The Real Estate Institute of Victoria (REIV) has called on the State Government to review its property tax priorities to incentivise investors and help ease the housing crisis.
In a submission to the 2024-2025 Victorian State Budget, the REIV revealed the Victorian Government received $26.95 billion in state tax revenue in the 2023 financial year, with property tax making up 43.6 per cent of the State Government’s revenue base.
“This suggests a heavy reliance on property taxes,” the submission said.
“Furthermore, data from the Victoria State Government’s Treasury and Finance indicates that by the end of the FY2022, property taxation accounted for almost half of the state government’s tax revenue at 47.5 per cent of annual income.
“This reinforces the principle of dependence on the property sector which currently needs to encourage investment cash flow rather than obstruct it through taxation deterrence.”
The REIV’s submission urges the Victorian Government to focus on increasing overall housing supply by reconfiguring the state’s property tax regime to incentivise investors.
It has outlined three key recommendations to achieve this.
The first recommendation is for the Victorian Government to consider the introduction of new tax incentives for investors supplying long-term rental stock to the market.
This could be through a land tax concession for property owners who keep their property on the rental market for an agreed consecutive term, such as five to 10 years.
These long-term rental supply incentives are likely to have greater impact than recently announced levies on vacant land and short stay accommodation.
REIV President, Jacob Caine, said the Victorian Government must reconfigure its property tax policy using principles that make Victoria an attractive state for investors.
“It’s time the Victorian Government reconsidered several comfortable yet outdated taxes like stamp duty and instead adopted fit-for-purpose tax measures that will drive investment and give more Victorians a roof over their heads,” Mr Caine said.
“To increase the supply of housing in Victoria, we need a tax regime that positions this state as a more competitive place to invest.
“While we welcome recent commercial and industrial property policy efforts, more must be done in residential property to bolster housing supply.”
The REIV has also recommended a complete review of the state’s stamp duty regulations, including considering a complete replacement of stamp duty tax with a new structure that promotes mobility and supports economic activity.
The industry body would also like to see negative gearing retained in its current configuration.
The REIV’s view is that negative gearing plays an important role in incentivising investment in the state’s rental market, and its removal would lead to further destabilisation of the rental market and removal of stock.
In other REIV news, the institute is moving its headquarters to Abbotsford, with the purchase of 617 Victoria St.
The 1658sq m commercial property is situated 200m city-side of Victoria Gardens Shopping Centre and features a modern multi-level office space with 52 carparks.
The new building is three kilometres from the CBD, and close to public transport.
Settlement for the property is scheduled for late June 2024, after which a contemporary interior fit-out will be commissioned, providing REIV employees, members and stakeholders a new and inspiring corporate home.
Jacob Caine, REIV President said the purchase of the Abbotsford property presented the perfect opportunity for REIV’s stakeholders.
“Relocating our corporate office will signify a new and exciting chapter for the REIV and importantly enable myriad benefits for our employees and members,” Mr Caine said.
“The new premises will create a more engaging environment for training and development and offer a tremendous space to run events and welcome visitors.
“We will also ensure REIV’s new home is equipped with cutting-edge technology so we can improve our communication and engagement with all our stakeholders.”
REIV’s move to a new headquarters follows the sale of its 335 Camberwell Rd headquarters in December 2023.
