Victoria found to be the worst state to be a landlord as investors struggle with new land tax pressures
The state has been dubbed the nation’s worst state for landlords and faces economic headwinds and housing shortages as population growth soars.
Victoria has been dubbed the nation’s worst state for landlords and faces economic headwinds and housing shortages as population growth soars.
The claim from the Property Investors Council of Australia follows new tax figures revealing the number of new landlords adding to the nation’s supply of rental homes is in decline.
Meanwhile, the Real Estate Institute of Victoria has warned 90 per cent of the state’s agents have heard from landlords looking to pass proposed new land tax costs on to tenants.
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The REIV members survey also revealed seven in 10 had heard from landlords considering selling since the budget announcement in May.
Treasury intends to reduce the threshold for land tax payments from $300,000 to $50,000, as well as creating a fixed charge from $500 to $3675 depending on a property’s value as they seek to recoup Covid-era budget losses.
REIV president Quentin Killian said the plan “beggars belief” in the midst of a rental affordability crisis.
“REIV members are at the coal face of the housing sector and their engagement with renters
and rental providers every day has brought some uncomfortable home truths — the rental
crisis is real and will only get worse with the introduction of this new tax,” Mr Qullian said.
New Australian Taxation Office figures show the number of people claiming rental property income grew by just 18,698 Australia in the 2020-2021 financial year, according to figures released by the Australian Taxation Office earlier this month.
It’s less than half the 51,574 recorded in the 2017-2018 financial year, and far below the peak of more than 100,000 in the years before the global financial crisis earlier this century.
PICA chair Ben Kingsley said while the 2,245,539 Australians claiming rental property incomes in the latest data was at a new high, the decline in new landlords signing up posed problems for the nation’s future with six-figure migration expected for the coming years.
Mr Kingsley said Victoria was particularly vulnerable to
“On the involvement of government, Victoria is now ranked the lowest by our system,” he said.
Particular concerns for investors include high stamp duty, looming additional charges for land tax and changes to the Victorian Tenancy Act implemented in March, 2021 — right at the end of the most recent data.
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“It’s all made it less attractive to buy an investment property in Victoria,” Mr Kingsley said.
With the prospect some landlords will sell rather than bring existing homes up to the standard needed under the revised tenancy act, and soaring population as migration comes back online following a number of years at a slow ebb during the pandemic, he warned tenants could suffer as a result.
“There will be a chronic shortage (of rental homes),” he said.
Latest figures from PropTrack show Melbourne rental vacancies were at 1.33 per cent in May, having improved slightly since the start of the year.
Just 1.28 per cent of regional Victorian homes available for lease were untenanted.
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Originally published as Victoria found to be the worst state to be a landlord as investors struggle with new land tax pressures