The Western Australian state government has moved to boost rental property supply in the state through a land tax exemption. Introduced in the May budget the new legislation  provided a 50 per cent land tax exemption for eligible build-to-rent developments.

The government has introduced the Land Tax Assessment Amendment (Build-to-Rent) Bill 2023 to the state Parliament, providing a 50 per cent land tax exemption for up to 20 years for eligible build-to-rent developments.
According to the Western Australian government, these changes are part of its continued work to build the capacity of the state’s rental market and increase housing supply, with further incentives to bolster housing at the affordable end of the market funded in the 2023–24 state budget.

In order to qualify for the exemption, which will be available in the 2023–24 assessment year, a BTR development needs to:

  • Contain at least 40 self-contained dwellings available for residential leases
  • Be owned by the same owner or group of owners and managed by the same management entity
  • Be completed between 12 May 2022 and 1 July 2032

Exemption to be available from the 2023-24 assessment year.

A build-to-rent development is a housing development constructed for the purpose of providing multiple residential dwellings for lease under residential tenancy agreements.

Retrospective land tax would apply if an eligible build-to-rent development stops meeting the criteria within the first 15 years after the exemption is granted. Western Australia’s rental market is under pressure at the moment and the government is committed to doing what it can to help build its capacity.
The introduction of the new legislation to encourage more rental property builds comes after the WA government expanded its Urban Connect Home Loan pilot for those looking to buy one-bedroom apartments.

Urban Connect Home Loan Scheme

First launched last year, the Urban Connect Home Loan offers borrowers the ability to purchase apartments in medium- and high-density developments, close to transport hubs and in urban locations across 189 suburbs in the greater Perth area.

The initiative is being delivered by low-deposit lender Keystart and aims to make medium- and high-density living more accessible and help make property ownership easier for Western Australians.

It does this by offering mortgages to eligible borrowers seeking to buy off-the-plan, new and established apartments with a deposit of as little as 2 per cent, without having to pay lender’s mortgage insurance.

While the offering originally only covered off-the-plan, new and established apartments with a minimum of two bedrooms in a complex of two storeys or more, the criteria has now been expanded to one-bedroom apartments. It is only for apartments in the inner metro region or near selected rail transport hubs.

As with the original offering, the Urban Connect Home Loan is means-tested. It is available for singles earning up to $180,000 a year to purchase an apartment up to $560,000 or couples and families with a combined income of up to $200,000 a year, with a purchase limit of $650,000.

The Western Australian government has been spending a record amount on social housing and homelessness measures recently and announced that it would extend and expand its existing transfer duty rebate for off-the-plan purchases as part of major funding commitments unveiled in the 2023–24 State Budget to boost housing supply and choice across Western Australia.

The state government will spend $33 million to extend the existing off-the-plan transfer duty rebate to 30 June 2025, convert the rebate to a legislated duty concession and increase the thresholds to:

  • a 100 per cent duty concession for properties valued up to $650,000 (formerly $500,000); and phasing down to a 50 per cent duty concession for properties valued over $750,000 (formerly $600,000).

This cut in transfer duty aims to act as an incentive to build new apartments and boost housing at the affordable end of the market while adding density and vibrancy to urban areas. It will also provide more opportunities for Western Australians to downsize or buy their first home.

Source: wa.gov.au

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