There have been some important legislative changes that affect the property sector. This article takes a closer look at these changes.
Stamp duty for land transfers between spouses and partners
The Andrews Government has promised to close a stamp duty loophole that up to 3,000 people used last year. From 1 July, land transfers between spouses will no longer be exempt from stamp duty.
Exemptions will remain for the spouses’ principal place of residence, or where the transfer arises out of the breakdown of the relationship.
The upshot is that the change will primarily affect investors. The Treasurer, Tim Pallas, argued that “the transfer of investment properties between spouses is seeking to do pretty much one thing and that’s to avoid liability to taxation”. Using the March 2017 figures for median house prices in North Caulfield, the spousal transfer exemption would have saved investors $127,985 in stamp duty.
The removal of the exemption is a big blow to investors who intend to transfer between spouses or partners.
Vacant property tax
The Victorian Government also announced that it will introduce a vacant residential property tax for properties in the inner and middle suburbs of Melbourne (including Bayside, Glen Eira and Port Phillip council areas). The Federal Government has indicated that it will introduce similar legislation.
Vacant means that the residence was not occupied by either the owner or a tenant for more than six months in the preceding year.
The annual tax will start from 1 January 2018, based on occupancy during the 2017 year, and will be assessed at 1% of the capital improved value of the land. Exemptions are available for holiday homes and new residential properties.
Crucially, the new tax will be self-reporting, although the State Revenue Office has promised to ‘conduct monitoring and compliance activities’.
Underquoting
Underquoting has been illegal for quite some time, but new laws came into effect in May that are aimed at finally stamping out the practice.
Agents must now provide prospective buyers with a Statement of Information. The Statement must include three comparable sales, as well as an indicative sales price that is a single price or expressed in a range of not more than 10%. Words like ‘from’, ‘over’ and ‘offer above’ are prohibited.
Consumer Affairs Victoria (CAV) will be responsible for administering the new scheme, and agents must respond to CAV requests for explanations of how the indicative selling price was determined.
While it has been argued that underquoting does not cause any financial harm, Justice Middleton of the Federal Court explained that buyers who attend falsely advertised auctions miss opportunities elsewhere, and are “inconvenienced, disappointed and deceived”.
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