Advertisement

Owner-occupiers prioritised over investors in Spring Street's new housing policy direction

Changes to first home buyer incentives, alteration of the relationship between stamp duty and off-the-plan purchases, a new vacant housing tax and re-prioritising owner-occupiers over investors are all crystallised in Spring Street's Homes for Victorians.

Having spent its first two years in government resetting planning & development market fundamentals through initiatives like Capital City Zone reforms and the structure planning process that's still underway in Fishermans Bend, the release of Homes for Victorians is the next iteration of housing market reform.

While the stamp duty removal for first home buyers has already grabbed the headlines elsewhere, the clear prioritisation refocus on owner-occupiers for off-the-plan purchases is easily the most unexpected component among all the consumer-focused changes.  

Rebalancing the market between investors and home buyers - Making off-the-plan fairer

The current off-the-plan stamp duty concessions mean the beneficiaries only pay stamp duty on the value of their land, before construction begins. This is a considerable saving compared to buying once the homes are built. It is particularly attractive for apartments.

Victoria is the only state to offer such a broad concession. And while it’s great for those who purchase property to build their future home, it also gives investors an unfair advantage.

To make sure that genuine home buyers are getting the subsidy, this concession will now only be available to home buyers who intend it to be their principal place of residence or who qualify for the first home buyer stamp duty concessions.

This initiative will apply to contracts entered into from 1 July 2017.

This measure will tilt the scales away from investors and back toward first home buyers. This change is expected to reduce the amount paid as subsidies by $841 million over the next four years.

This saving will be used to fund changes to stamp duty for first home buyers.

Homes for Victorians, page 14

The Vacant Residential Property Tax will "provide an incentive to reduce the high number of houses and apartments being left vacant in the inner and middle ring of Melbourne", the Homes for Victoria's document states.

The tax rate is set to kick off at 1% of a property's capital improved value.  The documents further state "in the first instance, it will be based on self-assessment with subsequent enforcement action being taken by the State Revenue Office on the basis of publicly available information".

Exemptions from the new tax include holiday houses, city flats for people who need use them to base themselves for work, deceased estates and homes owned people who are temporarily overseas.

"The design of this tax and the exemptions to be provided will be the subject of consultations with the property sector over the next two months".

One would hope that in its consultations with the property sector, these exemption definitions are fleshed out properly. For instance, the section on exemptions seems to imply that "holiday homes" are only outside the city which seems somewhat odd in this day and age. 

The Victorian Government is also set to launch a new pilot scheme called HomesVic which will see the government offer to co-purchase properties with 400 first home buyers who meet the target criteria: singles with incomes of up to $75,000 and couples on a combined income of $95,000.

In this scheme, presumably subject to approval from the government, the state will take a 25% equity in the property being bought by the first home buyer - the buyer will only need to have a 5% deposit, effectively removing the need for the buyer to purchase Mortgage Lenders Insurance.

If the property is sold, "Homes Vic will recover its share of the equity and reinvest it in other homes".

Likewise, Spring Street is set to introduce a new approach to help first home buyers purchase in government-led developments - the Homes for Victorians documents single out the Arden precinct out, which is set to be developed slowly until the new Melbourne Metro station is complete and accelerate thereafter.

Spring Street is "setting a target that at least 10% of all properties in government-led developments will be prioritised for first home buyers". 

The definition of 'government-led' isn't all that clear - for instance will this apply to all future developments - executed by a private a developer on behalf of the government -  that occur on surplus VicTrack land (like at Jewell station) or only apply to large precincts like Arden?  

To view the entire suite of initiatives, see the Homes for Victorians website www.vic.gov.au/affordablehousing

2 comments

George D's picture

I expect this will see a decrease in apartments relative to houses, as investor-class dwellings decrease in relative importance.

This is one of the biggest things that Labor has done since being elected, but it won't be noticed immediately.

Back to top
theboynoodle's picture

The ratio seems only likely to change if less apartments are built. I don't imagine developers are currently prioritizing apartments over houses due to investor demand as the two are not interchangeable. The growth in apartment constructions hasn't been because that's where the sales are, it's been because that's the only way to add dwellings within 25km of the city.

Reducing the appeal of apartments to investors will hopefully mean that the apartments built are better suited to owner-occupiers but, unfortunately, there are a number of other factors at play that make new-build apartments problematic for owner-occupiers. The changes to stamp duty may simply mean that new unit values fall due to the additional cost of purchase. That's a win compared to today, because it's money that flows to the treasury rather than landowners and developers, but it might not change who actually owns what's built.

Back to top

Development & Planning

Friday, March 24, 2017 - 06:00
Planning Minister Richard Wynne has approved another commercial tower at Lendlease's Melbourne Quarter development in the Docklands. The building known as Melbourne Quarter Tower will be located at 693 Collins Street, injecting almost 55,000sqm of office space into the precinct across its 28 floors, in addition to approximately 2,500sqm of retail space.

Policy, Culture & Opinion

Thursday, March 9, 2017 - 12:00
As part of the enabling stage of the Queen Victoria Market Renewal Project, the City of Melbourne has finally revealed their plans for the former Munro site, to be developed by PDG Corporation into a mixed-use development comprising a 58-storey Bates Smart designed-tower of 308 dwellings and a 300-room hotel, after the developer was awarded the rights to develop the site on CoM's behalf.

Visual Melbourne

Wednesday, February 22, 2017 - 07:00
Once again Melbourne has turned it on for the spectacular cultural juggernaut that is White Night. A crowd of around 600,000 took part in the all night festival of projections, performances, artworks and installations. Stealing the show again this year was the extraordinary projections upon the Royal Exhibition Building.

Advertisement

Transport & Design

Thursday, March 23, 2017 - 12:00
The large-scale redevelopment of Richmond's former Jaques engineering complex has been marked by an number of onsite dedications. Dating back to 1885 and with frontages to Palmer, Coppin, Dyer and Griffiths Streets, the 9,945sqm site's engineering heritage has been permanently embossed across the site.

Sustainability & Environment

Tuesday, March 14, 2017 - 13:00
Victoria Walks, a walking promotion charity supported by VicHeath, is leading a crowdsourcing initiative that is supported by the State Government and 14 councils. The campaign aims to collect and analyse opinions on walking right across the Melbourne metropolitan area. The authorities are asking people to indicate their walking safety concerns through an interactive online map on CrowdSpot's platform.