As the end of financial year arrives, Avant Law takes a look at some important changes planned in the property law space. Some of these changes may affect your decision to invest in real estate and in which jurisdiction. Here is a snapshot of some of the biggest changes coming.
Nationally
Widening of First Home Buyers Guarantee Schemes
From 1 July 2023, the Federal Government's First Home Buyers Guarantee ("FHBG"), and Regional First Home Buyers Guarantee ("RFHBG") schemes, will widen to allow for joint applications to be made by friends, siblings, or other family members. Currently, the schemes only allow for applications to be made by individual, or married or de-facto couple first home buyers. The changes will also allow for non-first home buyers to receive the guarantee, provided they have not owned property within the last 10 years. The FHBG and RFHBG schemes allow eligible first home buyers to purchase a property without Lenders Mortgage Insurance, and with a deposit as low as 5% of the purchase price, with up to 35,000 guarantees under the FHBG scheme, and up to 10,000 under the RGHBG scheme, being issued each financial year.
New South Wales
As rents continue to soar in New South Wales the new State
Government is looking to pass new laws requiring owners and agents
to notify all rental applicants of offers that are higher than the
advertised price. Community groups fear this is legitimising rental
bidding and will make matters worse. The planned legislation will
require advertisements to include a fixed amount payable for the
rent, will prohibit the soliciting of a higher amount than
advertised but will not prevent rental bidding, as long as all
applicants are notified of the higher offer.
As we have already seen, the first home buyers choice is being
scrapped on 30 June 2023 meaning first home buyers up to $1.5
million will no longer be able to chose an annual property tax
instead of paying duty upfront.
First home buyers will have windfall after 1 July in that duty
exemptions will now apply up to $800,000 (from $650,000) and
concessions will apply from $800,000 to
$1 million (previously $650,000 to $800,000).
Queensland
Queensland is set to benefit from a major overhaul to the
Property Law Act 1974. These changes, when accented to will see
sellers required to provide any buyer with a disclosure document
containing all prescribed certificates. Prescribed certificates
include body corporate certificates, by-laws, pool compliance
documentation, rates and water notices and other relevant
documents. If this is not done, a buyer can terminate the contract
and recover costs.
It also updates and cements in the electronic conveyancing process
and provides some certainty around electronic signatures, service
of documents and delays in settlement.
The Palaszczuk Government has also announced that they will
commence drafting of amendments to limit the scope for sunset
clauses to be included in off-the-plan contracts. The amendments
will, at this stage, restrict the circumstances in which a sunset
clause may be invoked, to include only when the purchaser has
provided written consent for its invoking, under a Supreme Court
order, or in another situation prescribed by legislation.
Sunset clauses grant a party the right to unilaterally rescind a
contract, if the contract is settled within a specified timeframe,
and is commonly invoked by developers of off-the-plan contracts
when supply shortages, or other factors, delay construction. These
clauses have caused problems amidst the pandemic, with developers
allegedly exploiting building supply chain-related shortages to
rescind contracts to then enter a new contract for a higher
purchase price. While no legislation has yet been tabled, these
changes will provide much-needed security, and protections, for
off-the-plan property purchases.
In the Build to Rent space, the Revenue Legislation Amendment Bill
2023 was introduced to the Queensland Parliament on 13 June 2023.
This Bill will amend multiple laws to provide for land tax cuts for
properties for up to 20 years where the development features an
affordable housing component of at least 10% of the properties for
rent. There will also be exemptions on foreign investor land tax
surcharges payable and additional foreign acquirer duty.
1 July will also see the introduction on limiting the number of
times landlords can increase residential rents, to once per annum.
There is no cap on the amount of the increase, but after 1 July
2023, residential rents in Queensland can only be increased once a
year.
Western Australia
Abolishment of paper Certificates of Title – From 7 August
2023, amendments to the Western Australian Transfer of Land Act
1893 will commence, resulting in the removal of the requirement for
duplicate certificates of title. The amendments passed in June
2022, and will see duplicate (paper) titles be no longer created or
issued, as part of WA's plan to modernise the state's
e-conveyancing regime. Any duplicate titles issued before the date
of commencement will no longer hold legal effect, although any
purchaser who is a holder of a duplicate title will not need to
take any action to render it invalid. All original certificates of
title will still be held by LandGate.
Similar to Queensland, Western Australia will also see land tax
exemptions provided to the buyers of land used for new build to
rent developments.
Victoria
The recently unveiled 2023-24 Budget announces proposals to
reform Land Transfer Duty and Land Tax. In an effort to offset the
impact of COVID-19 debt, a 10-year "COVID Debt Levy" is
proposed to be implemented from 1 January 2024 on Victorian
landholdings. The levy would place an additional annual fixed
charge of $500 on landholdings between $50,000-$100,000; an annual
fixed charge of $975 on landholdings between $100,000-$300,000; and
an annual fixed charge of $975 plus 0.1% of the total value of the
landholding, on landholdings valued greater than $300,000. The levy
would also reduce the tax-free threshold for general land tax rates
from $300,000 to $50,000. This levy would only apply to properties
who are currently liable for Land Tax, and therefore family homes
and personal residences would not be affected. This proposal is
expected to generate $1.1 billion in the 2023/24 financial year,
however community groups are concerned that Mum and Dad investors
would be discouraged from purchasing rental properties, leading to
a decrease in rental supply.
Amendments to land transfer duty have also been unveiled. The
Budget proposes to replace transfer duty on sales of commercial and
industrial properties with an annual property tax of 0.1% of the
property's unimproved land value. Current owners of commercial
properties would not be affected by the change. Purchasers of
commercial property after 1 July 2024, however would not be liable
for transfer duty, and the annual tax would be applied after a
transition period of 10 years from the sale date. This proposal
aims to encourage businesses to invest, expand and create more jobs
in Victoria.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
