Reducing the rate of stamp duty while allowing home buyers to pay the tax in installments are two key initiatives the Real Estate Institute of New South Wales (REINSW) believe will help bolster an ailing NSW property market, its CEO has said.
REINSW is lobbying the government to introduce a new HECS-like scheme that allows buyers to pay their stamp duty on a pay-as-you-go basis. Under the proposed plan purchasers would be able to pay off their stamp duty over three years, incurring no interest.
Payment of the stamp duty would be guaranteed, as it would be held against the property in the same way as unpaid land tax.
Additionally, REINSW said a cut in the rate of stamp duty would not only assist prospective home buyers but could also increase government revenue.
REINSW said its research showed that when property transfers taxes were cut in Western Australia and the Northern Territory, government revenues actually increased. Between 2003 and 2006, WA cut property transfer duties by 0.9 per cent, yet related revenues rose by $706 million. Similarly in the NT, property transfer rates were cut by 0.45 per cent and resulted in an increase of $20 million in related revenue – a rise of 20 per cent.
“We want to ease the pain of the market a little bit and keep business churning along,” REINSW CEO, Tim Mckibbin, told delegates at a joint REINSW and Real Estate Employers' Federation (REEF) of NSW Industry Update in Parramatta yesterday.
“It is a bit like a shop putting on a sale to get the stock moving, we are creating a transaction that’s not there.”
According to Mr McKibbin, March this year saw the lowest transaction numbers in more than 12 years, while median house and apartment prices in NSW are down from 2011 levels.
“The results have been very worrying, and April looks like it will be no better. This month we have had the Easter long weekend and ANZAC day to also slow down transactions.”
REINSW said real innovation needs to be brought to bear on two areas of government regulation that are restricting both the supply of housing as well as its affordability.
“It is a social issue as well. Right now, families are struggling to buy with little help from the government,” REINSW President Christian Payne told Real Estate Business.
The REINSW has also called for a review of planning controls. According to the REINSW, there is an urgent need for planning controls to be reformed in order to reduce red tape and costs, as well as providing greater certainty for developers as there is a greater demand for housing, as more and more people flock to Sydney.
In an article published by The Telegraph yesterday, NSW treasurer Mike Baird is quoted as saying the concept for pay-as-you-go stamp duty was "an interesting idea" and one that “is under active consideration”.