Earlier this week, the ACT Government announced a number of changes to the Stamp Duty regime, commencing 1 July 2021. These changes will have impacts on the property market in Canberra, affecting both buyers and developers.
The main change is that anyone purchasing an “off the plan” apartment or townhouse valued at up to $500,000 will no longer be liable for stamp duty, if the property will be their principal place of residence for at least a year. This applies to any purchaser: be it a first-home buyer, upgrader or downsizer.
The ACT Government has indicated that this will be a permanent change.
There has also been an across the board reduction in stamp duty of $1,040 for any owner-occupier purchases priced between $200,000 an $1.455 million.
These changes are being offset in the budget by an average increase in household general rates of 3.75%.
Implication for Buyers
This stamp duty change will likely have a number of key impacts in the short term.
The most obvious impact is that the costs of stamp duty will reduce the total cost of purchasing, especially for buyers looking at off-the-plan townhouses and apartments under $500,000. It is likely, however, that these reduced costs will also see an uptick in demand at this price point.
Accordingly, buyers looking at off-the-plan townhouses or apartments under $500,000 should make sure they have all their ducks in a row (including having a clear understanding of their borrowing capacity and a good conveyancer ready to review any contracts) because they might find these properties are sold more quickly than usual.
Implications for Developers
The social media following the announcement has proven telling in showing the policy objectives of this change to stamp duty, and in showing what the government hopes this change does to housing development in the ACT going forward.
Following the announcement, a number of people were quick to point out that there are, in fact, very few developments offering off-the-plan property under $500,000 in the ACT. In fact, Allhomes reported that at the time of the announcement there were only two townhouse developments (listed on Allhomes) offering properties under $500,000 (both in Taylor), and more than 30 apartment complexes.
In response to these comments on social media, the ACT Chief Minister Andrew Barr stated that ‘the initiative is targeted at encouraging the development of new projects with properties below $500,000 – hence “off-the-plan”.’ The Chief Minister went on to say ‘It sends a strong signal to increase the supply of new housing below $500,000’.
Whether or not Developers rise to the task of increasing the supply of new, low cost housing will be interesting, especially given the current strong performance of the housing market across the ACT and the significant cost of land.
The information in this document represents general information, and should not be relied for your specific circumstances. If you require legal advice and assistance on the matters contained or associated in this document you should contact Trinity Law. Subject to the limits of the law, Trinity Law disclaims any liability on persons relying on this document.