STAMP duty and land tax reforms are on the agenda with the Property Council WA putting the Liberal-Nationals and Labor on notice in the run up to the March election.
The Property Council WA warning comes after a warning from the Housing Industry Association that a fall in the “other dwelling” segment mainly made up of apartments was the lowest since March 2014 reflecting not only the volatility in that particular market but also a slowing from the previous year’s activity.
Property Council WA executive director Lino Iacomella said Western Australians taking up an apartment lifestyle were paying the price of an imbalanced stamp duty system with many paying about $8000 more than those buying under a “traditional” house and land package.
“The WA tax system is distorting the property market through different stamp duty rules that apply to those buying new single residential house and land packages and those buying apartments,” he said.
“Currently we have a situation where someone buying an apartment before construction is required to pay stamp duty on the full sales price of the new dwelling.
“This is compared with someone buying a new house and land package that is only required to pay stamp duty on the land component.”
“This is leading to apartment buyers having an unfair financial burden placed on them and is restricting the apartment market.
“WA needs to follow the lead of other states, like SA, Victoria and NSW and introduce a stamp duty concession for off-the-plan apartments to bring balance to its tax system and promote much needed infill development.”
“A stamp duty concession for off-the-plan purchases will help trigger new construction activity in WA and help create vital new jobs.
“This type of intervention is critical at a time when WA’s jobless rate is rising.”
“Additionally, new construction will help support the Government’s infill agenda which is currently stuck in first gear – we are only seeing 30 per cent infill when we need to be hitting 47 per cent.’’
“Ahead of next year’s State Election, the Property Council will be calling on both parties to commit to stamp duty reforms aimed at creating more housing diversity and creating jobs which are necessary to keep WA growing.”
Mr Iacomella said the Property Council wanted WA’s antiquated land tax system, with the second highest top marginal rate of land tax in the country at 2.67 per cent, reformed to make the state more competitive with other states and to keep the state growing.
“In NSW and QLD the top marginal rate of land tax is 2 per cent, and in Victoria it is 2.25 per cent.
“Only South Australia has higher land tax rates.
“The land tax burden on property investors in Perth is further compounded by the addition of the Metropolitan Regional Improvement Fund which adds a further 0.14 per cent to make the effective top marginal land tax rate 2.81 per cent.
He said the WA land tax structure also had the greatest number of tax thresholds – seven wile in NSW there were only three thresholds. “The large number of tax thresholds in WA worsens the dreaded aggregation factor.
“Landholdings are aggregated for land tax assessment and the large number of tax thresholds heightens the risk of being pushed up to higher land tax rates when assessments are done each year.
“WA’s complex land tax system and the high top marginal tax rate, has created a land tax squeeze in WA where fewer than 10 per cent of tax payers pay more than 80 per cent of total land tax.’’
Housing Industry Association WA executive director John Gelavis said with the State Election looming in 2017, policy makers had to ensure housing construction did not fall to an unsustainably low level, an outcome, which would not only place pressure on housing supply and ultimately housing affordability, but would also be detrimental for the broader state economy.
In seasonally adjusted terms, there were a total of 1646 dwellings approved during month of August, which was 14.3 per cent down on the previous month,’’ he said.
“The number of detached dwellings approved during the month of August declined by only 2 per cent compared with a month earlier, while the number of ‘other-dwellings’ approved fell by some 41.9 per cent.’’
August approvals the “other dwelling” segment fell to 343 with seasonally-adjusted building approvals for the last 12 month in “other dwellings” reaching 6362 compared with the previous twelve months where there had been 8880 approvals, which was a 28.4 per cent decline overall.
“Detached housing approvals over the last 12 months have also declined by 26.7 per cent, however over the three month comparison seems to have stabilised only reducing by 2 per cent, compared with 15.5 per cent in the “other dwellings” segment.
“Private sector detached house sales in Western Australia rose during August and have now seen growth in seven of the past nine months, which is a positive sign.”