Property tax hike on agenda to help fund Andrews government affordable housing agenda

Victorians could be slugged with a new property tax to help fund the Andrews government’s social and affordable housing agenda.

The government is planning property scheme reforms. Picture: Nicki Connolly

Victorians could be slugged with new property taxes in a bid to help fund the state government’s social and affordable housing agenda.

The Sunday Herald Sun can reveal the state government has started work to establish new developer contributions in a bid to boost the state’s coffers.

The discussions, which also include planning reforms and improving housing supply, are not part of the upcoming state budget.

It comes a year after the government was forced to scrap its $800m social housing tax that would have funded up to 1700 new social homes each year.

The government backflip came less than two weeks after the tax was announced and would have also included key reforms to fast-track building and planning approvals.

But the property and construction industry slammed the proposed 1.75 per cent social housing levy, which was set to add an extra $20,000 on the median price of a new house.

Now sources say work is underway to recoup funds that would have been raised under the social housing tax.

The Andrews government backflipped on its $800m social housing tax - but now it’s looking to recoup funds. Picture: NCA NewsWire / David Crosling

Advanced industry consultation is expected to get underway later this year in an effort to avoid a similar damaging public campaign as the one threatened last year.

Sources familiar with the government work said various options were likely to be canvassed.

They would include a mandatory inclusionary zoning which would either impose levies or designate a portion of new builds to social housing.

An inclusionary zoning model was close to being introduced in 2019 following a successful pilot program.

Government sources said Victoria had been closely monitoring significant planning changes in South Australia and Queensland.

Since 2020 South Australia has operated under a single rule book replacing the 68 council development plans which regulated planning rules.

In Queensland priority development areas are unlocking thousands of parcels of lands for social and affordable housing.

Daniel Andrews last week confirmed the government was considering a suite of planning reforms.

Levies could be imposed as part of the Andrews government plans.

It could see councils stripped of planning powers over major developments.

Property Council of Australia Victorian executive director, Cath Evans, said any reform needed to be well considered and involve a wide range of stakeholders.

“The Property Council has made our position clear – the Victorian taxation system is in need of a review to fully examine the impact that taxes are having on both the supply and affordability of housing,” she said.

“Any change to the State’s tax settings needs to be aimed at driving economic growth and delivering new housing supply to an increasingly stressed market.

“While we haven’t been engaged on specific proposals for reform, we remain committed to constructive collaboration with the Government to address this and other challenges facing the State.”

Opposition housing affordability spokeswoman Jess Wilson said Victorians couldn’t afford new taxes while there was a cost and living crisis.

“This would be the latest among 44 new and increased taxes, charges and levies under this tired government,” she said.

“The Andrews Government have an impossible task in explaining how yet another property tax hike will solve the housing affordability crisis.”

“Victoria already lags the other states on new dwelling starts and this approach will only make it harder again for Victorians to own their own home.”