Rumours are rife about a cessation of the stamp duty dispensations for first home buyers in the upcoming state budget however one possible solution may be the introduction of a system similar to the Higher Education Contribution Scheme (HECS) according to RE/MAX WA Managing Director, Geoff Baldwin.
“First Homebuyer stamp duty relief is critical to ensuring this critical segment of the market doesn’t lose even more strength as its cessation would almost certainly prove to be a knockout blow for the property sector”, Mr Baldwin said.
“Obviously the WA government is looking at all options to get the budget back into surplus but crippling the capacity of first home buyers would be extremely short sighted as this segment is the first link to the strength of the whole market.
“Having already been disadvantaged by having the First Home Owner Grant slashed to $3000, compared to $10,000 for new home buyers, the established real estate Industry can well do without another hit at this time.
“One solution is to adopt a system similar to HECS whereby it continues to be granted when it is most needed but paid back when the recipient is in a stronger financial position.
“The repayment could occur when the property is sold or in say 5 years, whichever is the sooner.
“Stamp Duty could be a via zero interest loan rather than a dispensation and that it should be paid back from the proceeds of an eventual sale or by instalments after five years.
“By implementing a repayment system the Government could continue with the stamp duty dispensation knowing that it would eventually recoup all of these funds and enabling it to avoid creating another negative blow to the market and ultimately the WA economy.
“There is no doubt that the dispensation is justified but it is most needed when people are trying to put together the required funds to buy a first property.
“Once that property has been held for a few years it will gain equity value creating a capacity for repayment.