Property taxes and the rental market go hand in hand January 2007 RETURN
After vigorous REIV campaigns the state government has wisely moved to reduce both land tax and stamp duty for certain purchasers. It was a huge election issue and partly to lessen an emerging rental crisis.
No-where near enough new property is hitting the market. Victoria has a growing population and our immediate city edge district is growing at an even higher rate. In 1996 there was less than 6500 residents in the CBD/Southbank/Docklands precinct, there is now over 63,000 permanent occupants. This is massive demand that needs new property on masse to fulfil the requirements.
In recent years the market has seen rising building costs, the fear of the 1990’s apartment glut, land taxes, rising stamp duties and developers having to pay 1/11th of sales in GST (and not able to claim it back). These are key factors that effect the supply of rental property. All have stymied new construction and in some obscure way helped current owners by creating a chronic rental shortage.
Apart from a lack of new supply, we are experiencing a boom market with little vacancies and rising rental values. Conditions are so tight that people are competing for the few properties available. Never before have we experienced regular rental bid offs between potential tenants.
History shows that when investors or developers are given too many hurdles to own and supply new property, they retreat and the market dries up quickly. This is immediately followed by an accommodation supply crisis. In 1985, Federal Treasurer Paul Keating abolished negative gearing deductibility for property owners. Investors fled, a rental crisis occurred and one of the shortest living policies ever was abolished in a major back down.
In the early 2000’s NSW Premier Bob Carr created a 2% stamp duty to sellers of investment property. The investors fled again and the Sydney NSW building industry had a major drop. New Premier Iemma cancelled the duty in his 2nd day of office yet they still wait for the recovery.
Whilst we understand the need for Government funds, incentives must be there for the investors and developers. Changes will continue to occur and in our opinion the most fundamental improvement would be the scrapping of GST charged on the sale of new residential property, it should not be deemed a taxable supply as there is no input credit.
The private sector is a huge part of the supply of accommodation in Australia and helps open market forces shape styles of property built. As a nation we are privileged to have such a high participation by the private sector and the common sense it brings to the rental supply.
After vigorous REIV campaigns the state government has wisely moved to reduce both land tax and stamp duty for certain purchasers. It was a huge election issue and partly to lessen an emerging rental crisis.
No-where near enough new property is hitting the market. Victoria has a growing population and our immediate city edge district is growing at an even higher rate. In 1996 there was less than 6500 residents in the CBD/Southbank/Docklands precinct, there is now over 63,000 permanent occupants. This is massive demand that needs new property on masse to fulfil the requirements.
In recent years the market has seen rising building costs, the fear of the 1990’s apartment glut, land taxes, rising stamp duties and developers having to pay 1/11th of sales in GST (and not able to claim it back). These are key factors that effect the supply of rental property. All have stymied new construction and in some obscure way helped current owners by creating a chronic rental shortage.
Apart from a lack of new supply, we are experiencing a boom market with little vacancies and rising rental values. Conditions are so tight that people are competing for the few properties available. Never before have we experienced regular rental bid offs between potential tenants.
History shows that when investors or developers are given too many hurdles to own and supply new property, they retreat and the market dries up quickly. This is immediately followed by an accommodation supply crisis. In 1985, Federal Treasurer Paul Keating abolished negative gearing deductibility for property owners. Investors fled, a rental crisis occurred and one of the shortest living policies ever was abolished in a major back down.
In the early 2000’s NSW Premier Bob Carr created a 2% stamp duty to sellers of investment property. The investors fled again and the Sydney NSW building industry had a major drop. New Premier Iemma cancelled the duty in his 2nd day of office yet they still wait for the recovery.
Whilst we understand the need for Government funds, incentives must be there for the investors and developers. Changes will continue to occur and in our opinion the most fundamental improvement would be the scrapping of GST charged on the sale of new residential property, it should not be deemed a taxable supply as there is no input credit.
The private sector is a huge part of the supply of accommodation in Australia and helps open market forces shape styles of property built. As a nation we are privileged to have such a high participation by the private sector and the common sense it brings to the rental supply.