Off-the-plan duty shock for apart­ment buy­ers

Western Suburbs Weekly - - News -

CUR­RENT trans­fer duty rules for off-the-plan pur­chases favour house and land pack­ages and cre­ate a dis­in­cen­tive to buy­ing an apart­ment, ac­cord­ing to the Real Es­tate In­sti­tute of WA (REIWA).

“Apart­ments sold off the plan are li­able for trans­fer duty on the full sale price of both the land and apart­ment, whereas house and land pack­ages are typ­i­cally only charged trans­fer duty on the land com­po­nent,” pres­i­dent Hay­den Groves said.

“Not only does this cre­ate a dis­in­cen­tive for buy­ing an apart­ment, it places an un­fair fi­nan­cial bur­den on those buy­ers who do choose to pur­chase off the plan.”

At cur­rent rates, the trans­fer duty fee ap­pli­ca­ble to a house and land pack­age of $564,500 would be $7315, while the fee for an off-the-plan apart­ment of the same value would be $21,170.75 – a dif­fer­ence of more than $13,000.

A re­cent REIWA sur­vey of WA prop­erty seek­ers found 64 per cent of the 122 re­spon­dents would be more likely to buy or in­vest in off-the-plan apart­ments if trans­fer duty rates were amended to be more in line with house and land pack­ages.the sur­vey also found 62 per cent of re­spon­dents con­sid­ered af­ford­abil­ity the big­gest hous­ing is­sue for our chang­ing pop­u­la­tion.

As part of its cam­paign to put prop­erty is­sues on the po­lit­i­cal agenda, REIWA is ad­vo­cat­ing for a 50 per cent con­ces­sion to trans­fer duty for off-the-plan pur­chases.

“As WA grows and the pop­u­la­tion de­mo­graph­ics of our state change, we are go­ing to need more di­verse hous­ing so­lu­tions to bet­ter suit the needs of our com­mu­nity,” Mr Groves said.

“In­cen­tivis­ing off-the-plan apart­ment sales by align­ing trans­fer duty rates with house and land pack­ages will help im­prove af­ford­abil­ity for West Aus­tralians seek­ing al­ter­na­tive hous­ing op­tions and re-bal­ance the avail­able stock by adding more di­ver­sity to the mar­ket.”

REIWA sce­nario anal­y­sis found if a 50 per cent con­ces­sion on trans­fer duty for off-the-plan apart­ment pur­chases were to be ap­plied, there would be a short-term loss for the State Gov­ern­ment of up to $12.3 mil­lion.

How­ever, ul­ti­mately, it could gen­er­ate a net growth of up to $9.2 mil­lion if sales in­creased by seven per cent.

“We are calling on all po­lit­i­cal par­ties to com­mit to im­prov­ing hous­ing af­ford­abil­ity and di­ver­sity in WA, by cre­at­ing an even play­ing field for buy­ers and in­vestors wish­ing to pur­chase off-the-plan apart­ments,” Mr Groves said.

Source: REIWA

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