Vacant property tax plan to cause ‘headache’ for Victorian homeowners, MPs say

A PLAN to slug absentee ­Melbourne land owners with a vacant property tax is being criticised by Upper House MPs who say the long-awaited policy will be “tricky’’ to police.

The proposed vacant property tax will be tricky to police, MPs say.

A PLAN to slug absentee ­Melbourne land owners with a vacant property tax is being criticised by Upper House MPs who say the long-awaited policy will be “tricky’’ to police.

The $80 million levy, aimed at reducing empty inner-city houses and apartments, was a key Budget promise by Treasurer Tim ­Pallas last year.

However, the proposed legislation has been questioned by Greens leader Greg Barber, who says well-meaning landholders could be swept up in the new tax.

“A vacancy tax is a good idea, and a number of cities around the world are doing it,’’ Mr Barber said.

“But the issue here is how ‘vacant’ is defined and what kinds of proof the State Revenue Office will accept.’’

Shadow Treasurer Michael O’Brien also flagged concerns about the Bill, including issues with compliance and who would be affected.

“This looks like a Bill drafted in hell,” he said. “It will be a big win for the tax lawyers and a massive headache for thousands of Victorians.’’

Under the proposed law, short-term rentals, including Airbnbs, will be affected. Picture: Waldo Swiegers/Bloomberg

Under the Andrews government proposal, owners will pay 1 per cent of the property’s capital improved value if they do not live in their house, in 16 inner-city suburbs, for more than six months a year.

Holiday homeowners will also be affected and must prove they spend at least four weeks in the property.

Short-term rentals, including Airbnb properties, must also be occupied more than half the year. It is understood if concerns about the legislation are not addressed, the government’s Bill could face delays in the Upper House later this year.

Treasurer Tim Pallas defended the new tax in the ­Public Accounts and Estimates Committee last week, saying the move would increase ­Melbourne’s available housing stock.

“It is part of a set of initiatives introduced by the Andrews Labor government towards ensuring today’s families and future generations will be able to afford somewhere to live,” Mr Pallas said.

The Bill is being considered in the Legislative Council as the federal government unveiled plans to implement a $5000 tax if investors left residential properties empty or failed to rent it out for six months per year.