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