Stamp duty reform key to relieving housing affordability pressures for West Aussies

11 August 2021

"Find out why REIWA is calling for the WA Government to reform stamp duty in its 2021-22 State Budget."

Stamp duty remains the biggest financial hurdle for Western Australians looking to buy property, which is why the WA Government should commit to reforming stamp duty in its 2021-22 State Budget.

REIWA President Damian Collins said while stamp duty was an important revenue earner for the WA Government, the inefficient and inequitable tax was ultimately a handbrake on the economy.

“Stamp duty actively discourages home ownership and makes it significantly more difficult for people to move frequently. Our state’s finances are enviable. We have navigated the challenges of COVID-19 relatively unscathed and are one of the only economies in the world thriving right now.

“If there was ever a time for the WA Government to implement bold reform to help alleviate housing affordability pressures on West Aussies, now is it,” Mr Collins said.

In its 2021-22 Pre-Budget Submission, REIWA is calling for the WA Government to introduce four key areas of stamp duty reform that will improve the efficiency and equity of the WA property market.

1. Introduce a two-stream revenue collection method for stamp duty

REIWA strongly recommends the WA Government introduce a two-stream revenue collection model for stamp duty, which gives purchasers the option to pay the hefty tax upfront (as is currently the case) or opt for an ongoing annual fee, calculated at the purchase price of the property.

“Stamp duty adds a considerable amount of money to the savings required to purchase a home, as well as adding to the debt buyers take on, which adds thousands of extra dollars over the life of the loan. This additional cost is too big of a burden for many buyers, pushing their dream of home ownership out of reach.

“It also penalises those who move house more frequently. Often these people are simply moving for work and are unfairly burdened with a tax that has no relationship to any economic output,” Mr Collins said.

In a 2020 survey conducted by REIWA of more than 1,000 people, 90 per cent of respondents said they considered stamp duty to be a significant barrier to home ownership, while 60 per cent said they would opt for an ongoing annual fee if given the choice.

“Stamp duty in its current form is a huge pain point for WA buyers. 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,” Mr Collins said.

2. Provide immediate $10,000 stamp duty relief for those aged 65 and over

REIWA is calling for the WA Government to immediately provide a $10,000 stamp duty concession for all people aged over 65.

“Stamp duty prevents many seniors from right-sizing into more suitable accommodation. Many either struggle to raise the upfront costs or are deterred from spending a large sum to move home,” Mr Collins said.

“Targeted stamp duty relief for seniors would assist with these upfront costs and help them to right-size into more suitable accommodation, which would free up housing stock and assist with mobility across the whole market.”

3. Lock in the off-the-plan stamp duty rebate

With one-third of all unit purchases in 2020 estimated to be off-the-plan, REIWA is calling for the WA Government to lock in the stamp duty rebate for off-the-plan purchases, which is due to expire in October 2021.

"It is vital that the off-the-plan stamp duty rebate becomes a permanent feature of WA’s property tax system. Incentivising the purchase of multi-unit dwellings will ensure ongoing construction work while reducing urban sprawl and encouraging infill development," Mr Collins said.

“The current 75 per cent stamp duty rebate for off-the-plan construction apartments has been essential in ensuring an ongoing pipeline of projects. We believe that without this ongoing incentive, the demand for apartments will soften, impacting the steady supply of diverse housing and the creation of jobs for West Australians."

4. Remove stamp duty on the purchase of small businesses

REIWA is recommending WA join the likes of Victoria, New South Wales, Tasmania, South Australia and the Australian Capital Territory in removing stamp duty on the purchase of small businesses.

“Whilst overall WA has been incredibly lucky throughout the COVID-19 pandemic, those who have been hit hardest by lockdowns and restrictions have been small businesses. They need our support more than ever, so it’s essential the WA Government does not stand in the way and that they implement policies that boost productivity,” Mr Collins said.

“As one of the only places in the country that still collects stamp duty on business assets, we are creating a business environment that is less competitive than the eastern states and placing a cost burden on small businesses which discourages productivity and the entrepreneurial spirit. With more people making career changes than ever before, we need to pave the way for those who want to have a go.”