The Victorian Parliament has passed a range of housing measures, including the introduction of a tax on vacant residential properties also referred to as the vacant residential property tax or vacancy tax. The tax doesn’t apply to all vacant properties, only those located in Melbourne’s inner and middle suburbs- refer here for more information and are unoccupied for more than six months, the tax applies from the 1st of January 2018 and is based on use and occupation in the preceding year.
Why could this be setting a precedent for other states? The Victorian Government was concerned about the number of vacant properties across Melbourne’s inner and middle suburbs and the tax is intended to encourage landowners to make residential properties available for purchase or rent so that Melbourne’s current housing stock is used as efficiently as possible.
How much is the tax and how is it calculated?
It is an annual tax of 1 percent of the capital improved value (CIV) of taxable land. For example, if the taxable land has a CIV of $500,000, the tax is $5000.
The CIV of a property is the value of land and buildings as determined by the general valuation process, and is found on the owner’s council rates notice.
Current Market Data
“This is quite remarkable — despite predictions of looming apartment oversupply in inner-city Melbourne, we are seeing vacancies fall rather than rising,” he said.
“Even in the Docklands, the vacancy rate tumbled to just 2.4 percent last month, down from a high of 6 percent in December.”
The figures have been released hot on the heels of the Victorian Government announcing that property owners who leave residences empty will be slapped with a new tax from January 1.
Mr Christopher said SQM’s figures didn’t take into account vacant properties that weren’t being offered for rent. But they showed a need for the tax, which aims to free up more housing and reduce pressure on prices by encouraging investors to list their properties for sale or rent. “Hopefully the tax does work and brings more properties into the marketplace,” he said.
State by State
If Melbourne is successful with revenue raising and controlling the rental market, with the hopes to bring back a balance to housing affordability do you think other states will follow? There is also valid discussion about the viability of future developments and will they be put on hold?
SQM latest report, Boom or Bust has eased fears of a deep housing correction in Sydney and Melbourne, crediting the actions of regulators to rein in rampaging investor borrowing for those cities’ survival.
Let’s look local
BRISBANE’S dwelling price growth is expected to mirror that of Sydney this byear, with new forecasts seeing the city more than double its pace to a high of 7 percent. These projections came off the latest SQM Boom & Bust report.
“Brisbane’s property market will experience slightly stronger gains than those posted in 2017,” said SQM housing expert Louis Christopher, “with property prices forecast to rise from 3 percent to 7 percent.”
What was holding Brisbane back from a higher rate of housing price growth was “the persistent overhang of surplus property listings”, he said.