Apartment buyers slugged with massive government fees, taxes and charges: Property Council of Australia (WA)

A property advocacy groups claim apartment buyers are bring slugged with six-figure sums on various government property-related fees, taxes and charges. Research from the Property Council of Australia shows the lofty costs have swelled State Government coffers, adding an extra $1.9 billion to revenue annually compared to five years ago. The Sky High report shows State-based property-related taxes almost doubled from $2.6b in 2018/19 to $4.5b in 2023/24. PCA WA executive director Nicola Brischetto said it represented “a substantial windfall to the WA Government.” The PCA-commissioned research breaks down the heavy burden on apartment buyers — worth an average $39,000 per apartment. This includes transfer duty on land, land tax, the cost of council rates, development application feeds, the per cent for art scheme, the construction training fund levy and other contributions, as well as headworks like Western Power, Water Corporation and NBN services. Once you add the post-construction GST impost of $68,181 as well as buyer transfer duty of just under $30,000 on a $750,000 apartment, the total additional government-imposed cost per apartment is $130,000. The Sky High analysis, based on real apartment projects, shows a 152-apartment development costing $183 million, incurs government-related costs of $6m. Under its modelling, miscellaneous contributions were worth $ 1,750,000, followed by land tax ($1,418,236), transfer duty on land ($667,645), headworks including Western Power, Water Corporation and NBN ($583,300)‘ the percent for art scheme ($813,633) council rates ($313,241), the construction training fund levy ($254,544) and development application fees ($57,841). The report highlights that apartment buyers face higher charges than those buying house and land packages. Under the current concession scheme, an apartment purchased off the plan before construction starts gets a concession of $14,870, bringing the transfer duty down to $14,870. If the apartment is purchased while it is under construction, the concession duty drops to $18,587. The research shows house-and-land-package buyers get it a little easier, with a buyer transfer duty of $10,735 where there is a a land component of $350,000. But, in a bad week for Perth’s property sector, research revealed by the Master Builders Association this week shows those building a home in WA have also been hit hard. This research revealed it takes longer to build a home in Perth than anywhere else in Australia. Research by the Master Builders Association shows it took an average of 17.88 months to build a home in WA in 2023-24, the highest build time in the nation and much higher than the national average of just over 12 months. The build time — which covers the period from approval to completion — has more than doubled from 8.88 months in 2018-19 and from a low of 8.7 months in 2017-2018, when the construction period was on par with the national average. While the MBA research did not consider costs, it indicated some of the financial burden for those building as they are forced to pay both rent and a mortgage for about 18 months.