Victorian Budget 2021 First-home owners grant to be halved in regional Victoria
First-home buyers in regional Victoria will no longer be able to receive a $20,000 grant from July 1, with the First Home Owners Grant set to halve to just $10,000.
But there will be no change to the $10,000 grant on offer for metropolitan first-home buyers, Victorian Treasury officials confirmed to Domain at Thursday’s budget.
It comes as first-time home buyers have been surging into the market post-COVID-19-lockdown, fuelled by ultra-low interest rates, and amid a shift to regional Victoria prompted by the rise of remote working.
The budget papers, released on Thursday, revealed that across outer Melbourne and regional Victoria, 78 per cent of settled transactions since March 2020 had been from first-home buyers snapping up property.
“Seventy-seven per cent of all Victorian first-home buyer transactions since March 2020 were properties under $600,000 and therefore no land transfer [stamp] duty was payable,” the budget papers said.
The cut to the FHOG was one of the measures to help Victoria’s recovery from its coronavirus-related financial woes which has seen total state debt reach $77.5 billion in 2021.
It was among a raft of housing-related announcements made by Victorian Treasurer Tim Pallas during the state budget, including new stamp duty discounts for inner-city home buyers.
The measures included the previously announced, and controversial, move to raise both stamp duty and land tax for home buyers and owners deemed wealthy by the government.
Under the new rules, home buyers who bought a property worth more than $2 million would have to pay a duty of 6.5 per cent on every dollar above the $2 million price tag.
Land tax for those with investments between $1.8 million and $3 million would rise by 0.25 percentage points and by 0.3 percentage points for those with properties worth more than $3 million.
“Land tax revenue is expected to increase by 15.2 per cent in 2021-2022 to $4.2 billion,” budget papers stated.
It estimated land tax would continue to grow by 9 per cent annually, over the forward estimates.
While a relief package was offered to landlords throughout 2020 via land tax relief, that package will now end, budget papers also revealed.
Extra cash grants for tenants struggling to pay rent because of the impact of COVID-19, introduced last year, will likewise end as will the pandemic-era concessions for stamp duty on most properties across the state.
The government had offered land transfer concessions of 50 per cent on newly built homes priced up to $1 million, and 25 per cent on existing homes up to the same price, to help the market through the worst of the pandemic.
Some concessions for stamp duty were still on offer to encourage the purchase of new homes, especially in the hard-hit inner city.
- The threshold for off-the-plan concession for land transfer duty will increase to $1 million for home buyers, for contracts entered into from July 1, 2021, to June 30, 2023.
- A 100 per cent land transfer duty concession for the purchase of new residential property in the Melbourne Local Government Area for homes that had not sold in 12 months or more since completion, and had a value of up to $1 million. This would apply to contracts entered into from May 21, 2021, to June 30, 2022.
- A 50 per cent land transfer concession would be offered to those buying a new residential property in the Melbourne Local Government Area (for homes up to $1 million in value) if buyers were not eligible for the 100 per cent concession. This would be for contracts entered into from July 1, 2021, to 3 June 30, 2022.
While economists have called stamp or land transfer duty an inefficient tax and an impediment to the market, Mr Pallas said now was not the time for the Victorian government to move away from the charges.
However, at the budget briefing, Mr Pallas didn’t rule out making changes to stamp duty into the future.
“I would never say never, what I would say is now is not the time,” Mr Pallas said. “Reform is always important but timing is key.”
Stamp duty was a key part of assisting the Victorian economy to grow and to open opportunities for Victorians who had “sacrificed so much” during the pandemic, he said.
While property industry groups were up in arms about the new taxes on investors and home buyers, Mr Pallas said the “premium” stamp duty was similar to that of NSW, where properties bought for over $3 million attracted a similar 7 per cent stamp duty for every dollar over $3 million spent.
Ref: MELISSA HEAGNEY | SENIOR JOURNALIST (on 20 May 2021). Victorian Budget 2021 First-home owners grant to be halved in regional Victoria. Retrieved from https://www.domain.com.au/news/victorian-budget-2021-first-home-owners-grant-to-be-halved-in-regional-victoria-1056070/.
Images from internet