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A new study reveals that agents have been flooded with calls from landlords since Victoria’s state budget imposed new and increased land tax on investment properties.
The latest insights come as the state was labelled as the “worst” state or territory across the country for renters by Property Investment Professionals of Australia (PIPA) and the Property Investors Council of Australia (PICA).
Conducted by the Real Estate Institute of Victoria, the survey revealed that 90 per cent of agents have fielded an increase in calls from landlords concerned about their finances in the wake of the state’s new taxes. At least 70 per cent of agents say that those calls are from investment property owners who are seriously looking at selling.
Renters, too, have been calling in with “extreme concern” about their finances. Rents have already been tracking upward due to a severe shortage of stock coupled with landlords looking to recoup higher mortgage payments. Now, renters are alarmed at the prospect of new state budget taxes ultimately being passed onto them by their landlord.
Real estate professionals are worried these calls will only worsen as more landlords sell up in the face of higher taxes. More than eight in 10 (83 per cent) respondents said that interest in buying investment property had “consistently decreased” since 2021, when more than 120 changes to the Residential Tenancies Act came into effect. The latest changes, they fear, will only exacerbate the issue.
REIV CEO Quentin Kilian opined the survey provides hard evidence that the 2023-24 State Budget’s land tax increase is bad policy. He also expressed frustration that the voices of industry leaders who could have commented on the potential flow-on effects from taxing investors had not been sought prior to the budget announcement.
“Our door is always open; we implore all sides of politics to engage the sector so we can propose and discuss viable and sustainable solutions to address the core issues impacting housing in Victoria,” he said.
“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”.
And he noted that at a time when rental vacancies were incredibly low across the state, it was hard to understand why the state government would disincentive landlords from holding on to rental properties.
“It beggars belief that while Victoria is facing housing supply and affordability headwinds, the state government would introduce a new tax that will only exacerbate the problem,” Mr Kilian said.
REIV cited a number of agents who reported that the situation on the ground was becoming increasingly dire for renters.
An agent in Croydon noted he was receiving 20 to 40 applications per property, a number that he said points to “homelessness being a high risk”.
An agent in Bayside described that renters increasingly appeared “desperate” to find housing, while a Blackburn real estate professional said that it was already evident landlords had begun to sell in higher numbers since the budget announcement.
Moreover, buyers’ advocates report that the need for their services has markedly decreased.
“Some buyer advocacy clients that were already engaged, finance-ready and actively seeking property to buy as an investment in Victoria have actually paused services as they are considering buying property interstate due to the uncertainty post the Victoria state budget,” an advocate told the body.
Originally Published: Juliet Helmke | Real Estate Business | 26 June 2023