The Queensland government’s “tax grab” could see residential property investors exit the market and put pressure on small businesses, according to an expert.
Ray White Commercial Head of Research, Vanessa Rader said the Revenue Legislation Amendment Act 2022, which will see an increased land tax burden on investors, could make many divest out of the state.
“For those investors who own property across the country, their Queensland land tax burden is now larger than ever before,” Ms Rader said.
“This could conversely see investment assets exit the market as owners look to restructure their portfolios and shelter from this high outgoing.
“Furthermore, this will be a major hindrance in attracting investment into the state with buyers favouring other locations where their statutory liabilities will be less.”
Ms Rader said a lack of rental accommodation in the market and the slow completion of new stock to meet the population movements meant rental increases are tipped to continue to move upward because of the higher taxes.
Commercial tenants are the ones that will likely be negatively impacted by the tax changes, according to Ms Rader.
“For many commercial owners, this change in land tax will not hold the same burden as residential investors,” she said.
“With many commercial leases ensuring the recovery of land tax outgoings as part of their lease (with the exception of retail leases), tenants will be the losers from the Queensland Government’s tax grab as small businesses will likely foot the bill from their landlords.”
Ms Rader noted this would add further pressure to businesses who have been impacted by interrupted trade during COVID-19, struggled through changing regulations regarding masks and vaccinations pressuring their customer and staffing levels, as well as those small businesses which were borne out of the pandemic by individuals who looked to survive during a time where job losses and reduced hours were a feature.
She said the grab for land tax would impact a range of investors but also occupiers alike.
“Consideration for small businesses who bear the land tax obligations for their commercial landlords or residential tenants who have the threat of not finding a rental property if rents increase to recover this new or increased outgoing has not been made,” she said.
“There may be some assets come to market or investors revisit their ownership structures in response to the changes in legislation.
“Others ponder why they should invest into a state where their national investment holdings, which were made to spread risks and liabilities, should impact them in the calculation of a state-based tax.”