THE housing and construction industries are to receive a significant boost from the budget. One of the measures taken by the government to increase housing supply is cutting to zero stamp duty for those buying dwellings off the plan.Additionally, those aged over 65 years will pay no stamp duty on a new dwelling, as long as they live in it for more than 12 months. In both cases, the new dwelling must cost less than $600,00.None of the budget measures here involve a large amount of money but, taken with other measures to cut developer contributions to local councils announced last week, will give the housing construction industry a substantial lift.The government has budgeted $120 million over two years to fund the off-the-plan stamp duty costs, with a further $20 million, also over two years, to finance the stamp duty cuts for those over-65s who are selling the family home to move into smaller housing.To qualify for zero stamp duty, new dwellings most be at the “pre-construction stage” – that is, before the laying of foundations has begun, although site preparation such as demolishing existing buildings is permitted.For off-the-plan dwellings where building is under way, stamp duty will fall by 25 per cent.”What this is about is allowing project finance to be accessed,” the NSW Treasurer, Eric Roozendaal, said of the stamp duty cuts to increase off-the-plan sales. “This is a well constructed plan . . . to get a lot more housing stock into the market.”Since the global financial crisis, property developers have found it difficult to obtain the financing for new developments. A higher level of pre-sale is expected to ease financing pressures, helping developers to get projects off the ground.The chief executive of Urban Taskforce, Aaron Gadiel, said: “This is a fundamental re-shaping of the stamp duty regime so that it supports new housing development.”Coupled with the measures to increase housing supply outlined late last week by capping developer contributions to councils for infrastructure, while also paving the way for councils to raise rates beyond the present rate cap, the stamp duty cuts detailed yesterday will result in a boost in the amount of new housing stock being offered for sale.The NSW acting executive director of the Property Council of Australia, Glenn Byres, said: “The [stamp duty changes] break the back of some of the impediments to bringing housing demand though.”In pre-budget lobbying, his organisation argued for the government to follow Victoria in cutting stamp duties for dwellings bought off the plan. NSW went a step further, in abolishing stamp duty altogether in some cases.Treasury expects the additional measures to boost housing stock by 8000 units, twice the estimate arrived at by BIS Shrapnel based on concessional cuts to stamp duty introduced earlier in Victoria.After the initial two years of stamp duty cuts, they would be reviewed, Mr Roozendaal said.The $600,000 threshold might also need to be assessed, property industry officials said. “The thresholds may need to be reviewed in 12 months time, to see if it is acting as an impediment to some stock being brought to market,” Mr Byres said. Even with the stamp duty cuts, the state government is budgeting for a $400 million increase in stamp duty revenues from property transactions in 2010-11 and again in 2011-12.
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