New South Wales’ proposal to phase out stamp duty in favour of a general property tax will free up supply and empower upsizers and downsizers looking to make a move in the real estate market, according to Australia’s largest professional body of buyer’s agents.
Real Estate Buyers Agents Association (REBAA) vice-president Ramon Mitchell said offering buyers the choice to stick with the current stamp duty arrangement or opt for the property tax was a smart move by the government and paved the way for increased transactions.
“We are cautiously optimistic about the recommendations made by the NSW Government to mitigate the impact of one of the most unpopular taxes we have,” said Mr Mitchell.
“Phasing out stamp duty in favour of a general property tax is a step in the right direction towards removing one of the biggest barriers to home ownership in Australia.
“It’s certainly a crafty move by the politicians as it negates previous arguments about abolishing stamp duty altogether in favour of a tax.”
The consultation process for the NSW reforms runs until March 2021. It is likely the changes could come into effect within the next 12-18 months after more than a decade of suggested reforms.
Mr Mitchell said those looking to buy, renovate and sell in the short-term would be wise to opt for the annual tax while those who wanted to buy and hold for the long-term would most likely opt for the current stamp duty levy.
He said the two groups who will benefit most were downsizers and upsizers, to help free up supply and reignite the property market.
“Despite a surge in buyer sentiment over recent weeks, the real challenge buyers are facing is low stock numbers,” said Mr Mitchell.
“It will be interesting to see the flow on effect on supply as it effectively removes a major barrier for many would-be downsizers and upsizers who have been sitting on their hands waiting to make their move.”
Mr Mitchell warned those buyers who were choosing to delay their purchase decision and wait for the annual property tax to think twice as they could end up paying a higher purchase price and negate the saving in the upfront payment.