Owners who leave properties vacant will be slugged with a new tax under a Victorian government push to free up more housing for sale and reduce rents.
The new vacant residential property tax is expected to raise about $80 million over four years, coming into force on January 1.
The tax is among a suite of changes the government has announced to make housing more affordable, including scrapping stamp duty for first home buyers on properties worth up to $600,000.
The government will launch a $50 million program to co-purchase properties with first home buyers in which the government would retain an equity share.
The new vacant property tax rate will be 1 per cent of the property’s capital-improved value rather than its overall worth. It will apply to homes that are vacant for more than a total of six months in a calendar year.
Premier Daniel Andrews said the tax would send a strong message to owners who were “effectively banking an empty property and denying that to the market”.
He said owners had plenty of time to adjust to the new arrangements and put their properties up for sale or lease.
The new policy is geared towards Melbourne’s inner and middle suburbs. It will not apply to holiday homes, city units used for work, deceased estates or homes owned by Victorians who move temporarily overseas.
Although the government expects the tax will raise tens of millions a year, Mr Andrews said he preferred the properties were available for sale or rent.
“I do hope it raises no money at all,” he said.
At least 24,000 properties were “demonstrably unoccupied” in Melbourne in 2014, according to a study conducted by Prosper Australia. However, the study suggested the number of empty properties might be much higher based on an examination of water use.
Tony Keenan, chief executive of not-for-profit agency Launch Housing, praised the vacant property tax but stressed any money raised should go to social housing.
“We can’t have large numbers of vacant houses during a time of housing crisis,” he said.
Housing Choices Australia managing director Michael Lennon said the tax would help tackle the problem of investors “parking money” in property while waiting for its value to rise.
He said that practice was particularly noticeable in places like Docklands.
The government has also promised to give first home buyers priority in government-led urban developments, with at least 10 per cent of properties allocated to first-time buyers on projects such as the Arden redevelopment.
But Opposition Leader Matthew Guy slammed the government’s changes, saying lack of supply had sent prices “north”.
Meanwhile, the state government is also spending $20 million to upgrade rooming houses that accommodate some of Victoria’s most vulnerable people. Three government-owned rooming houses – in Carlton, Ballarat and South Melbourne – will share in $10 million in funding for revamps.
Housing Minister Martin Foley said the funding boost would allow rooming houses to be upgraded to fully contained apartments so they were more modern and safer for residents.
“These buildings will become a safe place to live. They will also incorporate the latest environmentally sustainable design, which will assist in reducing maintenance and operating costs,” he said.
The remaining money will go towards upgrading other properties owned by the rooming house sector.