Property Stamp Duty reform is high on the agenda for the NSW State Government. Part of the policy review process announced late last year was a period of public consultation with formal submission due by March 15, 2021.
However, a less formal process where anyone can ‘Have your say’ is already underway and the question ‘Do you think the proposed (stamp duty) changes will make home ownership easier in NSW’ has so far attracted over 660 comments.
A passing review of a range of comments so far post on the website www.haveyoursay.nsw.gov.au is starting to show some interesting, if very general and often very personal threads. There are also a number of shared concerns that have emerged in the comments.
Firstly, the number of clear comments that this is not a good idea are running slightly ahead of those who say it is a good idea, perhaps that’s not a surprising result. However, what is clear is that for many people stamp duty and or land tax is a very touchy subject as few, if any respondents to the survey, personally like any form of tax, in particular, a tax applied to the family home.
Some of the general feedback
In reading a range of comments here’s a sample of ideas that have so far created common ground between the various posts on the ‘Have your say’ website. I suggest not many are a surprise as they reflect some familiar deeply felt community attitudes and well documented concerns in the housing market.
Stamp duty was first introduced in 1865 and so a common idea is that the rate of stamp duty should be a much lower rate or even a flat rate and that owner occupiers should pay no duty. There was also the view of a clear failure of the current stamp duty to take better account of how values had increased, while stamp duty rates had remained unchanged.
This ‘no tax at all’ comment was also aligned to a review of council rates along with the suggestion that all property related taxes and rates might be rolled into one, like the GST.
There was also the frequent suggestion that any duty should be paid when a sale is made with the seller being liable, not the buyer. Or another frequent suggestion is a form of death duty and often tied again to the idea of a flat-rate, or at least a capped rate with a high value starting point above $1,000,000.
This is one of the most frequent comments related to housing affordability, along with the suggestion that all first-time buyers should pay no duty. However, the ability to switch between stamp duty and a land tax was a far more common concern.
The idea that once either option was selected, it could not be changed was not popular at all. There’s a clear desire to have the ability to change. Many respondents did not like the idea of a more or less perpetual land tax.
Better to pay the stamp duty and get it over and done with, as some properties saddled with land tax might attract lower prices. Overall, the impact on house prices was a frequent subject for comment and a big concern.
Another big topic was clarity for the many thousands of people who had already paid stamp duty. How would they be treated and how could this possibly be fair. Some comments were made that previous buyers had to go into additional debit to pay their stamp duty – would the interest paid be reimbursed?
I also see the common suggestion that investors should for some reason pay a higher rate of either stamp duty or land tax. This is a point I find personally very hard to justify as I’ve never understood why property investors should be taxed more just because they invest in property.
Then the comments suggested that anyone renting might be worse off if the property they leased was tied to a land tax payment. And those rules need to be clarified again, I’d suggest not to the disadvantage of the investor.
However, in the material I was able to read perhaps the biggest concern surrounded older buyers and those buying for their retirement. As we face the reality of the baby boomer generation moving through the housing market over the next 5-10 years this is again not a surprise.
To date I’d say the top three concerns from my sample related to how the proposed changes to stamp duty might impact, were focused on how prices would respond under the different rules, how the choice between stamp duty and land tax might operate and the impact on older buyers, and that’s neck and neck with how those who have already paid stamp duty would be treated.
An interesting sample of views with I suggest much more debate to come.