The Big Housing Build includes $678 million to help unlock more affordable and accessible housing for Victorians.
A new home buyers fund has been announced by the government as part of this initiative.
The Victorian Homebuyer Fund provides $500 million to accelerate Victorians into home ownership.
The fund will contribute to the purchase price in exchange for a proportionate equity interest in the property. This aims to help reduce the size of the deposit required and will help Victorians afford their homes sooner.
It will support the purchase of both established and newly built homes.
The Victorian government has also extended the $20,000 First Home Owner Grant for people buying or building a new home in regional Victoria to apply to contracts of sale entered up until 30 June 2021.
“This extension gives more Victorians the opportunity to live locally and enter the property market for the first time, while also supporting jobs in regional Victoria,” the Treasurer said.
In order to increase the supply of housing and create more options for renters by establishing the build-to-rent sector in Victoria, from 1 January 2022, Victoria will provide a 50 per cent land tax discount for eligible new developments until 2040.
These developments will also be exempt from the absentee owner surcharge over the same period. Investment in the build-to-rent sector will stimulate construction activity, create jobs and support Victoria’s economic recovery.
Stamp duty concessions
The Victorian government has also announced an investment of over $293 million to fund a stamp duty concession of up to 50 per cent* for homes valued at up to $1 million.
In the Victorian Budget 2020/21, $1.5 billion of new tax relief for Victorian businesses and families has been announced.
This includes a stamp duty concession of up to 50 per cent for homes valued at up to $1 million. It is for contracts entered into from 25 November to 30 June 2021.
Relief will be targeted at newly built or “off-the-plan” homes, which will receive a 50 per cent waiver. Existing homes will be eligible for a 25 per cent waiver.
A first home buyer, for example, purchasing an existing home worth $700,000 would be eligible for both the first home buyer duty concession and then the new 25 per cent waiver, totalling tax relief of some $18,500.
“With a waiver on stamp duty, we’ll help more Victorians find their home and get more Victorians back to work,” Treasurer Tim Pallas said.
In a bid to lure businesses to regional Victoria, a 50 per cent stamp duty concession on the purchase of commercial and industrial properties will be brought forward to January 2021 – encouraging more businesses to open, relocate or expand.
This investment is tipped to save businesses a further $39.6 million.
He continued: “There is no sugar-coating it, this pandemic has hit businesses hard. This support will help them open their doors, get back on their feet and employ more Victorians.”
The move comes after the NSW government’s announced in its budget that it was launching a public consultation on enabling home buyers to opt out of stamp duty, and instead choose a smaller annual property tax.
In his speech, Treasurer Pallas said: “We will encourage Victorians back into the property market, by waiving up to 50 per cent of stamp duty on eligible homes, for the remainder of the financial year. And Victorians will be able to get into the property market sooner and with lower deposits, thanks to our $500 million Victorian Homebuyer Fund.
“But we’re not just focusing on those who can afford to buy a home. In a year when ‘home’ became increasingly central to our lives, we’re making sure more Victorians than ever have a roof over their head.”
Australia’s largest investment in social housing
One of the key measures in the Victorian budget 2020-21 is a package to build more than 12,000 new homes throughout metro and regional Victoria, the majority of which will be social and low-cost housing.
According to the Andrews government, the package is Australia’s largest ever investment in public and community housing.
The investment will deliver 9,300 new social housing homes, including replacing 1,100 old public housing units.
Of these new homes, 2,000 will be for Victorians living with mental illness.
The package is expected to boost the state’s social housing supply by 10 per cent in four years.
A further 2,900 new affordable and low-cost homes will be built to “help low-to-moderate income earners live closer to where they work and provide options for private rental”.
Around 25 per cent of the funding will be allocated to regional Victoria to deliver “secure, modern and affordable homes”, including at least $15 million guaranteed for each of Horsham and Golden Plains.
All the new homes being built will need to meet 7-star energy efficiency standards, which should help reduce the costs of heating/cooling them.
The budget also includes $155 million to implement coronavirus preparation and prevention measures in public housing – including testing, cleaning, security, food and material aid, and community services for residents.
A further $11 million will fund extra support staff at hotels for the homeless.
The Big Housing Build is expected to support over 10,000 jobs over the next four years, which the state government said would help “supercharge Victoria’s economic recovery through the pandemic and beyond”.
“This year we've been reminded just how important home really is,” Premier Daniel Andrews said.
“This investment will help Aboriginal Victorians, pensioners, Victorians with disability, family violence victims and single parent families find their feet.”
He continued: “This package will boost our state’s social housing supply by 10 per cent in just four years – providing a stable foundation for thousands of Victorians to build their lives.
“The unprecedented investment will boost Victoria’s economic recovery, generating an estimated $6.7 billion in economic activity and supporting a peak of more than 18,000 jobs – with 10 per cent of the work on major projects to be done by apprentices, cadets and trainees.
“Hundreds of new jobs will be created for women, Aboriginal Victorians, people with disability, social housing tenants and people from diverse backgrounds through social procurement targets,” he added.
A new government agency, Homes Victoria, has been established to work across government, industry and the social housing sector to deliver the housing growth and to manage existing public housing.
When combined with existing commitments, the package will help deliver more than 15,800 new homes over the next four years.
Minister for Housing Richard Wynne commented: “This unprecedented housing blitz will deliver new homes and jobs across Melbourne and regional Victoria.”
“We’re delivering the biggest investment in social housing Victoria has ever seen – we’re not just investing in bricks and mortar, but the lives of Victorians for decades to come.”
The Victorian budget 2020-21 also includes funds to provide ongoing support to help keep tenants in their homes, including the $80 million set aside in April to give certainty for those Victorians facing financial hardship.
The budget also provides a further $6 million to help ensure Consumer Affairs Victoria can continue to provide support through the Residential Tenancies Dispute Resolution Scheme and the Residential Tenancy Relief Scheme.
To help vulnerable tenants, an additional $600,000 (previously announced) has been provided to advocacy groups to “continue their crucial work providing assistance throughout the pandemic, including support for Victorians from culturally and linguistically diverse communities”.
Premier Andrews said: “The pandemic has made paying the rent hard for many Victorians.
“But thanks to a shared partnership between tenants, landlords and government, thousands of Victorians have been able to negotiate a fair reduction in rent.
“In fact, as of the start of this month, more than 57,000 tenants and landlords had registered a reduced rent agreement with Consumer Affairs Victoria.
“The Victorian budget 2020-21 will continue to provide ongoing support to help keep tenants in their homes,” he said.
Minister for Consumer Affairs, Gaming and Liquor Regulation Melissa Horne commented: “It’s been a tough year for many, particularly tenants.
“We’ve provided support and certainty throughout the pandemic – that will continue into our recovery too.”
Treasurer Pallas concluded: "We’ll do this through our record $5.3 billion investment in social and affordable housing, as part of our Big Housing Build. It’s a three-for-one investment: homes for our most vulnerable, jobs in construction and economic activity.
“We’ll build over 12 000 new homes, supporting more than 10 000 jobs a year while cutting the social housing wait list.
“This will transform thousands of lives.”
*This story has been updated to reflect that the concession is 50 per cent, not 50 cents as previously stated.
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Annie Kane is the editor of The Adviser and Mortgage Business.
As well as writing about the Australian broking industry, the mortgage market, financial regulation, fintechs and the wider lending landscape – Annie is also the host of the Elite Broker and In Focus podcasts and The Adviser Live webcasts.