How renters could suffer even more under Daniel Andrew’s new Covid taxes
There are growing concerns that the Victorian government’s new land tax will be passed on to tenants, with the changes announced by the opposition and tenant interest groups.
Real estate investors will be saddled with additional land taxes starting early next year, including a $975 fee for land holdings worth more than $300,000 and an additional 0.1 percent for every dollar above that.
Those with land holdings worth $50,000 to $100,000 will be charged $500 each year. Those who only own a family home are exempt.
Victoria’s land tax threshold will also be lowered from $300,000 to $50,000.
It’s part of an effort to get cash back after the government racked up huge debts from the Covid pandemic.
But there are fears that landlords will immediately pass the annual costs on to tenants – who are already struggling due to a shortage of housing on the market.
There is growing concern that tenants in Victoria will face additional costs as a result of the state government’s new land tax
Shadow Treasurer Brad Roswell said the changes would make rents even more expensive.
“This is going to make it harder for people who can afford it least to enter the rental market,” he said.
“Measures introduced today will make it much more difficult for young people, for vulnerable people who simply ask for a roof over their heads.”
Victorian executive director of the Property Council of Australia Cath Evans claimed the tax would lead to higher rents, owners selling or buying the highway.
“Lowering the tax threshold will naturally create more stress and pressure on those landowners to keep those properties,” she said, according to the ABC.
“And it becomes a risk that those costs will be passed on to tenants, which of course adds to what is already a major challenge in our rental market here.”
Treasurer Tim Pallas (pictured), who handed over the Victorian budget on Tuesday, blamed a ‘lack of supply of suitable housing on the market’ for higher rents
The state budget focused on repaying debt accumulated during the Covid pandemic (pictured, Victorian Prime Minister Dan Andrews)
Ms Evans said owners already have ‘significant expenses in the form of insurance, municipal fees, repairs and maintenance on a property’.
She explained that lowering the tax threshold adds additional pressure that can convince owners to sell during a housing shortage.
“Those who can keep their property will have to pass that on to their tenant, which means a further increase in the rent,” she added.
The CEO of the Victorian Council of Social Service, Emma King, also expressed serious concern for the tenants.
“As for any tax increase for landlords, under no circumstances should it be passed on to tenants, and to be honest when that happens people should be screaming loud and loud because we want to know, and fine we should name and shame a lot , ‘she said.
The tax-free threshold for land tax is reduced from $300,000 to $50,000. It is expected to affect about 380,000 homeowners who have not previously paid taxes (stock image)
However, Victoria treasurer Tim Pallas has dismissed speculation that tenants will bear the brunt of the higher costs.
‘What I believe plays a substantial role is both the increase in the … interest rate for a rental property.
“But more importantly, the fact that the law of supply and demand works in favor of landlords effectively inflating the price.”
Prime Minister Dan Andrews echoed his sentiment.
“The supply is the problem (which leads to higher rents), and anyone who puts in a rental application and finds themselves as one of 25 different applications — 50 in fact — and you have realtors and some landlords who are essentially holding an auction for a rental property. ,’ he said.
“They can tell you there isn’t enough supply, which is why we need to make better and faster decisions.”