The Real Estate Institute of Western Australia (REIWA) has called on the WA government to make bolder reforms on stamp duty in order to remove “one of the biggest financial hurdles buyers face” in today’s property market.
Handed down this week, the 2021-22 Western Australian budget includes an $875 million investment in social housing, as well as a two-year extension to the off-the-plan stamp duty rebate to 24 October 2023 at a reduced rate of 50 per cent – down from 75 per cent.
But while these are welcome initiatives, REIWA president Damian Collins said it was disappointing that the state government had not committed to a permanent stamp duty reform – despite achieving a record budget surplus of $5.6 million.
“We welcome the investment in social housing to help address the state’s housing shortage, however more needs to be done to increase housing supply in the private rental market.
“The private sector provides the vast majority of housing and issues such as stamp duty, as well as the current review of the Residential Tenancies Act and its implications, can have a material impact on the supply of rental housing,” according to him.
The president therefore urged the WA government to consider making the off-the-plan stamp duty rebate a permanent feature of the state’s property tax system in order to “ensure an ongoing pipeline of projects, a steady supply of diverse housing and to aid in the creation of jobs for West Australians”.
Prior to the budget announcement, REIWA has called for four key stamp duty reforms to improve the efficiency and equity of the WA property market, including:
1. Introduce a two-stream revenue collection method for stamp duty
2. Provide immediate $10,000 stamp duty relief for those aged 65 and over.
3. Lock in the off-the-plan stamp duty rebate.
4. Remove stamp duty on the purchase of small businesses.
“Whilst the extension of the off-the-plan rebate is welcomed, we are disappointed none of the other reforms were considered. We are particularly disappointed no consideration was given to implementing a two-stream stamp duty revenue collection method,” Mr Collins said.
According to him, the two-stream revenue collection model would have given purchasers the option to pay stamp duty upfront or opt for an ongoing annual fee, thus making it easier for Western Australians to own a home or move more frequently.
“Stamp duty is an important revenue earner for the WA Government, but it is also an inefficient and inequitable tax that actively discourages home ownership.
“Reforming stamp duty by implementing a two-stream revenue collection method would remove one of the biggest financial hurdles buyers face and result in a significant productivity boost for our economy,” the president commented.
Ultimately, Mr Collins believes that the WA government missed a “golden opportunity” in the 2021-22 state budget.
“[They could have] taken advantage of the state’s enviable coffers to deliver bold housing reform that eases one of the most exorbitant cost burdens associated with home ownership.”