Calls for major reform of NSW property costs

The two men appeared at a one-day discussion of the NSW Government’s Federal Financial Relations Review on Monday to argue for stamp duty to be scrapped.

Stamp duty is paid every time someone buys a home and for a $700,000 property, this can add up to $26,990.

Dr Henry told The Sydney Morning Herald the levy created an unfair hurdle for young aspiring homeowners.

“It’s a big obstacle for first home buyers – saving for the deposit and then saving for the stamp duty – it’s just nuts,” he said. “Particularly in Sydney, it’s a massive bill they’ve got to pay.”

“If stamp duty were abolished and replaced with an annual land tax, of course, over a 15-year period – or whatever it is – they’ll end up paying the same amount. But they don’t have to come up with all the cash upfront.”

First home buyers are exempt from paying stamp duty for properties below $650,000 but pay a reduced amount for those valued between $650,000 and $800,000.

Deloitte financial services partner James Hickey said abolishing stamp duty was a move worthy of consideration but it could not be done retrospectively so that people who had already paid stamp duty would also have to pay land tax.

Mr Hickey said getting rid of stamp duty could make it more attractive for older people to downsize as they wouldn’t lose a substantial amount of money in stamp duty when they bought another property.

He said spreading out the payment over a number of years in the form of smaller annual land tax payments may also help make buying a home more affordable.

“From the borrowers’ point of view, economically, they will probably pay the same amount but it won’t be upfront, it will be paid annually over a long period of time, which spreads the cost out,” he told

However, scrapping stamp duty would involve some short-term pain for the State Government’s finances as the amount it received each year from land tax would be much lower than stamp duty, for the first few years.

Over the medium to long-term, Mr Hickey said land tax would likely provide more certainty in the government’s finances and be a more sustainable form of revenue.

Two former Treasury secretaries are pushing for stamp duty to be abolished.Source:Supplied

Grattan Institute household finances program director Brendan Coates said shifting from stamp duties to a broadbased property tax would leave residents up to $5 billion a year better off, which would improve housing affordability.

“Stamp duties are the worst taxes levied by state governments,” Mr Coates told

“And stamp duties are unfair. One family could pay more tax than another with similar income and assets, simply because it moves house more often.”

Despite the obvious benefits, only one Australian government – the ACT – has made the move from stamp duties to a broadbased property tax.

Mr Coates said property taxes were often unpopular precisely because they were highly visible and difficult to avoid.

They could also pose problems for people who are asset-rich but income-poor, especially retirees.

He said allowing some homeowners to defer payment until they sell their house would ensure income-poor households could stay in their homes.

During a press conference today, Prime Minister Scott Morrison was asked about the idea and said he thought it was a “matter for the states”.

“But what I’m not for is increasing the GST,” he said.

“If states want to increase the GST, that’s a matter for them. But we’ve got no interest in increasing the GST and however people might want to dress that up, the answer to an increased GST is no.”

Former Treasury secretary Ken Henry believes stamp duty would be abolished.

Former Treasury secretary Ken Henry believes stamp duty would be abolished.Source:Supplied

House prices have begun to climb again, rising by 5.3 per cent in 2019 after a lacklustre 2018, CoreLogic data showed.

A Deloitte mortgage report released on Monday revealed total settlements of new housing lenders (not including refinances) showed growth of almost 20 per cent between June and December last year.

It followed a bad year in the 12 months to June 2019, when growth fell by 15 per cent compared to June 2018.

However, supply does not seem to be keeping up with demand, with Loan Market chair Sam White saying there had been a shortage of properties.

“The lack of properties for sale was also one of the biggest features in 2019. Pre-approval numbers were massive. Customers were ready to buy but they simply could not find the property, as supply was not coming to market.”

Mr Morrison revealed more than 700 first home buyers had used the First Home Loan Deposit Scheme to buy a property since it was introduced on January 1.

“Now we are seeing over 5000 people already accessing the scheme. More than half of them have already got their hunting licence to be out there with that pre-approval, finding that home,” he said.

“This is all about ensuring that Australians can get that opportunity to get ahead.”

More than 700 people have already found their home, he said.

Nearly half of those who have applied intend to buy their first home outside of the three major capitals of Sydney, Melbourne and Brisbane.

New government figures show under 30s are the most enthusiastic participants in the scheme outside the major cities, whereas the 30-39 age group are more likely to be buying a home in cities like Sydney.

Data released on Monday also found two per cent of the 10,000 places on offer under the scheme so far have been take up by those aged 50-59.

The scheme allows first-time buyers to save for a deposit of just five per cent, meaning they can buy their home years earlier than they would normally be able to do.

It supports 10,000 first-time homebuyer loans each year through the Commonwealth Bank of Australia and National Australia Bank, along with 25 non-bank lenders.

A further 10,000 places will become available In July.

Mr Morrison said Australians were buying their first house later in life because they were having to save for a bigger deposit than their parents did.

“This is about making it that little bit easier for first home buyers,” he said.

With AAP


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