The New South Wales government yesterday announced temporary adjustments to stamp duty for certain first home buyers (FHBs) as part of its COVID-19 recovery plan.
Under the changes, no stamp duty will be charged on new homes for FHBs below $800,000 in value, up from the former $650,000. Stamp duty relief will also apply, on a scaled basis, to newly built homes valued between $800,000 and $1 million, as well as to vacant land worth up to $400,000.
The adjustments will not apply to existing homes, only newly-built dwellings and vacant land, and they are scheduled to last for a 12-month period, starting 1 August 2020.
Aussie CEO James Symond was among those to welcome the news, calling the relief measure “a lifeline” for aspiring FHBs amidst the chaos of COVID.
“Important initiatives like this will have positive outcomes for so many hopeful first home buyers, the housing and construction industry, and the entire NSW economy," Symond said.
“While the stamp duty relief is temporary and only available for the next 12 months, it’s important for first home buyers considering purchasing a new home to understand their financing options and the range of conditions that apply.”
The Housing Industry Association (HIA) also celebrated the announcement out of the NSW government as “timely relief” and a “welcome move”.
“[The] HIA has been seeking changes to the stamp duty arrangements to better reflect the price of new homes in NSW and, in particular, in Sydney,” said David Bare, HIA executive director NSW.
"This initiative will have positive outcomes for the housing industry and the NSW economy as a whole. The government is forecasting that this change will assist more than 6,000 first home buyers, which have traditionally been under-represented in the NSW market, particularly in Sydney.
“Combined with the existing $10,000 first home owners grant and the $25,000 HomeBuilder grant, first home buyers in NSW should be looking to a new home as a real option to take up home ownership,” he added.
According to Urban Taskforce CEO Tom Forrest, the extension of the stamp duty exemption is sure to make a “big difference” to new buyers, as well as the struggling property market at large.
“The problem with stamp duty and payroll tax is they are distortionary. They have the effect of creating a bias in the property market which slows down property transactions,” he explained.
However, while Forrest heartily welcomed yesterday’s announcement, he also called for the States and Commonwealth to band together and support a progressive phase out of stamp duty to be replaced with a broad-based land tax or widening of the GST.