Latest incentives for property buyers ripe with opportunity

Governments generally don’t like economic decline. When spending is down, they’ll usually do whatever they can to get people buying again. With 2020 being what it was across the world, we saw this effect in action with both federal and state governments in Australia putting a lot of focus on stimulating the economy and incentivising us to spend big in areas such as property and construction.

And why wouldn’t they? There’s no denying property is a big part of our culture in Australia. We love talking about it, buying it, building it, flipping it. It’s also a huge part of our economy. In fact residential building activity totalled $72.2 billion over the year to June 2020 alone and it’s also a significant segment of our employment sector, with 1.18 million Australians directly employed in the construction industry (which is equivalent to almost 1 in 10 jobs across the economy).

From the introduction and extension of the HomeBuilder Grant to state based incentives like the land transfer duty waiver in Victoria, we’re being incentivised to buy property like never before (and likely won’t ever be again, in our lifetimes at least). These new incentives paired with the fact that interest rates are so low right now (and will be until at least until 2023) means if you’ve been considering property, there’s really no time like the present to take action.

It’s not just hyperbole – the window of opportunity is actually closing on some of the incentives on offer at the moment, so let’s break down what’s out there and why you need to do something sooner rather than later if you plan on taking maximum advantage.

Land transfer duty (aka stamp duty) waiver

As part of the Victorian State Budget announced in late 2020, a special land transfer (duty) waiver was announced for Victorian residential property with a dutiable value of up to $1 million. This means:

• For new residential properties, a 50% land transfer duty waiver of the duty otherwise payable applies.
• For existing residential properties, a 25% land transfer duty waiver of the duty otherwise payable applies.
• For vacant residential land, a 25% land transfer duty waiver of the duty otherwise payable applies.

It’s also worth noting that this waiver applies after all other benefits available on property purchases in Victoria (such as the first home buyer duty concession and principal place of residence concession) but does not apply to the additional foreign purchaser duty. This is great news if you’re looking to increase your stamp duty savings (we’re looking at you, first home buyers purchasing property between $600,000 and $750,000!)

All residential property purchases in Victoria with contracts signed on or after 25 November and before July 2021, with a dutiable value of $1 million or less are eligible for this duty waiver regardless of whether the property is intended as an investment or your principal place of residence. It just can’t be a transfer that obtains the commercial and industrial land concession, a gift, or with a dutiable value of greater than $1 million.

Key takeaway: Whether you’re an investor, owner-occupier or first home buyer looking to purchase a property in Victoria with a dutiable value of $1 million or less, you have until 30 June to save up to 50% of your stamp duty costs (sometimes even more, after other concessions are applied).

HomeBuilder

Taking a step up to the national level, just as the curtains were about to draw a close on the popular HomeBuilder Grant, the Federal Government announced a last-minute extension to the program (albeit with a few tweaks).

For those who missed the news at the time, HomeBuilder was designed to provide eligible owner-occupiers (including first home buyers) with a grant to build a new home or substantially renovate an existing one. Originally, the grant provided a $25,000 boost for those who got in before the December 2020 deadline on qualifying property transactions.

With the new extension, qualifying owner-occupier property purchases will be able to access a revised $15,000 grant for appropriate building contracts signed between 1 January 2021 and 31 March 2021, inclusive. Also extended is the deadline for all applications to be submitted – you now have until 14 April 2021 inclusive to apply for the grant. This deadline extension also applies retrospectively to those who may have qualified for $25,000 grant last year but may not submitted their application in time. Other changes include:

• An extension to the construction commencement timeframe from three months to six months for all HomeBuilder applicants. This will apply to all eligible contracts signed on or after 4 June 2020.
• An increase to the property price cap for new build contracts in New South Wales and Victoria to $950,000 and $850,000, respectively, where the contract is signed between 1 January 2021 and 31 March 2021, inclusive.
  • The existing new build property price cap of $750,000 will continue to apply in all other States and Territories.
• A change in licensing requirements and registration for builders, as below:
  • Where an eligible contract is signed on or after 29 November 2020, the builder must have a valid licence or registration before 29 November 2020.
  • Where an eligible contract is signed before 29 November 2020, the builder must have a valid licence or registration before 4 June 2020.

Aside from these changes, existing program criteria apply.