The Real Estate Institute of Victoria (REIV) has today criticised the land tax increases announced in the State Budget, saying they will only worsen the current rental crisis facing Victorians.
Quentin Kilian, CEO, REIV, said the decision is a backward step that fails to address the shortage of affordable rental housing that’s impacting Victorian renters.
“This is a tax on families – not the big end of town. The Government is seeking to recoup the budget debt off short-term solutions that will hurt mum and dad property investors and Victorian renters, while exacerbating the structural housing supply issues facing the state”, he said.
Small businesses will also be impacted as land tax is not just payable on residential but also on commercial and industrial property.
According to Australian Tax Office data, more than 70 per cent of Victorian property investors own only one rental property, with 43 per cent of that group earning under $100,000 p.a.
“This announcement will ultimately drive mum and dad investors out of the market as the cost of maintaining a rental property outweighs futureproofing family finances. The biggest impact will be felt by people with smaller holdings as the tax free threshold drops from $300,000 to just $50,000, disproportionately impacting everyday Victorians investing to secure their future.
“Larger land taxes are a disincentive for investors which will ultimately drive rental prices upwards as supply fails to catch up to demand. Renters already doing it tough – are also set to suffer under this new levy. This is not good news for Victorians, he said.
Mr Kilian said the REIV urges the government to urgently reconsider its position and review ways in which buying and holding property can be incentivised, rather than targeted by growing costs.
“More needs to be done to future proof sustainable, accessible, and affordable housing for all Victorians”, he concluded.
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