New land tax: Less rentals, soaring rents

A controversial new land tax won’t come into effect until next year but investors are already selling up their Glitter Strip holdings.

ANALYSIS

A controversial new land tax won’t come into effect until next year but investors are already selling up their Glitter Strip holdings, experts say.

The state government’s land tax reform hit the headlines last week for all the wrong reasons with property experts labelling it “illogical” and “irrational“.

A controversial new land tax is causing Glitter Strip investors to sell their holdings. Picture: Nigel Hallett

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In short, the new land tax will sting Queensland property owners for their investment properties in Queensland as well as their investment properties held in other states from 2023.

A spokesman for the Queensland Treasurer said the Revenue Legislation Amendment Bill was passed unanimously in Parliament in June 2022, with the legislation aiming to close a “land tax loophole” where interstate investors who owned properties across several states can access the tax-free threshold multiple times.

Ray White Surfers Paradise Group’s Andrew Bell says it’s the most irrational decision he’s seen anyone do in the middle of a crisis. Picture by Richard Gosling

Experts on the ground here fear the move will frighten interstate investors, hurt our mum and dad investors, and have a flow-on effect to the rental crisis we are already experiencing.

“It’s the most irrational decision I’ve seen anyone do in the middle of a crisis,” Ray White Surfers Paradise Group boss Andrew Bell said.

“It’s having an immediate effect.

“It’s already causing people to say ‘I won’t buy’ and others have rung us to sell.

“There will be less properties to rent and there will be a drive to pass on the land tax cost in the form of higher rents.”

Ray White Surfers Paradise Group’s Andrew Bell says the new tax, not set to come in until next year, is already having an effect on the Gold Coast. Picture: Nigel Hallett

He said public housing was hard to come by and people were relying on the private rental sector.

“One of the fundamentals of the government is to provide basic needs for the people who elected them.

“One of those basics needs is housing and we know that, currently, there is an acute shortage of rental properties on the Gold Coast, it’s the worst in the city’s history.”

“At the very time we should be incentivising, the Government has gone in the reverse,” he said.

“They should be finding ways to attract people to buy investment properties.

“I’ve been saying those incentives could include the halving of stamp duty if the property is in the rental pool for a minimum of five years and the elimination of land tax or a significant reduction for a similar period of time.”

REIQ CEO Antonia Mercorella has called for a repeal of the new land tax regime.

The Real Estate Institute of Queensland (REIQ) has called for a repeal of the ‘illogical’ new land tax regime with many Gold Coast property experts backing the REIQ’s calls.

“This new land tax regime is as unique as it is illogical,” REIQ CEO Antonia Mercorella said.

“There’s no other state or territory that charges state land tax based on the value of properties held across Australia and outside the jurisdiction where the tax is collected.

Buyer’s agent Oliver Dunstan, of Rose and Jones.

Buyers agent Oliver Dunstan, of Rose and Jones, said the reform would bring, “less rentals and more pain for tenants”, coming at a time where the state’s rental market continued to experience record low vacancy.

“Unfortunately, once this takes effect, we will see typical mum and dad investors and renters bearing the brunt of this policy,” Mr Dunstan said.

“Some investors will be forced to sell their Queensland investments due to affordability, which will push tenants from their homes.

“This will shrink an already under supplied rental market and in turn push rental prices up,” he said.

The new law will come into effect on January 1 2024 and apply to land tax assessments in the 2023-24 financial year.