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Stamp duty hike offers a double whammy concern

Developers say the new stamp duty changes will hit their industry particularly hard.

The changes, which come into effect from July 1, are expected to adversely impact first homebuyers purchasing house and land packages and investors buying off the plan.

Some industry pundits also believe that under the current tax regime the development of affordable inner city living has been made more difficult, which has long-term implications for the vibrancy and economic health of the CBD.

Inner City Housing Development Association president Laurance Goodman said the reduced stamp duty payment timeframe would put pressure on investors and first home buyers who often had little cash prior to finance.

Mr Goodman said most of the development industry was based on off-the-plan sales and the changes would make it harder to sell property in this manner.

He said that by reducing the timeframe to pay stamp duty the Government had made it more difficult for investors to sort out their finance.

“I know from first hand experience in the industry that significant numbers of those people are short of cash until financed,” Mr Goodman said.

“Not only do they have to pay increased stamp duty, but they have to find it [finance] earlier.”

Mr Goodman estimated that 20 per cent of those buying off the plan would feel the pinch and 75 per cent of first homebuyers would be strongly affected.

The Inner City Housing Development Association plans to call on developers, financiers, settlement agents and other property industry members to lobby the community to make stamp duty an election issue.

For the past 12 years Limnios Property Group has been involved in selling property off the plan and its executive director James Limnios said the changes would make buying property this way less attractive for some buyers.

He said increasing stamp duty and giving the purchaser a shorter amount of time to come up with the stamp duty would stop some property investors from buying property off the plan, particularly when the dwelling was not even built.

He said he did not believe, however, that the changes would bring the property industry to a halt but that it would unnecessarily slow it down.

Mr Limnios told WA Business News that the Government’s move went against trying to get more inner city development to go ahead to attract more residents to the city.

“Perth is an expanding market and compared to other cities it still has a lot of growing to do,” he said.

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