How Queensland’s ‘ridiculous’ new housing tax plan imploded

Sep 2022Karen Millers

Queensland Premier Annastacia Palaszczuk has been forced to abandon controversial plans for a housing tax that experts warned would worsen the state’s housing crisis.

From next January, property investors were facing a steep hike in payable land tax with treasury set to factor in the value of all real estate holdings anywhere in Australia, not just in the Sunshine State.

Research indicated a mass exodus of landlords would likely follow, seeing the supply of rental accommodation dwindle and forcing prices up.

On Thursday night, Ms Palaszczuk decided to shelve the policy, in what has been described as a “win for common sense” – and for struggling tenants.

Cameron Kusher, executive manager of economic research at PropTrack, said the backflip was good news for renters.

“It was very clear that this policy was going to drive current investors away from Queensland and discourage future investment from the state, which would only harm the economy,” Mr Kusher said.

Interstate backlash

When the housing tax was first announced in December 2021, Queensland Treasury conceded it would need the help of its interstate counterparts to make it work.

Data from other jurisdictions about landholdings was an essential component of the new land tax calculations, it said.

This week, New South Wales Premier Dominic Perrottet led an unexpected resistance to the proposal, vowing to block data-sharing.

“This is a tax implemented by a state that impacts the residents of NSW,” Mr Perrottet said. “It’s wrong, and we’re not going to comply with it.”

He savaged the proposal as nothing more than a cash grab and “lazy policy”.

“This is poor financial management by a Labor State Government impacting the residents of NSW. No one is safe across the country from Labor’s taxing. They’ve gotten over taxing their own residents and are now trying to tax everybody else across Australia.”

Other state and territory leaders followed suit, with Tasmania and the Northern Territory revealing they wouldn’t assist Queensland bean counters either.

According to a report in The Courier-Mail, the situation became clear to Ms Palaszczuk ahead of a meeting of the National Cabinet on Friday, forcing her to shelve the tax hike plan.

Alarming research

As pressure intensified on Queensland to abandon the new tax, research by the Property Investment Professionals of Australia indicated a mass exodus of landlords was looming.

PIPA chair Nicola McDougall said 45% of investors with assets in Queensland had already sold at least one property in the past two years, and mostly to owner-occupiers.

The sell-up meant that almost 30% of all rental dwellings were stripped from the supply pool, equating to potentially 160,000 homes, based on Census data analysis.

And thousands more properties were set to be stripped from the rental market due to investor concerns over the “ridiculous” new tax, Ms McDougall said.

“The survey provided investors with more than a dozen potential reasons why they may sell a property in the next year – and the Queensland land tax was the top reason with nearly 31% of investors,” she said.

“If the percentage of investors who are considering selling winds up doing so, then we are going to see even higher rents as well as a sharp increase in homelessness – especially in Queensland.”

Speaking after news today that the housing tax had been shelved, Ms McDougall welcomed Ms Palaszczuk’s “leadership” and said renters were the ultimate winners.

“Common sense has prevailed, and we thank the premier for recognising and valuing the vital role that private landlords have in society and the wider economy.

“It’s time for all of us to work together collaboratively to help restore investor interest in Queensland, as well as explore ways to improve the supply of rental dwellings.”

Housing groups’ fury

The looming tax hike was described by various housing industry groups in recent weeks as unworkable, unfair, and illogical.

The Real Estate Institute of Queensland led the charge against the tax and warned of the impact it would have on tenants.

“To send shockwaves through the private housing investment market during a rental crisis was unprecedented and illogical,” REIQ chief executive Antonia Mercorella said. 

“Abandoning the contentious land tax regime will bring confidence back to the property investor market in a time of great uncertainty.”

Ben Kingsley, chair of the Property Investors Council of Australia, had described the policy as “ludicrous”.

“Landlords who have holdings are effectively being double taxed with Queensland claiming the right to tax based on property that’s not even within its jurisdiction.”

Meanwhile, Hayden Groves, the president of the Real Estate Institute of Australia, said demonising investors ignored the important role they play in providing homes for millions of people.

“It is astonishing that policy makers still don’t seem to understand that rental market challenges derive from supply shortages not greedy landlords,” Mr Groves said.

Originally Published: Shannon Molloy | realestate.com.au | 30 September 2022

https://www.realestate.com.au/news/how-queenslands-ridiculous-new-housing-tax-plan-imploded/

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