Investors Rush Prior to July 1 VIC Stamp Duty Changes
A new government concession has been signed to help re-balance the property market between investors and home buyers, reducing the amount paid as subsidies by $841 million over the next 4 years.
To make sure that genuine home buyers are getting the subsidy, this concession will now only be available to home buyers who intend for the property to be their principal place of residence or who qualify for the first home buyer stamp duty concessions. This means the beneficiaries only pay stamp duty on the value of their land, before construction begins. This is a considerable saving compared to buying once the homes are built. It is particularly attractive for apartments
However, there is a catch - this initiative will only apply to contracts entered into from 1 July 2017 and Victoria is the only state to offer such a broad concession. Therefore, the CBRE Residential Projects – Victoria team believe that there will be a large rush from investors prior to the stamp duty relief change on July 1.
“This is the biggest change to the off the plan apartment market in 25 years. For the past three decades, investors have been encouraged to buy off the plan in order to boost construction industry jobs and residential housing supply through generous savings in stamp duty. This saving has been the single biggest driver of the off the plan market. To have it cut without industry consultation unilaterally by the State Government will risk construction industry jobs and impact young professional workers who are likely to see rents soar as the supply of inner city apartments dries up. It will also impact international developer clients who have helped make Melbourne such a dynamic, vibrant city. It’s a damaging change that will have a clear impact on construction and jobs,” commented Andrew Leoncelli, Director of CBRE Residential Projects in Melbourne.
International investors will be hit with a 7% FIRB charge plus a $5k or $10k application fee. This is in addition to 5.5% full stamp duty, plus a vacant landlords tax between 0.5% and 1.5% - all up in the first year government charges of 13 -17%.
We currently have a wide portfolio of properties across Melbourne perfect as both a first-home and/or investment. Have a look at our range or call to speak to an agent on 1300 888 770.