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Politicians are being urged to make real estate a key focus of elections, in a bid to create a fairer and more prosperous market.
The Real Estate Institute of Western Australia (REIWA) has issued a plea to politicians ahead of the upcoming state election, urging them to pay more attention to real estate.
As the property market continues to drive Western Australia’s economic recovery, REIWA has asked the candidates of the upcoming WA election to commit to policy reforms that deliver a fair, sustainable and prosperous market.
According to REIWA president Damian Collins, in order to aid the state’s recovery, “bold reforms are needed to sustain growth”.
As such, Mr Collins has put together five recommendations for the future leaders of WA.
1. Stamp duty reform for home purchases
With stamp duty accounting for a significant portion of the savings needed to qualify for a home loan, it is widely considered a hindrance to home ownership.
REIWA is demanding a reform on stamp duty that provides greater choice and opens doors for people seeking to buy their own home.
In particular, Mr Collins recommended a change in the way stamp duty is paid, wherein “a two-stream revenue collection method would provide buyers with the choice between paying the upfront cost or an ongoing annual payment – allowing this choice will provide a more equitable taxation system.”
Further, he called for a state tax review to take place to determine the best option moving forward in terms of making home ownership more affordable for West Australians.
2. Stamp duty removal for small businesses
According to Mr Collins, WA is one of only three states and territories that still collect stamp duty on the purchase of a business.
Currently, a buyer who purchases a business in state to the value of $5 million will be liable for approximately $250,000 in stamp duty, which equates to five local, full-time jobs or up to 10 trainees, he said.
To support the state’s employment and create more local jobs, REIWA recommended “a staged approach to abolish stamp duty collection on the purchases of businesses, commencing with the sale of small businesses becoming exempt up to the value of $5 million”.
3. Stamp duty rebates for off-the-plan purchases
Approximately one-third of units sold across WA in 2020 were bought off the plan, with Mr Collins attributing these figures to ongoing incentives.
According to him, the current 75 per cent stamp duty rebate for off-the-plan and under-construction apartments was critical in securing an ongoing pipeline of projects, thus allowing for a steady supply of diverse housing and jobs for West Australians.
“REIWA firmly believes that without ongoing incentives, the WA apartment market will decline, which is why the institute recommends making the off-the-plan stamp duty rebate a permanent feature of WA’s property tax system, rather than let the legislation expire in October 2021, as it is currently scheduled to do.”
4. Plan to tackle rental shortage
In order for it to remain the most affordable state to rent a home, Mr Collins explained that WA needs to increase its rental stock urgently.
He said that investors should be encouraged to buy established properties, and to do this, the government should commit to short-term financial incentives such as stamp duty or land tax rebates for investors.
Further, “legislative reforms such as the Residential Tenancies Act (RTA) need to ensure a fair rental system for tenants and owners”, Mr Collins added.
“Some of the changes proposed in the current reforms pose a significant risk to the rights of owners and must be addressed, especially changes that erodes the rights of owners which will only deter investment and continue to decrease supply.”
5. Innovation-centered legislative framework for retail
Mr Collins believes that a modern and flexible legislative framework that encourages innovation might jumpstart the industry’s rebound following a tough 2020.
According to him, the current Commercial Tenancies (Retail Shops) Act is outdated and has hindered the retail sector significantly.
Therefore, REIWA recommended an urgent review of the act to allow for more innovative and creative ways to do business.
“REIWA is calling on all candidates to commit to an urgent review of the Act to enable greater flexibility in the length and conditions of retail leases, without the need to seek permission from the State Administrative Tribunal,” Mr Collins concluded.
Property refers to either a tangible or intangible item that an individual or business has legal rights or ownership of, such as houses, cars, stocks or bond certificates.