First homebuyers getting locked out by tax loophole, according to SA Council of Social Services
The plan to close a land tax loophole will be good news for those trying to purchase their first property, says the community service peak body – as current rules allow investors to crowd them out of the market.
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First homebuyers are missing out on opportunities to get into the housing market because of the “land tax loophole” Treasurer Rob Lucas is aiming to fix, the SA Council of Social Services (SACOSS) says.
As the door closed on the public consultation phase of the State Government’s land tax reforms last night, Mr Lucas has found support from SACOSS – an organisation that rarely sees eye-to-eye with his government’s policies.
However, Mr Lucas is coming under increased pressure from opponents of the policy, as a new Property Council survey reveals a huge slump in business confidence and the state maintains the highest unemployment rate in the nation.
SACOSS chief executive Ross Womersley said Mr Lucas’s proposal to change the rules so that land tax was evaluated on the aggregated value of landowner’s holdings was a step in the right direction.
“The proposed changes to the legislation to stop tax avoidance are good, sensible policy – both for fairness and to limit existing incentives that encourage investors to ‘crowd out’ low income and first-home buyers in the housing market,” Mr Womersley said.
“The government’s own figures show 56,000 households can’t get affordable housing and there has been a decline of around 20,000 social housing tenements over the last 25 years.
“I think it is extraordinary that property developers are shameless enough to argue aggregation is not a problem.”
Mr Lucas welcomed the SACOSS support, agreeing the current system made it more difficult for first homebuyers.
But the Master Builders Association SA submission argues the land tax reforms will have the opposite effect.
“Since changes to land tax were announced Master Builders SA has regularly heard reports from private planners that they have lots of clients cancelling or holding back on developments,” the submission said.
“The reality is land developers supply finished allotments to the market so builders can build on them.
“Grouping of newly created residential building allotments will increase the cost of these allotments as the developer passes the cost on.”
Business SA chief executive Martin Haese said the option to delay the Bill, that will underpin the land tax changes, must remain on the table, along with further considerations to grandfather existing investments which have been made in good faith.
“There is no doubt the land tax aggregation changes have caused a significant amount of uncertainty within the South Australian business community, and that has been reflected in several business confidence surveys of late,” Mr Haese said.
“After consulting with our members and other concerned businesses, we also know many property owners are reluctant to sell their properties or begin further developments because of the State Government’s land tax proposals.”
Mr Lucas, who has promised to introduced the legislation this month, said delaying it would be a recipe for disaster.
“The Government view is that this short period of uncertainty should be put to rest,” he said, and again urged Labor to make clear its position.