Investor concerns mount over Victorian land tax
With the Victorian government introducing new levies, an investor has sounded the alarms on how this could impact property portfolios.
As the Victorian government recently announced a new 7.5 per cent levy on short-stay accommodations as part of its plan to boost housing supply, business coach and mentor Therese O’Neill expressed concerns over the impact this will have on her property portfolio and her ability to provide affordable housing to renters to Smart Property Investment's sister brand, The Adviser.
“My new residential land tax bill is estimated to be around $1,200 in the first year,” Ms O’Neill said.
“This comes on top of an almost doubling of my investment loan repayments and rising cost-of-living pressures.
“At a time when Victoria is in the midst of a housing crisis and rising rents, this new tax does not make logical sense to me.”
Ms O’Neill flagged that she will be “forced to pass on” the additional cost of ownership to her tenants when the time comes to renew their leases and stated that this would intensify the housing crisis, further hindering rental affordability.
“This tax is unfair, illogical, and will only make the housing crisis worse,” she stated.
“The Victorian government should be looking for ways to encourage investment in new housing, not discourage it.
“This could be done by reducing stamp duty rates or providing other financial incentives to investors.”
A similar sentiment was shared by chairperson of the Property Investors Council of Australia, Ben Kingsley, who stated that the government is failing to attract tens of billions of dollars from “small-business property investors”.
According to the Victorian government, the estimated $70 million of revenue generated would be allocated to Homes Victoria, with 25 per cent of the funds reserved for investment in the state’s regional areas.
Former Victorian premier Dan Andrews, who announced his resignation from the role of Premier on 26 September, said the short-term levy came as the population of regional Victoria was expected to grow to 2.3 million by 2051 amid the mounting housing concerns in the regions.
Elsewhere, NSW North Coast mortgage brokers have also expressed doubts in a similar move by the NSW state government to grant the Byron Shire Council the authority to tighten restrictions on short-stay accommodation.
Managing director at Entourage Finance, Damien Roylance, also suggested a move such as this would exacerbate housing issues.
“A vacant property is probably the worst possible outcome for everyone,” he said.
“If councils want to get investors to open up their properties for long-term rentals, they need to incentivise them.”