2020 – Real Estate Relief Package
2 April 2020
The Hon. Annastacia Palaszczuk, MP
Premier of Queensland
1 William Street,
Brisbane QLD 4000
Real Estate Relief Package
The Real Estate Institute of Queensland (“REIQ”) is seeking urgent action from the Queensland State Government to assist in maintaining the stability of the Queensland property market in the face of the economic impacts of the coronavirus (COVID-19) pandemic.
Queensland’s residential real estate sector is worth over $1 trillion1 and employs over 50,000 Queenslanders directly with many more employed in associated industries. Activity within the real estate sector contributes in excess of $30 billion every year to the Queensland Government.
Protecting and sustaining the Queensland real estate sector is critical to safeguarding our property market and supporting our local economy. In order to do so, strong action needs to be taken..
Over the past weeks, the REIQ has consulted on and developed a set of recommendations and proposed initiatives we believe will assist in minimising the potential economic impacts of the coronavirus (COVID-19) on the real estate sector. The following applies to both residential and commercial real estate unless otherwise specified:
- Property Market Stimulation and Support – Short-Term Action. In order to maintain stability and optimism in the Queensland property market during the coronavirus (COVID-19) pandemic, we ask the Queensland State Government to:
- Extend the First Home Buyers Grant to established housing. Expanding the availability of the First Home Buyers Grant beyond new construction will stimulate economic activity through the introduction of increased numbers of first home buyers to the broader property market.
- Implement a 50% reduction in development application costs across all Local Governments and introduce streamlined application processes. Removing barriers to development and reducing costs will assist to boost construction levels, increase competition and importantly, reduce cost for the end purchaser.
- Deliver a 75% reduction in stamp duty for the period of the coronavirus (COVID-19) pandemic. A short-term, but significant, reduction in stamp duty payable on property transactions will have a positive effect on confidence within the property market. This, in turn, will offset the predicted drop in real estate transactions expected during the immediate crisis period. Lessening the financial burden of stamp duty, for a limited period, will lessen the perceived financial risk and act as a significant incentive to purchasers who may otherwise be discouraged from purchasing during this crucial period. Similarly, such an initiative would encourage vendors to list their properties during the coronavirus (COVID- 19) period, buoyed by the likelihood of increased buyer activity.
It is envisaged that increased transaction activity during this period would, to a large degree, negate revenue lost to State Government by the reduction in stamp duty rates, as the likely consequence of not reducing the stamp duty rate would result in a significant decrease in transaction activity and consequential drop in revenue received through those transactions.
- Property Market Stimulation and Support – Long-Term Measures. In the 18 months following the end of the COVID-19 pandemic, we are seeking the following further stamp duty related reforms to continue to support and stimulate the property market.
- Removal of stamp duty for persons aged over 65 years. This initiative would have the effect of encouraging older Queenslanders to move into age-appropriate accommodation by reducing the financial burden of such a move. A likely consequence of this would be greater access to housing stock for younger Queenslanders.
- A 50% reduction in stamp duty where residential investment property purchases are committed to the permanent rental market in Queensland for 3 years or more. A significant reduction in stamp duty for residential investment properties will have the effect of stimulating property investment in Queensland. A natural consequence of the rental eviction moratorium and similar measure introduced to combat the financial impacts of the coronavirus (COVID-19) is that property investors (current or prospective) are likely to lose confidence in residential property as a viable investment option. Queensland has rapidly growing residential rental demand, a situation likely to be exacerbated by the financial impacts of the coronavirus (COVID-19). The combination of increase rental demand and decreased property investment is a looming social time bomb. More than 90% of Queensland residential investment property supply is provided by ‘mum and dad’ investors who are most likely to be sensitive to increased risk to their property investment returns.
A significant decrease in stamp duty payable on residential investment properties, qualified by enforceable commitment by investors to making that property available to the permanent rental market, will have the dual effects of stimulating investment confidence and activity (making Queensland a particularly attractive investment market), and ensuring adequate supply is maintained to meet increasing demand.
- A 40% reduction in stamp duty for all other residential property purchases. A significant reduction in stamp duty payable on non-investment residential property purchases will have the effect of instilling confidence into the property market generally and provide significant incentive to individuals Australia-wide to consider migration to Queensland.
- Support for Property Investors and Households. To support property investors impacted by potential reductions in rental income, and households financially impacted by the coronavirus (COVID-19), we ask the Queensland State Government to facilitate the following:
- Provide a significant reduction or temporary removal of land tax for the period of the coronavirus (COVID-19) pandemic.
- Waive local government rates for those who have lost their income as a result of this crisis; and
- Implement a 50% discount on local government rates to assist household budgets and assist in stimulating the Queensland economy.
- Support for the Real Estate Profession. To directly support the real estate industry that provide front line contact with participants in the property market and an invaluable service to property owners, investors and tenants, both commercial and residential, we ask the Queensland State Government to:
- Provide a 12-month extension to all existing licence and registration holders in Queensland, commencing 1 May 2020;
- Provide Queensland State Government funding to The REIQ to assist it to continue to provide essential resources, training and support to the real estate industry, during the coronavirus (COVID-19) period and beyond; and,
- Provide Queensland State Government funding to establish a Property Think Tank to identify new initiatives to maintain and regenerate local property markets and create opportunities and jobs within the real estate sector, with the consequential benefit being the continued generation of State Government revenue.
Importantly, these recommendations and initiative should be in addition to the Federal Government’s JobSeeker and JobKeeper support programs, the Queensland Government’s recently announced rental grants and any other stimulus packages yet to be released. The REIQ believes that it is not enough to put money in people’s pockets during this time; instead, we need maintain confidence in the Queensland property market and assist the real estate sector to ride out this crisis and emerge stronger and more resilient for the benefit of all Queenslanders.
The REIQ fundamentally believe this relief package will keep Queenslanders employed within the State’s second largest employment sector, keep essential services functioning at this critical time, and most importantly accelerate our State economy’s recovery once this crisis has passed. We look forward to the opportunity to discuss this correspondence in further detail.
If you wish to discuss any aspect of this letter, please do not hesitate to contact me on 1300 MY REIQ.
Chief Executive Officer