The government is introducing legislation to scrap the scheme, which offers buyers a choice between paying stamp duty or annual property tax
Real estate organisations and experts have voiced their opposition to the NSW government's decision to abolish a first-home buyer's scheme that offers the choice between paying substantial stamp duty or a smaller annual property tax.
In the coming week, the NSW government will introduce legislation to raise the stamp duty exemption threshold for first-home buyers from $650,000 to $800,000, with concessions for homes up to $1 million, The Australian reported.
Alongside this change, the legislation will eliminate the previous government's First-Home Buyer's Choice (FHBC) scheme, which allowed home buyers to opt for either stamp duty or a reduced annual land tax on properties valued up to $1.5 million.
Cate Bakos, the president of the Real Estate Buyers Agents Association (REBAA), expressed disappointment over the discontinuation of the FHBC scheme. Although she acknowledged the increase in stamp duty exemption as a positive step, she raised concerns about the limited availability of properties within that price range.
According to Bakos, Sydney, being the initial test case for the scheme, hasn't been given sufficient time to demonstrate its effectiveness. She also said that stamp duty often acts as a major obstacle for homeowners looking to sell their properties, and removing the tax could potentially increase housing supply and foster a more dynamic market.
“A considerable number of homeowners currently hesitate to upgrade or downsize their properties due to the burden of stamp duty,” Bakos told The Australian.
More supply needed
The NSW government has emphasised the need to bolster housing supply in the market.
Premier Chris Minns has flagged the necessity to curb urban sprawl into Sydney's fringe suburbs and increase the approval of apartment projects, which have been at their lowest since 2014.
Treasurer Daniel Mookhey reaffirmed the importance of supply growth as the ultimate driver of property prices, emphasising the significance of constructing more houses to alleviate housing price pressures.
“A step backwards”
According to CPA Australia, a national accounting body, stamp duty is an inefficient tax. CPA Australia asserts that there is widespread agreement among tax experts and professionals that this lump-sum tax should be replaced with a smaller annual fee for all home buyers.
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Elinor Kasapidis, CPA Australia’s senior tax policy manager, criticised the NSW government's decision to prevent first-home buyers from opting out of stamp duty.
“The NSW government is taking a step backwards,” she told The Australian.
While acknowledging the increased stamp duty thresholds as a positive development, Kasapidis argued that it falls short in the long run, and advocated for a national shift away from stamp duty.
Minns stated that both policies could not coexist, maintaining that Labor's scheme was fairer and more balanced. He acknowledged the parliamentary budget office's assessment that each scheme cost over $700 million and emphasised the need to determine the most effective targeted assistance for first-home buyers.
While the NSW government plans to introduce legislation to parliament, the Coalition stated it would consider the bill upon review, The Australian reported.
Shadow Treasury spokesperson Damien Tudehope urged the crossbench, whose support is crucial for passing the legislation, to back the current subsidies. He reminded them that they had previously voted in favour of the reform when the coalition was in government and encouraged them to join in further reforms.
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