NSW cuts stamp duty for first time buyers

New South Wales has slashed stamp duty charges for first homebuyers in a bid to boost new home construction and help the state recover from COVID-19.

Premier Gladys Berejiklian said the threshold for stamp duty charges for first-time buyers in NSW would be raised from $650,000 to $800,000, with more than 6,000 buyers expected to benefit from the changes.’

Reduced concessions will be available on properties worth up to $1 million.

For vacant land, the threshold will go from $350,000 to $400,000 and phase out at $500,000. 

Stamp duty will remain applicable for established homes, with the changes to be ushered in on August 1.

First homebuyers could save up to $31,355 on a new $800,000 home, NSW Treasurer Dominic Perrottet said.

“We need to ensure our building sites keep ringing with hammers and saws as that means more people working, and first home owners will save money in the process,” Mr Perrottet said.

The stamp duty change comes after building approvals in Greater Sydney slumped to their lowest level since September 2013 over the year to May 2020.

Data released this month by NSW Department of Planning, Industry and Environment showed there were 33,000 approvals in the year to the end of May, prompting criticism that the state government’s planning acceleration programs had failed to drive an uptick in residential construction.

Overall dwelling approvals were down 45 per cent from the city’s 2016 peak, while apartment approvals had plunged 64 per cent since that time.

NSW Department of PLanning forecasts indicate Sydney needs around 40,000 new homes to be built each year to keep up with underlying demand.

At the time the figures were released, Urban Development Institute of Australia chief executive Steve Mann said the government’s response to COVID-19 had not provided developers with the confidence to launch projects.

“Despite measures to accelerate approvals the development sector is not experiencing an acceleration with significant barriers to delivery remaining. 

“The fast-tracked planning approvals process has been underwhelming for the residential development sector.

“Only five residential projects have been approved under this scheme.” 

“The newly-formed Planning Delivery Unit must start to cut down on bureaucratic red-tape and double handing, which is preventing projects from being delivered. 

“There needs to be further work to unlock greenfield development to ensure the forward supply of housing is strong enough to meet demand.”

Meanwhile across the country, the Real Estate Institute of Western Australia is lobbying for emergency COVID-19 measures to protect tenants to be phased out prior to their September cutoff point.

The institute was responding to the ACT government’s move to extend its emergency measures protecting tenants until September, a move that brought the territory in line with most other states. 

Protections in place include a moratorium on evictions, while tenants have been encouraged to negotiate with their landlords reduced rent periods, rental holidays or deferred rent payments.

REIWA president Damian Collins said WA property markets had largely returned to normality and the emergency measures were no longer needed.

Mr Collins said around 1 per cent of tenants in WA had been unable to meet their rent, with the vast majority of tenants only moderately affected by the crisis.

“It’s not fair that owners, who in fact may be suffering more than the tenants, are not able to exercise their normal rights under the lease,” Mr Collins said.

“From a landlord’s perspective, extending the emergency period could place them in a position of increased financial hardship as they are no longer able to defer mortgage repayments, with some deciding to sell, which would further reduce rental stock available.

“With the current vacancy rate sitting at 2 per cent, we can’t afford for landlords to take their properties out of the private rental market, as not only will this impact stock levels, it may also increase the median weekly rent.”

Mr Collins said emergency legislation protecting commercial tenants should also not be extended, because of the financial burdens faced by many landlords.

“Commercial landlords have worn the pain during the downturn and now that many tenants are back to normal or near-normal trading conditions, it’s only fair that tenants be expected to meet their obligations under the lease agreements they have entered into,” he said.