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Taxing vacant homes and holiday rentals could help ease the housing crisis

Incentivising investors, taxing vacant homes and holiday rentals and releasing more land are all measures being considered to address the current housing crisis according to the industry.

A recent Real Estate Institute of Australia (REIA) National Roundtable on the Gold Coast examined the state of the local Queensland market and looked for short-to-medium-term solutions to provide more homes for Australia’s rapidly increasing population.

REIA Queensland spokesperson and Gold Coast local, Andrew Bell OAM, said a number of areas were discussed, with one of the fastest options being a tax on vacant properties and short-term rentals.

“There are a lot of empty properties around Australia, with people who’ve got holiday homes or foreign investors that have empty properties,” Mr Bell said.

“They’ve bought them and they just don’t use them and they just lock them up.

“So there’s been suggestions of a vacancy tax as in, if you’re not using it and you don’t put it in the rental pool, there’s a tax on it to try and put it in the listing pool.”

Mr Bell said short-term accommodation had also taken a huge amount of property away from long-term renters.

“There is a tug of war between permanent rentals and short stays,” he said.

“We understand how important short stays are because they’re providing accommodation for tourists, which are very much part of our economy. 

“But the short stays are in such demand that they’ve been starting to dig into permanent rentals.”

He said the REIA debated the merits of putting in some form of tax incentives or disincentives to encourage longer-term rentals.

“We understand in a market like Surfers Paradise, short stays make enormous sense, but a short stay at Robina or Coomera not so much.”

According to Mr Bell, the REIA roundtable also looked at tax incentives for investors to encourage people to invest in housing, especially in areas where there’s high demand. 

“Incentivise people to buy,” he said.

“At the moment what’s been happening is we are almost vilifying investors and there have been proposals put forward that are disincentives.

“When people hear about rent freezes and the inability to put rents up for any length of time, this disincentivises investors.

“Then there’s been murmurs about changing negative gearing and some changes to capital gains taxes. 

“This is terribly unsettling to an investor, so it’s no surprise across the board we’re seeing anywhere from 15 to 20 per cent of the rental pool contract.

“We need to go the other way and incentivise people to actually buy.”

Mr Bell also said the group talked about freeing up more land to build new homes as a medium-term solution.

He said the Queensland State Government is currently doing an audit of all the government-owned vacant land that could be used for low-cost housing.

“Again, incentivise those types of developments through taxation, improve the processes of getting it through council and then other measures like stamp duty relief,” he said.

“Then perhaps some tax incentives to get people to build low-cost housing, which could come to market within three years.

“Remembering we’ve got 1.5 million people that they’re suggesting are going to be coming here over the next five years.”

Mr Bell said that other options like build-to-rent also need to be further explored, as well as changing zoning regulations to allow for more affordable housing.

“For buyers of property, we have also seen diminishing supply of affordable real estate, as most of our current areas zoned for development have already been snapped up,” he said.

“More areas need to be released for affordable housing and that will require some zoning changing, so all three levels of government – local, state and national – need to be working in close unison to deliver these outcomes.

“Unfortunately, history has taught us that decision-making at government level is slow and complex, hence several years of housing crisis has now passed without any significant steps being taken.”

Mr Bell said the findings from the roundtable will now be studied further before putting the proposals forward to government.

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Rowan Crosby

Rowan Crosby is a senior journalist at Elite Agent specialising in finance and real estate.