Property vendor duty will be abolished under the leadership of incoming NSW Premier Morris Iemma.
Mr Iemma made the announcement after being formally elected as the state’s 40th premier at a Labor caucus meeting today.
He said the new law would not be retrospective.
Mr Iemma will also become the state’s next treasurer, when he is sworn in to both jobs tomorrow.
“I announce today that the vendor duty will be abolished,” Mr Iemma told reporters.
“[It will be] effective for all contracts exchanged on or after today.”
“It’s not a decision that I have taken lightly and it will have an impact on revenues.”
Senior Labor figures had said Mr Iemma would roll back controversial property and poker machine taxes as part of his pitch for the state’s top job.
Mr Iemma said the vendor duty was introduced in a very different property market and that times had changed.
“A market that was stronger, but times have changed,” he said.
“In the current market conditions, vendor duty is a break on economic activity.
“The Property Council and Access Economics have identified that the removal of the vendor duty will stimulate economic activity, it will have a positive psychological effect on business.
“Thousands of NSW residents have an investment property as part of their nest egg.
“I want NSW to be the state where investment is rewarded, not just the multi-million dollar investors, but the investors in my own electorate of Punchbowl, Lakemba and Wiley Park or investors in Kiama, Hornsby, Parkes and Penrith, Sutherland, Dorrigo and Deniliquin.”
The 2.25 per cent vendor duty, introduced last year by then treasurer Michael Egan, applies to the sale of investment properties.
It has been criticised by investors, unions and the real estate and building industries, among others.
2nd August 2005
Source: SMHWhat’s your thoughts??
Roy H.
L.R.E.A., Dip FS (FP)
Guardian Property Specialists (GPS)
http://www.gpsnetwork.com.auThanks for the update, Roy
In some ways, a flatter market means IR’s remain low and can’t be too bad… (don’t hit me!) I hope a potentially reinvigorated NSW market doesn’t mean higher IR’s. Think about it: a 2.25% rise in IR’s will be the equivalent of the vendor duty.
kay henry
mmmm..
Good point, although I think it may better the public perception of NSW.
It dosentbother me too much either way as most of our investors are investing in Qld & Perth. But it would be nice to correct the NSW market for first time investors morall and confidence.
Roy H.
L.R.E.A., Dip FS (FP)
Guardian Property Specialists (GPS)
http://www.gpsnetwork.com.auI think Rowen Kelly said that removal of the vendor duty will release more properties onto the market, and bring more investors also to the market. Therefore an increase in market trade, but without a large impact on prices.
Personally, I feel that more vendors than investors will join the market, having a downward pressure on prices. At least for the immediate future.
Munjy
As the impetus for some market sectors north of the border flattens out, it would now seeem logical to at least look at NSW property again. The govt loosing money over it, I doubt that. With the new increased levels of activity, the normal stamp duty gained will far outstrip the loss of the 2.25% on exit.
If sentiment adds 10% to property numbers sold, this relates to 4 times the income lost on any additional property sales generated.
Give us a break, giving something up, not our govt mate.DD
Buyers Agent (Dip Financial Services(FP)
Don’t sweat the small stuff,and it’s all small stuff!!True, nothing is given for nothing, although I think the boost of moral for some emotional investors is needed.
Non emotional investors are more or less saying, damn I should buy when the market is down..
Roy H.
L.R.E.A., Dip FS (FP)
Guardian Property Specialists (GPS)
http://www.gpsnetwork.com.auThere was some discussion too about a drop in quality of properties for sale in NSW after the abolishment of vendor duty.
It was speculated that investors won’t hesitate to get rid of their crappiest investment properties which they had been reluctantly holding because of the cost of vendor duty.
I think this might not be a big problem at all because the vendor duty was only introduced about a year or so ago.
Does anybody have other thoughts about this?
Celivia
There will always be the poor quality properties available in any market, I guess it’s upto us to do our research and establish which is good and bad..
All in all, I think this will create a healthy competitive market..
Roy H.
L.R.E.A., Dip FS (FP)
Guardian Property Specialists (GPS)
http://www.gpsnetwork.com.auRoss Gittins article on Vendor Duty changes
It’s reassuring to occasionally have economists draw the same conclusions as one’s self![blink]
The irony is that, to the extent that the evil vendor tax was discouraging investors from selling, it was – by holding back the dam – helping to hold up the price of investment properties and housing generally.So its removal is likely to hasten the fall in Sydney property prices. Which may be a good thing ultimately but will have a high immediate cost if it touches off an avalanche.
Also:
Another Ross Gittins article on Vendor Duty changesRegards, F.[cowboy2]
Hi All
The removal of the vendor tax has good and bad effects on investment in NSW. It has been said on the forum that House prices may fall in the short term when the tax goes: this is good if you are looking to buy at a later date; not good if you already own a place.
On the other hand if the tax had remained for another few years there would have been an upward pressure on rental returns as rental property became scarcer: landlords would have finally got better returns.
I have stayed away from investment properties in NSW since the tax was introduced; so now it will be interesting to see what does happen?
Interesting times.
Kerwyn
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