Developers cover stamp duty for first home buyers ahead of Victoria tax cuts

Following the Victorian government’s announcement of stamp duty cuts for first-home buyers, developers and builders are covering stamp duty for their FHB customers to avoid a lull in the market ahead of the tax cut later this year. 

First home buyers can save stamp duty – up to $15,000 – on a string of Victorian apartment projects and house and land packages, well ahead of the government-announced measures that take effect from July 1, according to a report by Fairfax Media.

The Andrews government had announced recently that stamp duty would be waived for first-home buyers for properties up to $600,000 in the new financial year, while shutting out investors in its move to battle the affordability crisis.

The new move has had mixed reactions from the industry as the tax cuts could skew the advantage towards projects targeted for first home buyers rather than investors.

In reaction, many investor-driven developers are moving their project release dates forward in order to to capture investor dollars before the tax cut is removed, Fairfax Media reported. 

For those developers and builders who have a large portion of their projects tied to the first-home buyer segment, the July 1 date presented a potential lull in the market.

Some newly-released developments saw an immediate drop in enquiries from first timers.

Porter Davis, which will pay the stamp duty for Victorian first home buyers who use the builder for land contracts, brought forward marketing plans to target first-home buyers by several months so it could ride the wave of interest generated by the announcements.

Paul Wolff,sales and marketing director said he was fearful that people were going to delay their decision.

“We bought a campaign forward on the back of the hype and leveraging from the government’s media on [the idea of], ‘how does first home ownership happen sooner rather than later?”

"Given how quickly land prices were rising, those who waited until July 1 may have lost more than they saved on the tax cut."

He also said he would retrospectively apply the saving to any first-home buyers who purchased land after October 31 last year and would match the figure if a buyer also received the stamp duty cut from their developer.

Developers of Richmond’s Supply & Co. are offering stamp duty savings even more broadly. All owner-occupier buyers can get the savings, as well as 5 percent deposits, on the David Street project.

Beller Real Estate’s Heath Thompson, the agent selling Supply & Co. development, said the offer was a way to make the apartments attainable for first home buyers, who may be beaten investors keen to jump on the tax dodge before it ends.

“Investors have an increased appetite to purchase prior to 30th June,” Thompson said. “But first-home buyers may actually miss out because they think ‘we’ll wait’.”

He said the changes to the tax will undoubtedly put more roadblocks in the way for investors, who were already facing stricter lending conditions.

Developer OpenCorp, the team behind The Eastside Village in Hawthorn East, will also cover stamp duty for all buyers for the next few months and developer Growland will also waive the tax on their Victoria Square (previously Joseph Place) project in Footscray.