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News.com.au
20-05-2025
- Business
- News.com.au
Victorian budget panned as a ‘kick in the guts' to first-home buyers and a ‘chokehold' on property sector
The Victorian budget has been lashed as a 'kick in the guts' to first-home buyers after it slammed the door on a key housing program despite forecasts of a property price surge. Real Estate Institute of Victoria president Jacob Caine criticised the lack of support for first-home buyers in a budget that openly acknowledged home prices are expected to rise, even as it signalled the end of the once popular Victorian Homebuyer Fund. 'If you are a first-home buyer or on the cusp, it must feel like a kick in the guts,' Mr Caine said. 'It appears that the government is simultaneously relying on the extension of the stamp duty discount for new builds and the incentives and support program that the feds have promised, to shirk their responsibility for supporting first-home buyers into their first home. 'The forecast of increased Victorian property prices aligns with most economist and industry pundits, and that says that the opportunity to buy a first home is going to become even more difficult than it already is. 'The government needs to do more to support young Victorians into their first home.' In last year's budget the Victorian Homebuyer Fund shared-equity scheme was slated to exit the state's selection of support programs for affordability-challenged home buyers as of June 30, 2025. Yesterday's budget had no mention of the scheme, which is believed to have helped close to 15,000 Victorians with even a 5 per cent deposit to buy a home with the government paying for up to 25 per cent of its cost in return for a commensurate stake in the property. With no further funding, the state's struggling homebuyers will be directed towards a similar federal scheme dubbed Help To Buy — however that program's start date is still listed as late 2025. The Albanese government announced extensions to its property price caps, now $950,000 in metropolitan areas and $650,000 in regional areas, and the income eligibilities for it in the lead up to this year's federal election. But the number of places has not shifted from 40,000 over four years. At 10,000 per annum, Victorians would have to claim about 4000 of the national total, or 40 per cent, in order to get the same number of recipients as the state scheme. The REIV had called for the state government to follow the federal government's lead by boosting caps on the stamp duty concession scheme for first-home buyers which have remained at $600,000 for a full waiver, and $750,000 for a discounted tax bill, since 2017. State Revenue Office figures show 41,793 Victorian first-home buyers used the scheme in the 2023-2024 financial year, meaning it is helping more than 10 times the numbers likely to be assisted by the federal scheme. However, those numbers are waining as the caps cover an increasingly small portion of the market. At its peakin the 2020-2021 fianancial year, the program assisted almost 54,000 Victorians. They had also sought a more balanced property tax obligations, another budget submission Mr Caine said was ignored despite mounting evidence that landlords were selling up faster than they were being replaced. 'These declines should sound alarm bells, as they reflect a tightening rental market and reduced property investment, just when we need more rental housing, not less,' he said. 'With investor confidence fading, maintaining the budgetary status quo risks further constraining housing supply and worsening affordability issues.' Property Council of Australia Victorian executive director Cath Evans said the budget had left the property sector caught in a 'chokehold' of government fees, costs and charges that were stifling investment. 'The industry was hoping for progress – instead, we've hit a stop sign,' Ms Evans said. 'Since last year's budget, we have been loudly advocating for an easing of the tax burden to promote investment, greater support for first homebuyers and feasibility solutions to increase supply. None of this was addressed in the budget. 'The industry is ready to grow, but it can't grow under the current arrangements.' Housing Industry Association executive director Keith Ryan panned the budget as a bid for re-election that had failed to deliver meaningful and needed tax reform for the property sector. 'Trading conditions for many new home builders have become increasingly precarious in the face of overreaching new regulations, poor consumer confidence and escalating construction costs – many of which have been compounded by Victoria's punitive property tax regime,' Mr Ryan said. 'Unfortunately, this year's budget does little to reduce the prohibitive cost of new home building, apart from the previously foreshadowed decision to extend the stamp duty concession for off-the-plan apartments, units and townhouses for a further 12 months.' He said the one glimmer of hope for first-home buyers was a boost to VLine train services, which could potentially make affordable homes in regional parts of the state more viable for market entrants. Master Builders Victoria chief executive Michaela Lihou said they appreciated a conservative approach, and lauded $50m for the Melbourne Polytechnic Future of Housing Construction TAFE Centre of Excellence. However, Ms Lihou said broader building industry stimulus had been needed. 'While the significant shortage of housing in Victoria has also been a primary focus for the past few years now, we had hoped the Government would have seen the value in a significant stimulus injection to get the industry and homes moving for deserving Victorians,' she said.
Telegraph
15-05-2025
- Business
- Telegraph
Average home to fall into inheritance tax net within a decade
Soaring property prices will drag the average UK home into the inheritance tax net by 2035, analysis suggests. Rising property prices combined with frozen inheritance tax thresholds will land more bereaved families with tax bills in the coming years. Between April 2024 and March, the Treasury raked in a record £8.2bn in death duties – £750m more than the year before. By 2035, the average UK property value will surpass the inheritance tax-free threshold of £325,000, analysis of Land Registry data by investment platform Wealthify found. The average house price in February stood at £268,319, nearly double what it was in February 2005, when the average price was £138,626, according to the Land Registry. The Office for Budget Responsibility expects that under Labour, 9.7pc of estates will pay inheritance tax by the end of the decade, up from 4pc currently. The death levy is predicted to raise £14bn a year by 2030. Inheritance tax is paid at 40pc of anything left over the £325,000 threshold, although there are other allowances that can be claimed. The tax-free allowance, known as the nil-rate band, increases by £175,000 when a main residence is left to direct descendents, such as children or grandchildren. The £325,000 allowance is frozen until 2030 after Ms Reeves extended a tax band freeze introduced by the former Conservative chancellor, Jeremy Hunt, in 2022. The nil-rate band, which was set in 2009, would be £510,921 today if it had risen with inflation. Failing to increase both the main tax-free allowance and the additional residency would cost a married couple with £1m in inheritable assets an extra £233,560 in tax, analysis by investment platform AJ Bell found. Charlene Young, pensions and savings expert at AJ Bell, said: 'Frozen tax thresholds punish taxpayers by stealth. When asset prices rise but thresholds fail to track inflation, the result is higher tax bills. 'Astonishingly, the main inheritance tax free threshold won't have changed in over two decades by the time the freeze is lifted in 2030.' It comes after Rachel Reeves announced in her inaugural Budget last October that pensions would become subject to the death levy from April 2027. Ms Young said: 'The impact of the frozen bands will be turbo-charged if the taxman is also allowed to take a slice of unused pensions on death. 'If the changes are implemented as originally proposed for deaths from April 2027, the Exchequer might well overshoot its own impact assessment on the impact of the two-year extension to the inheritance tax band freeze by the time it comes to an end.' Parents told The Telegraph that they were planning to give larger sums to their children before they die, in order to help with house deposits. Any gift made more than seven years before death is exempt from inheritance tax automatically. Taxpayers also have a £3,000 annual gift allowance – which is designed to cover events including birthdays and religious holidays. Simon Holland, of Wealthify, said: 'Our research shows that four in five parents are becoming increasingly concerned with the amount of inheritance tax bereaved families are paying, driving a growing trend in people looking at how to pass on money to their loved ones in a tax-efficient way. 'If you are relatively young, healthy, and are financially able to do so, you might want to consider leaving your children a chunk of inheritance while you're still here.' But those looking to reduce a tax bill must be careful to record any gifts. HM Revenue and Customs (HMRC) launched 3,961 investigations into underpaid inheritance tax in the 12 months to April 5, an increase of 31pc on the previous tax year. The tax authority has opened nearly 10,000 investigations into families in the past three years. Of those, 2,606 are ongoing, data from a Freedom of Information request revealed. A Treasury spokesman said: 'This assumes inheritance tax policy in a decade's time. Decisions on this tax policy will be made then.'
