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Stamp duty reform gaining strong support

Col DuttonSponsored
UDIA WA President Col Dutton.
Camera IconUDIA WA President Col Dutton. Credit: The West Australian.

UDIA WA is focused on improving housing affordability and ensuring diverse housing to suit different household needs.

Stemming from this focus, one of the key recommendations in our State Budget submission this year is for the State Government to commit to a comprehensive review of state-based property taxes, specifically stamp duty.

We have been calling for a review of stamp duty for many years, given the barrier it creates to people moving homes – particularly those that may want to downsize or rightsize for their family or household’s changing needs.

Statistics reflect just how many households are remaining in larger homes despite their needs changing.

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Perth and Western Australia’s housing stock is dominated by three and four-bedroom detached housing, which accounts for 82.2 per cent of all homes in Perth. That is despite the average household size declining to 2.6 people per household.

A recent report by the National Housing Finance and Investment Corporation (NHFIC) strongly supports our views on stamp duty, stating that removing stamp duty would increase housing mobility, lead to more efficient use of the nation’s housing stock and reduce state and territory revenue volatility.

Concerningly, families across all states and territories (except the Australian Capital Territory where reform has already progressed) are paying substantially more stamp duty when they move house than they were 20 years ago.

Put simply, stamp duty provides a heavy penalty on household mobility and restricts the ability of households to upsize, downsize and move.

Furthermore, the report found that stamp duty is a volatile source of government revenue which can make managing government finances difficult.

The property market goes through large cyclical swings in both dwelling prices and the number of transfers, and this introduces volatility into government revenue as the revenue generated from stamp duty can vary significantly from year to year, dependent on the market.

There are more efficient and fair taxation regimes that allow for a smoother revenue stream for government and impacts less severely on housing affordability and mobility. In this regard, the NHFIC report recommends phasing out stamp duty in favour of a broad-based land tax.

The New South Wales Government has already embarked on a reform journey, considering what they call a “once-in-a-generation change” of giving homebuyers the choice to pay either stamp duty and land tax (where applicable), or a new smaller annual property tax.

In providing homebuyers with a choice, the government is potentially removing tens of thousands of dollars in upfront costs for home purchasers. UDIA WA would be very supportive of our State Government reviewing our stamp duty and land tax regimes to consider how it could be fairer and more efficient.

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