VIC 2020/21 State Budget – Property & infrastructure

Key Takeaways

Property

• $6bn Big Housing Build package
  • 12,200 new social and affordable homes
• $111m to implement planning reforms and reduce red tape to fast-track new projects
• Stamp duty waiver of 50% on new residential property transactions of up to $1m (worth up to $27,500)
• Stamp duty waiver of 25% on existing residential property transactions of up to $1m (worth up to $13,750)
• Bring forward Stamp duty concession of 50% on commercial and industrial property transactions in regional Victoria – now for contracts entered from 1 Jan 2021 rather than 1 Jan 2023
• Build to Rent projects Land tax discounts of 50% until 2040 and exemption from Absentee Owner Surcharge
• Vacant Residential Land tax waiver for all 2021 liabilities that arise due to property vacancies in 2020
• New Jobs Tax Credit for eligible businesses of 10c for every $1 of Victorian taxable wages above the previous year
• Victoria’s HomeBuyer Fund of $500m, expanding the HomesVic Shared Equity Initiative, by contributing equity to the purchase price for eligible first home buyers.

Road and rail projects

• Kickstarting Suburban Rail Loop through a $2.2 billion investment
• $2 billion towards delivering Geelong Fast Rail (matching the Commonwealth contribution)
• $1.5 billion towards the purchase of 100 Next Generation Trams
• State-wide road upgrades.

Energy projects

$1.6bn investment driving cheaper and cleaner energy sources including $682m to develop Victoria’s Renewable Energy Zones

• Investment in rooftop solar panels through additional solar rebates and investment in the rollout of a fast-charging network for electric vehicles across major highways and key tourist destinations
• Energy efficiency funding for social housing.

Community projects

• $1.9 billion in school upgrades including one new school
• Various hospital upgrades and development (4,100 jobs)
• $1.4billion Arts Precinct transformation (5,000 jobs).

Additional support

• Education and training funding including $631m for the TAFE system including $33m for ‘Big Build training pathway’
• $156m Extension of Regional Jobs and Infrastructure Fund
• $75m funding for the Growing Suburbs Fund
• $65m for agriculture strategy development including better infrastructure.

Impacts to your business

Property development

• Build to rent returns will improve with significant ongoing land tax savings and investment in social and affordable housing
• Investment in 12,200 new social and affordable homes should deliver new opportunities with increased construction activity in that space
• Demand for residential housing valued up to $1m should increase with stamp duty savings and shared-equity contributions available for eligible purchasers
• Settlement risk may be mitigated where eligible purchasers access government support
• Planning reform should cut red tape and fast-track approvals
• These concessions coupled with the recent Federal budget announcements will drive demand for new residential dwellings, construction activity and ancillary commercial opportunities.

Infrastructure

• Investment in hospitals, rail and roads will provide opportunities for contractors and project managers.  The suburban rail loop investment alone is expected to support initially up to 8000 jobs.
• Investment in regional centres through road, rail and energy projects will continue to change demographics and offer employment opportunities
• Further investment in solar and clean energy initiatives for 35,000 affordable homes

Did the VIC Budget deliver what you ordered?

• Social and affordable housing, infrastructure projects and cleaner energy were prioritised in this Budget
• The Budget attempts to encourage both supply and demand for the property sector with tax savings for some developers, purchasers and landowners
• Developers of sufficient scale should have an increased appetite for build to rent projects with land tax savings and funding for social and affordable housing
• However some industry participants may not find much relief in this Budget
• No further relief for Landlords has been included in the Budget
• While other states are proposing to move away from stamp duty, Victoria has not followed suit in this Budget

Get in touch

It has been an extraordinary year of upheaval as Victoria grapples with the effects of COVID-19 and we recognise that the property and infrastructure industry has been heavily impacted. Reach out to our experts for assistance navigating the implications and opportunities this Budget presents for you, your business and your industry.

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