Investors interested in purchasing property off the plan in Victoria should consider making their move sooner rather than later. The Victorian Government recently announced a raft of changes in order to make home ownership more affordable, particularly for first home buyers. One of the new measures announced will effectively remove the current concession available to off the plan investors.

Help for first home buyers

Stamp duty will be abolished for first home buyers purchasing properties valued at less than $600,000. A tapered discount will apply to properties valued between $600,000 and $750,000. This change is being introduced in an attempt to reduce the hurdle of upfront costs for first home buyers and will apply to both new and existing properties.

The Victorian Government has also targeted home ownership in regional Victoria with an increase in the First Home Owner Grant to $20,000 for new homes in this area. A further initiative to be introduced later this year is the co-ownership scheme. This will see the Victorian Government contribute to deposits saved by a limited number of eligible first home buyers, in return for an equity share in their properties.

New tax on vacant properties

The Victorian Government intends to introduce a Vacant Residential Property tax that will be levied on dwellings that are vacant for more than six months in a calendar year. This tax will only apply to properties in the inner and middle suburbs of Melbourne and is intended to encourage property owners in these areas to either sell or rent out vacant residences.

This tax will be applied at a rate of one per cent of the capital improved value of the property—however, exemptions will be available. For example, an apartment used as a city unit for work purposes will be exempt, as will holiday homes. The Victorian Government plans to consult the property sector over the coming months to further refine the details of these exemptions.

Balancing the property market

Purchasing property off the plan is an appealing option across Australia, but nowhere more so than in Victoria where stamp duty savings can be substantial. The current off the plan stamp duty concession means that stamp duty is only levied on the value of the land at the time that contracts are concluded—the value of the building that is still to be built is excluded.

This provides a considerable stamp duty saving when compared with the purchase of the same property once construction has been completed. To date, this has been particularly advantageous for apartment investors.

One of the initiatives aimed at balancing the property market between investors and home buyers is the amendment of this concession. The amendment means that the concession will only remain available to purchasers who intend to live in the property or who qualify for the first home buyers stamp duty concession.

Seize the day

Whilst property market speculators debate the impact these changes will have, there is no doubt that opportunities currently exist for investors. The off the plan stamp duty concessions are still available for property investors, provided that contracts of sale are concluded before 30th of June 2017.

All of these measures highlight the pressure that the Victorian market is presently experiencing. Apartments in the inner and middle suburbs of Melbourne are in particularly high demand. The combination of available stamp duty savings and a hungry property market make now the perfect time to invest.