The state government of Victoria announced a new property tax to boost the local social housing fund — a move that was met with disappointment from experts at the Housing Industry Association (HIA).
Commencing in July 2024, newly built projects with three dwellings or more and three or more lot subdivisions will contribute 1.75% of the “as-if-complete-project value” to the Social Housing Growth Fund.
Minister for Housing Richard Wynne said the change will affect less than 30% of all residential planning permits.
“This is an investment in more new homes, more jobs and more training opportunities for local tradies, with every dollar re-invested in the Victorian construction sector to build more social and affordable homes,” he said.
However, HIA executive director for Victoria Fiona Nield said this tax will be another hit to housing affordability for all Victorian homebuyers.
“The cost of new homes after July 2024 will increase with this tax being passed through in the land prices for all new lots in these areas,” she said.
Ms Nield said property taxes already contribute half of Victoria’s tax revenue and introducing another would only burden homebuyers.
“In Melbourne 38% of a new home build is made up of taxes, fees and charges — this new tax will see land and house prices being pushed further out of reach of new home buyers,” she said.
“Ultimately it is new home buyers who will lose out as the taxes must be passed on in higher land and house prices.”
For context: Melbourne already has a median land price of $377,000 and a median house price of $950,000.
Ms Nield said this new tax could add over $6,600 to the cost of land for new homes.
“Add stamp duty and GST along with many more costs and this tax could cost more than $20,000 for a new home buyer, adding to their mortgage repayments,” she said.
While the purpose of the Social Housing Growth Fund is crucial to the mission of the state government to provide homes, Ms Nield said the means to achieve it should be an “equitable” one.
“It simply doesn’t make sense to suggest that making houses for those that can afford to buy a new house cost more is the right solution to support those that can’t afford to buy one,” she said.
“The tax also comes at a time when the government is implementing a new windfall gains tax in regional Victoria which will raise land prices significantly, increasing building code requirements that will add to construction costs and just last week increased builder registration fees by between 4o% and 200%.”
“The government must stop shifting the burden of funding social and community infrastructure onto a select group of Victorians each year that choose to buy a new home — this tax is inequitable and unfair.”
Photo by @tara-winstead on Pexels.