Page 178 - Week 01 - Wednesday, 10 December 2008
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The bill will provide a concession to almost all first homebuyers, excluding only those who can afford to buy more expensive homes. This bill provides eligible purchasers with an exemption from conveyancing duty on homes valued up to $500,000. It also provides a concessional rate of duty for homes valued between $500,000 and $600,000. The concessional rate will be set at $26.25 for every $100 between $500,000 and $600,000. This taper rate is a smoothing mechanism that will avoid distortion of market negotiations above the point where the exemption cuts out. This taper rate ensures that duty on $599,999 homes aligns closely to the normal duty applicable for a sale at $600,000.
Many first homebuyers purchase a block of land, pay stamp duty on the conveyancing and then proceed to build their first home. The Canberra Liberals will ensure these first homebuyers are also relieved from excessive taxation. The Canberra Liberals will exempt first homebuyers from duty on the purchase of vacant land up to $300,000 and a concessional rate will apply between $300,000 and $450,000. A taper rate will apply of $11.83 per $100 over the $300,000 threshold. This will align the concessional rate with the normal rate of duty once the concession cuts out at $450,000.
The bill does not affect the ACT homebuyer concession scheme, since this existing scheme is tailored towards low-income individuals rather than first homebuyers. This is still a very appropriate policy response for persons who are on below average incomes. Under Labor, only the lowest income earners pay a concessional rate of stamp duty. For a couple with no kids, the concession scheme is only available if their combined income is under $120,000. Two APS6 workers could well fail to qualify.
The point, of course, is that many of these people suffer a significant drop in their income once they buy a home and have children. They are paying the mortgage for the next 30 years. We should look at the entirety, rather than just cutting people out of concessions, as is currently the case. That is why we believe in the principle that the vast majority of first homebuyers deserve not to pay stamp duty.
The Canberra Liberals recognise that a whole new generation of would-be buyers are struggling to enter the Canberra market and many are giving up on the dream of a future in Canberra. First homebuyers are usually young and they therefore have limited savings and no existing home equity with which to fund stamp duty. Housing prices in the Canberra market are prohibitive enough for first homebuyers, without government providing an extra barrier to market entry. This policy will give back to young Canberrans the second-to-none dream of home ownership.
We have seen some reports that home prices are easing in the Canberra market, but still the suburb of Banks at the far southern end of Canberra’s urban sprawl has long been regarded as among the most affordable of our suburbs. A search of the allhomes website reveals that the cheapest three-bedroom townhouse costs $319,000. The website’s online mortgage calculator tells us that stamp duty will account for $10,545, legal fees $800, loan application fees $655, with a minimum deposit of 10 per cent of $31,900. So the couple that saves for their deposit of $31,900 will, in fact, have to save another $10,500 in order to satisfy the government’s taxation rates.
Mr Stanhope says that land rent is the solution. Treasury modelling assumes that only 120 people will be helped a year. That is only four per cent of those who would
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