Are Off-the-Plan Stamp Duty Concessions in Melbourne Worth It in 2026?

Victoria's off-the-plan stamp duty concession—extended to October 2026 contracts must be signed between 21 October 2024 and 20 October 2026—can save buyers between $20,000 and $40,000 on new apartments and townhouses priced under $1 million the temporary concession has no value threshold and works by deducting eligible construction costs from the dutiable value, so savings vary by project stage. For first-home buyers purchasing in supply-constrained inner-ring locations with strong rental demand, the concession offers genuine value; for investors buying CBD or Docklands high-rise stock with oversupply risk, the stamp duty saving often fails to offset poor capital growth and settlement valuation shortfalls.

How the Off-the-Plan Stamp Duty Concession Works in Victoria

The concession reduces stamp duty to a flat $7,000 for eligible off-the-plan purchases of new homes or substantially renovated properties, provided the contract is signed before October 2026 and the dutiable value does not exceed $1 million. In practice, the concession reduces duty by reducing the dutiable value (generally by excluding construction costs incurred after the contract date), and the temporary concession for 21 Oct 2024–20 Oct 2026 has no value threshold, so the duty payable is not a flat amount. This applies to both owner-occupiers and investors purchasing strata apartments, townhouses or dwellings on land subdivided after the contract date. The temporary concession applies to eligible apartments, units and townhouses in a strata subdivision with common property (and does not apply to non-strata house-and-land packages).

For a Melbourne buyer purchasing a $750,000 off-the-plan apartment in Brunswick or Footscray, standard stamp duty would normally cost around $40,000 (duty rates; you can estimate via the SRO duty calculator). Under the concession, the buyer pays only $7,000—a saving of $33,000. Because the concession reduces the dutiable value by eligible construction costs (rather than setting a flat duty), the duty payable varies—Victorian Government examples include a ~$620,000 off-the-plan apartment where duty could fall from ~$32,000 to ~$4,000 if bought before construction starts. However, if the property's valuation at completion falls below the contract price—a common scenario when apartment markets soften—the buyer still owes the purchase price but may struggle to secure full financing, forcing them to either increase their deposit or walk away and forfeit the initial deposit, typically 10% (Consumer Affairs Victoria: off-the-plan deposits are required to be no more than 10%).

Off-the-Plan Versus Established Apartments: Real Melbourne Numbers

Consider two scenarios for a couple with a $150,000 deposit looking in Melbourne's inner west:

Scenario A: Off-the-plan two-bedroom apartment in Footscray
Contract price: $700,000 | Stamp duty: $7,000 | Total upfront cost: $157,000 | Settlement in 18 months | Estimated rent: $500/week | Risk: Market softens; settlement valuation at $670,000 means $30,000 equity loss on day one.

Scenario B: Established two-bedroom apartment in Footscray
Purchase price: $680,000 | Stamp duty: $36,000 | Total upfront cost: $186,000 | Immediate settlement | Current rent: $480/week | Benefit: Known condition, immediate rental income, no construction or sunset clause risk.

Scenario A saves $29,000 in upfront costs but exposes the buyer to valuation risk, delayed income and potential construction defects discovered only at handover. Scenario B costs more initially but delivers certainty and immediate rental yield. For first-home buyers using the concession to enter the market with limited savings, the $29,000 difference can be decisive; for investors prioritising cash flow and capital stability, the established unit often outperforms despite higher duty.

Who Actually Benefits from the Stamp Duty Concession?

The concession genuinely helps first-home buyers in suburbs where off-the-plan supply is limited and developers price competitively—typically established middle-ring areas like Coburg, Reservoir or Bentleigh, where townhouse developments replace single dwellings and compete directly with established stock. In these markets, the duty saving translates to real affordability without significant price inflation.

Conversely, investors purchasing CBD or Docklands high-rise apartments often find the concession negated by developers raising base prices to capture the duty saving, oversupply driving down rents and capital values, and settlement valuations falling short of contract prices. A Docklands apartment purchased off-the-plan in 2024 for $800,000 with a $7,000 duty bill may settle in 2026 valued at $750,000, wiping out the stamp duty saving and leaving the buyer in negative equity from day one.

Hidden Risks: Sunset Clauses and Valuation Shortfalls

Off-the-plan contracts include sunset clauses allowing developers to cancel if the project is not completed by a specified date, often 24 to 36 months from signing. If property prices rise during construction, developers may deliberately delay completion to trigger the sunset clause, refund deposits and re-sell at higher prices. Victorian law now restricts sunset clause cancellations, but buyers should verify the clause terms with a solicitor before signing (Sale of Land Amendment Act 2019 reforms explained by Consumer Affairs Victoria; see also the statutory mechanism on AustLII).

Settlement valuation shortfalls occur when lenders assess the completed property below the contract price. If a buyer contracts to pay $850,000 but the bank values the apartment at $800,000, the lender will only finance 80% of $800,000 ($640,000), not 80% of $850,000 ($680,000). The buyer must find an additional $40,000 in cash or negotiate with the developer—or risk losing the deposit. (See how lenders use valuation to calculate loan-to-value ratio (LVR) via MoneySmart’s LVR explainer and the common 80% threshold context in MoneySmart’s LMI definition.)

Getting Independent Advice: Benchmarking Deals and Understanding Real Costs

Developers and their appointed sales agents have a vested interest in promoting off-the-plan stock, so independent analysis is critical. A real estate agent working as a buyer's advocate can benchmark the developer's pricing against comparable established apartments in the same suburb, assess realistic rental yields and review historical capital growth data to determine whether the duty concession genuinely compensates for off-the-plan risk.

This type of side-by-side analysis helps buyers identify which Melbourne precincts—inner-west townhouse developments versus CBD high-rise—offer genuine value under the concession versus inflated deals where the stamp duty saving simply subsidises developer profit margins. While agents cannot provide legal or financial advice, they can flag common contract risks and recommend engaging a solicitor and independent valuer before exchanging contracts.

Forge Real Estate Melbourne can help you blueprint your future by finding the perfect blue-chip property where your lifestyle needs and investment goals converge.

📞 Phone: (03) 91003633

✉️ Email: info@forgeproperty.com.au

🌐 Website: www.forgerealestate.com.au

We offer specialized consultation and can assist in both Mandarin and Cantonese.