On 1 June 2017, the NSW Government announced various changes to the Stamp Duty to improve housing affordability.
The effect of the changes is that for any contracts dated on or after 1 July 2017:
No Stamp Duty is payable on homes up to $650,000;
Concessions on Stamp Duty apply to all homes up to $800,000;
$10,000 grant is available for builders of new homes up to $750,000 and purchasers of new homes up to $600,000;
Insurance Duty on Lender’s Mortgage Insurance is no longer payable;
Foreign investors are to pay higher duties and land taxes;
Investors are no longer allowed to defer paying stamp duty on off-the-plan purchases (purchasers who are buying a home as a primary place of residence off-the-plan will be still entitled to a 12-month delay in the payment of the stamp duty).
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Defects in Strata Building
There have been many reports of defects in new apartments in the Sydney region. To address these issues, the Strata Schemes Management Act 2015 Part 11 provides new obligations that property developers must follow. Under the new law, property developers are required to pay NSW Fair Trading a deposit, equal to 2% of the value of the contract exchanged with the Construction Company. Until the deposit is paid, the developer will not be able to obtain the Occupation Certificate for the apartment which is required during settlement with the purchaser.
Additionally, 15-18 months after completing the construction of the building, there is a mandatory obligation to inspect the building by an independent building inspector who has no affiliation with the developer. Should a defect be found, the Construction Company that built the building must repair any damages and the cost of such repair is covered by the bond.
The new scheme will only apply in the following circumstances:
Apartments with four floors or more;
Residential or mixed residential/commercial buildings; and
Construction contracts signed on or after 1 January 2018.
(Apartments with fewer than four floors are covered by the Home Building Composition Fund.)
The obligations imposed on property developers under this new scheme aims to detect and repair any defects early on, and to avoid situations whereby buyers and owners are forced to repair long-term defects which may be costly.