Division over stamp duty concession impact on Docklands
A number of Docklands apartments that are under currently construction are eligible for off-the-plan stamp duty concessions, but the development community is divided on what the impact of this will be.
On October 21, Premier Jacinta Allan unveiled her plan to slash stamp duty on off-the-plan apartments, kicking off what was to be a week of announcements aiming to ease the burden of construction costs and speed up building.
Under the change anyone buying an apartment, unit or townhouse off the plan can claim the concession – not just first home buyers and owner-occupiers, as it was previously.
Premier Allan said, “we asked industry what they need to build more homes sooner – and this is what they said.”
The decision to scrap these thresholds has been welcomed by many developers who currently have projects under construction in Docklands.
“More apartments and townhouses getting built means more homes for young people and families to rent or buy,” Lendlease executive director development Daniel Dugina said.
“[The concessions] will offer home buyers significant savings on their future homes, while boosting the future supply of housing in Melbourne,” he said.
Mr Dugina told Docklands News that purchasers of Lendlease’s Regatta and Ancora developments located at Collins Wharf are eligible for the concession, including owner-occupiers and investors.
A major point of difference to the current concession is that thresholds will be removed so that it is available for apartments, units and townhouses of any value.
Currently, first home buyers and owner-occupiers can access a stamp duty concession when they buy off the plan, but the amount is capped and subject to construction cost deductions.
This means, for first home buyers and owner-occupiers to access the concession, the reduced value for stamp duty calculations following the deduction of construction costs must be under thresholds of $750,000 for first home buyers and $550,000 for owner-occupiers.
Under the new changes, a Victorian using this concession who buys off the plan before any construction work starts could pay around $28,000 less stamp duty on a $620,000 apartment – with duty slashed from around $32,000 to about $4,000.
However, it is understood that off-the-plan stamp duty concessions are calculated based on the value of construction works completed to date.
This means buying an apartment early on in the construction program allows purchasers to maximise their stamp duty saving.
In Docklands, purchases made at either Regatta or Ancora over the next 12 months will be eligible for the stamp duty concession.
A spokesperson from Lendlease confirmed that there are currently 51 residences remaining for sale at Regatta, and 159 residences at Ancora that are eligible, but the concession for each dwelling will reduce as construction comes closer to completion.
While the concession changes have been welcomed by many, not everyone within the development community think they will have a lasting impact.
In a scathing op-ed published in The Age, property developer Maxwell Shifman said, “temporary off-the-plan stamp duty savings of $40,000 do not make up for the extra $700,000 a young family needs to find to buy a relatively small three-bedroom apartment.”
RMIT development expert, Professor Trivess Moore, holds similar concerns. He told Docklands News that while the change will help some people enter the property market it doesn’t do enough to address the housing affordability crisis.
“I’m not sure that reducing stamp duty is going to drive a whole heap of people to suddenly go ‘oh yes, now I can buy’,” he said.
According to Prof. Moore, it is the people who are already close to having the amount of savings to purchase an eligible apartment or townhouse that will benefit.
Additionally, he believes that there is a risk that the off-the-plan apartments sold may get built beyond the timeframe that is communicated to the purchaser.
Docklands resident and Lord Mayoral candidate Cr Jamal Hakim said that a multipronged approach supporting the development of more affordable housing is needed.
“I think one of the key things is having government starting to build on government-owned and public land, to be able to create a mix of housing options,” he said.
“Government intervention is critical, and we’ve got marketplace failure right now and a lot of that is because governments failed to put in the right programs to deliver on housing.” •

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