Victoria’s new investor land tax grab – announced in its state budget – will hurt property owners the most, according to two professional bodies.
In a statement, the Property Investment Professionals of Australia (PIPA) and the Property Investors Council of Australia (PICA) said that under the new policy, a Victorian with land holdings valued at $1 million will be slapped with an extra $2,000 in land tax per year – or about $20,000 over the next decade – but the tax will continue to rise along with land values throughout that period, so the cost to investors will likely be much higher.
“This is what happens when you have so much debt as well as continued economic mismanagement and self-serving governance,” PICA Chair Ben Kingsley (pictured above left) said. “Victorians will be paying for the government’s incompetence for not just years, but for decades.
“It’s a classic case of which policy is going to cause the least amount of political damage, so they go after the aspiring and hardworking Australian, but aspiration in Victoria is officially dead under the Labor government.”
PIPA Chair Nicola McDougall (pictured above right) said the “absurd” new land tax grab seemed to be modelled on the Queensland government’s failed policy last year.
“It does seem like the Victorian government has taken an illogical page out of the Queensland’s government’s ill-fated and investor-focused land tax playbook from last year, and we all know how that worked out for them,” McDougall said.
“This absurd policy will no doubt lead to the exodus of investors in Victoria who are already struggling with significantly higher mortgage repayments that dwarf any increases in rent over the past year.”
Kingsley said the policy folly will drive investors away from Victoria in droves – similar to what happened in Queensland last year – and result in renters paying higher rents.
“Victoria has the highest stamp duty of any state and territory in the country, so this policy is like rubbing salt into a wound,” he said. “Anyone looking to buy property in Victoria will look elsewhere, because this policy says that Victoria is closed for business.
“Borderless investors will simply shop elsewhere, where they are not being slugged by sky-high stamp duty and land tax, which will have a hugely detrimental impact on rental supply.”
McDougall said implementing such a policy during a prolonged critical undersupply of rental properties was simply illogical.
“It’s beggars belief that at a time of record low vacancy rates, rising rents, and increasing overseas migration – many of whom will initially choose to live in Melbourne but may find nowhere to rent – that the Victorian government would even consider implementing such a ridiculous policy,” McDougall said.
“This is yet another example of politicians having no understanding of how bad policy impacts investor behaviour, especially those aspirational and hardworking property owners who are set to be slugged the most by this latest financial impost.”
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