The WA State Government has announced that it will abolish the $3000 first home owners grant (FHOG) for purchases of established homes.  The change won’t come into effect until the legislation is passed by Parliament, which is expected in the second half of this year (2015).

The change sends a mixed message regarding the governments plans for development in Western Australia. Whilst it talks about the need for urban infill and reducing urban sprawl, the move will push first home buyers wanting land (versus a new apartment) out to the furthest reaches of our suburbs, something we already started to see when they cut the FHOG grant for established homes from $7000 to $3000 in 2013.

The $10,000 FHOG for building or buying new homes remains unchanged.

Changes to land tax were also announced, with the government lowering the thresholds and lifting rates in a bid to raise an additional $826m over the next four years – see the new scale here. This is the third increase to land tax in as many years and confirms the governments over reliance on property as a tax revenue stream.

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REIWA has repeatedly called upon the Government to enter into proper discussion with itself, business and the wider community on property tax reform, including replacing stamp duty, a ridiculous tax and penalty we pay for the ‘priviledge’ of buying a home, with a fairer, modest annual land tax for all property owners as recommend by the Henry Tax Review. (see REIWA response to the State Budget here). I say, hear hear!