2024, the Victorian Government is offering temporary stamp duty concessions on off-the-plan apartments, townhouses, and units. This initiative applies to all buyers—first-home buyers, investors, and even companies or trusts. It should make it more affordable to purchase a property in Victoria.
Unlike previous schemes, which were capped at certain price points and limited to first-home buyers, this new initiative is open to all buyers, with no price caps. For 12 months, all eligible buyers will be stamp-duty exempt on off-the-plan purchases, regardless of the property’s value.
Why Is the Government Doing This?
The Allan Government has set a goal to build 80,000 homes a year over the next decade. The stamp duty cuts are designed to stimulate the property market by reducing upfront costs for buyers and allowing developers to get projects moving more quickly. The government has budgeted $55 million to cover the cost of this program over the next year.
Victorian Premier Jacinta Allan explained that this initiative came from feedback from the industry, who stressed that reducing stamp duty would help unlock more housing developments.
How Much Can Buyers Save?
Stamp duty has long been a burden for homebuyers, adding significant costs to property purchases. These new concessions are set to provide substantial savings. For example, a buyer purchasing an off-the-plan property for $620,000 will now only pay $4000 in stamp duty—saving about $28,000 compared to what they would have paid without the concession.
The concession works by allowing buyers to deduct the construction costs from the sale price when calculating stamp duty. Essentially, you’ll only be paying stamp duty on the value of the land, not the total price of the finished property.
Who Benefits from These Changes?
This initiative is expected to benefit a wide range of buyers, including:
- First-home buyers: The lower upfront costs could help them break into the market sooner.
- Investors: They can take advantage of the savings to expand their portfolios.
- Downsizers: Older Australians who have been holding off on downsizing.
Cameron Kusher, head of economic research at REA Group, believes this scheme could encourage downsizers to free up large homes. For younger families, this could help relieve pressure on the housing market.
What About Developers?
The property development industry is welcoming the news, with developers like Mirvac praising the government for taking “decisive action.” The hope is that these stamp duty savings will lead to more pre-sales, allowing developers to secure financing faster and get construction started sooner.
With projects sitting on the market due to high taxes and market uncertainty, the stamp duty cut could be the boost developers need to start new developments and move existing stock.
What Properties Are Eligible?
The stamp duty concession applies to off-the-plan apartments, units, and townhouses that are part of a strata subdivision—meaning they have common areas like shared driveways or hallways. House and land packages are not eligible under this scheme, but first-home buyers and owner-occupiers can still access other existing concessions.
It’s important to note that this concession only applies to contracts signed between 21 October 2024 and 21 October 2025. So, if you’re thinking about buying an off-the-plan property, now is the time to start your search!
What About Foreign Buyers?
Foreign buyers are also eligible for the new concession. However, it won’t apply to the Foreign Purchaser Additional Duty (FPAD). FPAD is still calculated on the full value of the property before any deductions. This means foreign buyers will need to pay additional duty even if they benefit from the regular stamp duty concession.
Is This a Long-Term Solution?
While this is a temporary 12-month initiative, it’s designed to ease some of the immediate struggles facing the property market. Victorian Treasurer Tim Pallas hopes this will bridge the gap until interest rates begin to fall. Experts now predict that may happen in April 2025.
The housing market has faced multiple challenges, but with this stamp duty cut, developers and buyers alike have reason to feel optimistic. Although interest rates remain a concern, this stamp duty relief could help keep the property market moving forward.
What Should I Do?
If you’re considering buying an off-the-plan property, now’s the time to act. With this concession only available until 21 October 2025, there’s a limited window to take advantage of these substantial savings. First-home buyers, investors, and downsizers, the stamp duty cuts could make your next purchase much more affordable.