Realestatebusiness.com.au published an article on 26th June 2023 that stated that a new study by the Real Estate Institute of Victoria (REIV) has revealed that agents have been flooded with calls from Residential Rental Providers since Victoria’s state budget imposed new and increased land tax on investment properties.
Our experience here at First National Real Estate Neilson Partners confirms this information, with a much higher call rate over the past month or so.
The latest insight came as Victoria was labeled the “worst” state or territory across the country for Renters by Property Investment Professionals of Australia (PIPA) and the Property Investors Council of Australia (PICA).
Conducted by the Real Estate Institute of Victoria (REIV), the survey revealed that 90 percent of real estate agents and property managers have fielded an increase in calls from investors concerned about their finances in the wake of the state’s new taxes. At least 70 percent of polled agents and property managers stated that the calls came from investment property owners who are seriously looking at selling.
The report also claimed that calls from Renters have also spiked with expressions of “extreme concern” about their finances.
Rents have been tracking steadily upward due to the severe shortage of stock, coupled with Owners who are looking to recoup significantly higher mortgage payments. Now, Renters are alarmed at the prospect of new state budget taxes ultimately being passed onto them by their Rental Providers.
REIV CEO Quentin Kilian opined the survey provides hard evidence that the 2023-24 State Budget’s land tax increase is a bad policy. He also expressed frustration that the voices of industry leaders who could have commented on the potential flow-on effects from taxing investors had not been sought prior to the budget announcement.
As of the land tax year 2024 property owners of 2 or more properties will pay a temporary surcharge per year:
- For taxable landholdings between $50,000 and $100,000, a $500 flat surcharge will apply
- For taxable landholdings between $100,000 and $300,000 (or $250,000 for trusts), a $975 flat surcharge will apply
- For taxable landholdings over $300,000 (or $250,000 for trusts), a $975 flat surcharge will apply plus an increased rate of land tax by 0.10 percentage points
This will remain in place for 10 years with the aim to re-pay the state's COVID debt.
Visit sro.vic.gov.au/publications/changes-state-taxes-june-2023 for full details.
