Victoria’s Vacant Residential Land Tax is being brought forward for homeowners

The Victorian government has proposed a new tax in its first initiative since Dan Andrews left office as premier.

Treasurer Tim Pallas announced the surprise move at an industry breakfast on Tuesday, just one day after the state’s new leader, Jacinta Allan, was sworn in and her new Cabinet unveiled.

Victoria’s Vacant Residential Land Tax, a levy on homes left vacant for more than six months, will be expanded to the entire state, including regional areas, from January 1, 2025.

Currently, only properties in Melbourne’s inner and middle ring suburbs are subject to the tax, which is levied at one percent of the total property value.

Mr Pallas said the move would encourage landowners to develop land as Australia faces a housing crisis.

“We cannot afford to have wasteland in metropolitan Melbourne sitting idle year after year,” Pallas said.

‘Our clear message to landowners is to develop the land or sell it to someone who wants to.

“Similarly, we are not setting a rule for landowners that we as a state are not going to apply to ourselves.

“We expect any government entity that owns land to justify exactly why they own that land and are not putting it on the market.”

The tax will also be extended again in 2026 to include residentially zoned land that has not been improved in Melbourne’s suburbs for more than five years.

The treasurer said the tax currently raises $6 million a year and would be used to “change behavior” rather than benefit the budget.

Former Prime Minister Andrews announced the new 7.5 per cent levy on short-term rental providers, which aims to reduce the number of households renting homes to holidaymakers versus long-term renters amid the housing crisis

‘We would much rather not get $1 from taxes that is intended to change behavior. “We would rather see behavior change so we can get people into our homes,” he said.

Victorian shadow treasurer Brad Rowswell has since criticized the Labor government for the move.

“Victoria is bankrupt and Labor’s only plan for ‘economic growth’ is to tax Victorians more,” Rowswell said.

The change comes after the state government announced it would tax people in Airbnbs and other short-stay rental properties.

Former Prime Minister Andrews announced the new 7.5 per cent levy on short-term rental providers, which aims to reduce the number of households renting homes to holidaymakers to long-term renters amid the housing crisis.

There are more than 36,000 short-stay properties in Victoria, of which 29,000 are entire homes.