the Victorian Government.
🏘️Sold as a measure to unlock vacant housing in a housing crisis, it is simply another revenue-raising measure which presents a further reason for investors and developers to stay out of the State.
According to our favourite anonymous state government spokesperson, who has clearly never had a job in the real world: "the tax was designed to encourage more owners to make their homes available for rent or sale."
So why is this so pernicious? Because it is designed to force people to "take what they can get" in a given market, whether it covers their costs or not.
A property may be vacant for many reasons, particularly with residual stock in new developments. Sometimes the market falls away, as it has in Victoria the last 3 years, and you need to wait it out (if you can). Just renting out a new unit in the interim is not always a viable or desirable commercial solution.
Imagine any other retail business (which is effectively what #development is) being penalised for holding onto unsold stock.
Or in the case of empty development sites, the #feasibility challenges brought mean many sites will sit dormant for some time. Penalising the owners will not do anything to get new housing built sooner – far from it.
This is yet another example of the Government continuing its modus operandi of foisting its housing failings on the private sector. They do not understand or care about second-order, unintended impacts.
The VRLT adds another level of risk to being a property developer in Victoria, especially in the apartment sector they claim they want to support.
The risk is that by trying to do the right thing and build the #housingsupply the government says it wants, especially in apartments, they'll also try to force you to sell out residual stock at any price.
None of this engenders confidence in the State for the #apartment development sector.
🤔Once whatever is captured by this tax currently washes out, it will lead to lower future supply and no income – just like the FIRB surcharges have killed international investment and reduced new apartment supply to the point where the lost revenue is greater than the tax take.