Vacant property tax expected to raise $80m in push to increase housing affordability

Contributed by Joe Montero

The Andrews government’s move to impose a tax on those who leave properties unoccupied for more than 6 months in the year, is a positive move to take on the serious problem of housing affordability. It is to come into force next 1 January.

Vacant properties, often in the hands of large companies, are being purposely left unoccupied to cut costs and push up prices in the market. Getting rid of this loophole, should help to bring down housing prices and reduce rents.

According to estimations the proposed I percent on the property’s improved value tax will raise $80 billion that can be used by the government to provide more housing.

The tax is among a suite of changes the government has announced to make housing more affordable, including scrapping stamp duty for first home buyers, on properties worth up to $600,000. First Home buyers will also benefit from a $50 million co-purchase program, where the government will retain an equity share in the properties.

Premier Daniel Andrews said owners had plenty of time to adjust to the new arrangements and put their properties up for sale or lease.

The new policy is geared, towards Melbourne’s inner and middle suburbs, suffering from the highest housing cost and influencing the whole housing market. It will not apply to holiday homes, city units used for work, deceased estates or homes owned by Victorians who move overseas temporarily .

Consider that at least 80,000 properties (nearly one fifth of the total) were left unoccupied in Melbourne in 2016, according to  a study conducted by think tank Prosper Australia. If this number is right, action to discourage keeping properties empty is going to have a telling impact.

Tony Keenan, chief executive of not-for-profit agency Launch Housing, praised the vacant property tax but stressed any money raised should go to social housing.

“We can’t have large numbers of vacant houses during a time of housing crisis,” he said.

Housing Choices Australia managing director Michael Lennon said the tax would help tackle the problem of investors “parking money” in property while waiting for its value to rise.

He said that practice was particularly noticeable in places like Docklands.

This is a start. But to ensure anywhere near the necessary supply of affordable housing, the federal government must do its part, by scrapping negative gearing provisions and investing in new housing stock, to rejuvenate starved public and community. This would go a long way to tackling  housing poverty and stress  around the country.

 

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