Sam Tarascio slams Victoria taxes for stunting housing projects

Property development heavyweight Sam Tarascio has warned that new housing projects in Victoria are being hit by state government taxes, making them harder to stack up.

Salta Properties managing director Sam Tarascio.

Property development heavyweight Sam Tarascio has warned that new housing projects in Victoria are being hit by state government taxes that have made them harder to stack up, and cut into ­demand.

Mr Tarascio, the managing ­director at Salta Properties, which was founded by his billionaire ­father, said business conditions for investing in at-scale housing projects in the state had never been harder.

He expressed frustration on ­social media ahead of the state’s budget on Tuesday, saying that government policies should be supporting the housing sector, but were instead doing the opposite.

“What was once a thriving industry delivering high-quality homes has been crushed by a ­series of state taxes that have driven the cost of building new homes so high that even in a market desperately short of housing it is impossible to make feasibilities stack up,” he said, adding that this meant the industry could not ­deliver the supply.

Mr Tarascio acknowledged there had been some improvements to planning, but a raft of new and increased taxes had “killed the market”, with impacts on both buyers and developers.

“Land tax and stamp duty increases have directly impacted investors – driving rents higher,” he said. “Foreign buyer levies and surcharges have chased foreign capital out of the market, reducing the supply of money to help fund our record housing need.”

Developers also faced difficulties in accessing land. “Windfall gains tax has made it impossible to rezone land from no longer fit for purpose uses to a housing use,” Mr Tarascio said.

He dubbed the vacant residential land tax “incredibly stupid”, saying it had made developers “nervous about delivering supply by taxing the very stock the government wants them to produce”.

His sentiments are widely shared across the home building industry, with relatively few new projects under construction even though big players are positioning as they expect prices to spike.

They are facing a raft of problems, including high labour costs, still high input and construction prices, as well as foreign investors steering clear of the state.

Salta Properties is one of the largest investors in the Victorian property industry and has ambitions of building a $3bn build-to-rent business, as well as adding to its extensive industrial and logistics holdings and retail properties. The diversified property group has expertise in industrial, commercial, residential, hotels and retail development. All up, the group is developing more than $5bn of projects across multiple strategic sites.

Mr Tarascio’s calls have met with support, amid concerns that heavy taxes would hit the market hard and affect future collections.

Property Council Australia Victorian executive director Cath Evans called for the expansion of off-the-plan stamp duty concessions to supercharge the apartment market and the pausing of absentee owner surcharges and foreign purchaser additional ­duties to entice more investment.

“Victoria is in the midst of a crippling housing affordability and supply crisis that is being exacerbated by an extremely challenging investment environment, compounded by an uncompetitive and complex tax and regulatory regime,” she said.

HIA executive director, Victoria, Keith Ryan said there were widespread concerns about the impact of taxes. He said last year’s state budget damaged confidence in the home building industry, and he hoped that Tuesday’s budget spared more pain.

“Taxes are one of the major concerns for our members along with higher interest rates dampening consumer demand, the lack of skilled workers for home building, and uncertainty and delays caused by the planning system,” he said.

“I hope that once the budget is finalised the Victorian government can focus on measures to improve business and consumer confidence for the housing industry.”