In its 2022-23 pre-budget submission, REIWA has called on the Western Australian government to make the Off-the-Plan Duty Rebate Scheme a permanent fixture of the states taxation system.
What is the Off-the-Plan Duty Rebate Scheme?
The Off-the-Plan Duty Rebate Scheme was introduced in 2019 to incentivise development of multi-unit dwellings by removing the unfair financial burden placed on buyers looking to purchase off-the-plan apartments. It has also been very effective at promoting infill and creating construction jobs.
Originally the scheme entitled buyers to a rebate of 75 per cent of the stamp duty and/or foreign buyers duty paid on pre-construction contracts, capped at a maximum of $50,000.
The scheme was originally set to expire on 23 October 2021, but last year the WA Government announced the rebate would be extended until 24 October 2023, amended to a 50 per cent rebate instead of 75 per cent, but still capped at a maximum of $50,000.
REIWA is pleased the WA Government decided to extend the scheme last year, but now its time to lock it in for good.
Prior to the rebate, when an off-the-plan apartment was purchased, the buyer paid stamp duty on the combined value of the land and build, however a house and land package is taxed solely on the value of the land.
Removing the rebate will add to urban sprawl
This discrepancy put an unfair financial burden on those looking to buy apartments off-the-plan and encouraged a lot of people to look elsewhere, in some cases pushing them to buy in Perths outer suburbs.
This is in direct contradiction to the WA Governments commitment to reducing urban sprawl and promoting infill developments.
The rebate scheme is currently countering this issue, but if it is removed next year as planned, apartment buyers will once again be significantly disadvantaged.
The removal of this scheme would halt the progress weve observed, softening the demand for apartments, impacting the steady supply of diverse housing and reducing the creation of construction jobs in the state over the medium-to-long term.
The Off-the-Plan Duty Rebate Scheme has been effective in its goal of promoting infill and is precisely the policy measure our property market needs long-term to reduce urban sprawl.
