How will the changes to GST affect you?


Residential development is about to undergo the most radical change since the introduction of GST.

For all sale contracts entered after 1 July 2018, GST will be remitted to the ATO at settlement.

I have started to see the signs that this will further tighten the availability of development finance.

My understanding, from conversations with disgruntled developers who have traditionally used bank funding, is that, as a rule of thumb, the banks have reduced lending loan to value ratios from 65% to 55% of gross realisable value (excluding GST).

The cost of the additional equity on top of the cost of achieving 100% debt coverage from preconstruction presales will severely prejudice the viability of quite a few proposed projects.

GPS can still lend up to 70% of GVR (excluding GST) with no presale requirements for the right projects.

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