Stamp duty, rental reform high on REIWA election agenda

Western Australia’s peak real estate industry group is ratcheting up pressure on both political parties to make stamp duty rebates part of their respective campaigns, as the state heads towards an election next month.

Real Estate Institute of WA president Damian Collins unveiled the institute’s 2021 election submission this week, detailing the needs for the property sector to continue to support the state’s economic recovery.

Mr Collins said REIWA was calling on all parties to formalise WA’s stamp duty rebate for off-the-plan purchases if they are successful in the March 13 election, after a third of all unit purchases in the state in 2020 were made off-the-plan.

WA’s incumbent Labor government introduced the rebate in late 2019, slashing stamp duty by 75 per cent for off-the-plan purchases that are made prior to construction starting in an effort to encourage investment in the apartments sector and create building industry jobs.

The scheme is scheduled to expire in October.

“The current 75 per cent stamp duty rebate for off-the-plan construction apartments has been essential in ensuring an ongoing pipeline of projects,” Mr Collins said. 

“We firmly believe that without this ongoing incentive, the demand for WA apartments will soften, impacting the steady supply of diverse housing and the creation of jobs for West Australians."

Prior to the rebate being introduced, off-the-plan purchases were subject to stamp duty payable on the combined value of the land and build, while house and land packages were taxed solely on the value of the land.

“This discrepancy puts an unfair financial burden on those looking to buy off-the-plan and forces some people to look elsewhere, in some cases pushing people to buy in Perth’s outer suburbs,” Mr Collins said.

“This is in direct contradiction to the WA government’s commitment to reducing urban sprawl and promoting infill developments.”

In addition to the rebate, REIWA called on both parties to consider implementing a two-stream stamp duty system, similar to what has been proposed to be put in place in New South Wales.

REIWA’s recommendation is to give buyers the choice between paying stamp duty up front or an ongoing annual fee.

“The policy would empower homebuyers to decide for themselves which option leaves them financially better off,” REIWA’s election submission said.

“Those who have already purchased a property would not be impacted until they were to buy another property.

“Allowing this choice will provide a more equitable taxation system.

"Currently, those who must move homes frequently pay much more in tax than those who stay in their property for a long time.

“For the government, the annual fee would result in less volatility in government revenue, providing greater certainty of future income.”

Also on REIWA’s election agenda is Perth’s overheating rental market, where there were fewer than 3,000 properties available to rent at the end of January, compared to more than 5,700 at the same time last year.

While rents in Perth remain more affordable than other capital cities, Mr Collins warned that if policy settings were not adjusted to entice additional investors, rental prices would increase significantly.

“Encouraging investors to buy established properties is essential so that the vacant property can immediately be put into the rental market must be a priority for all parties contesting the WA election,” REIWA said.

REIWA called on all parties to provide stamp duty or land tax rebates to entice investors, even on a temporary basis, as well as introduce legislative reform to ensure a fair system for both tenants and landlords.