REIV slams state land tax increases

Peak body says changes will exacerbate the current rental crisis

REIV slams state land tax increases

The Real Estate Institute of Victoria has slammed the land tax increases announced in the state’s budget, saying that they will exacerbate the current rental crisis in Victoria.

According to Quentin Kilian, CEO of REIV, the decision is a step backward that fails to address the shortage of affordable rental housing impacting Victorian renters. He remarked, "

“This is a tax on families, not the big end of town,” Killian said. “The government is seeking to recoup the budget debt off short-term solutions that will hurt mum-and-dad property investors and Victorian renters, while exacerbating the structural housing supply issues facing the state.”

Kilian also highlighted the impact on small businesses, as land tax applies not only to residential properties but also to commercial and industrial properties.

According to Australian Tax Office data, over 70% of Victorian property investors own only one rental property, with 43% of that group earning under $100,000 per year.

“This announcement will ultimately drive mum-and-dad investors out of the market as the cost of maintaining a rental property outweighs future-proofing family finances,” Killian said. “The biggest impact will be felt by people with smaller holdings as the tax-free threshold drops from $300,000 to just $50,000, disproportionately impacting everyday Victorians investing to secure their future.”

Read next: Government schemes unlikely to increase rental supply – report

Kilian said that higher land taxes would discourage investors and result in rental prices increasing due to supply failing to catch up with demand.

A recent report by the Real Estate Institute of Australia and REA Group also blasted governments for policies that disincentivised property investment.

Killian also emphasised the negative consequences for renters who are already struggling.

“Renters already doing it tough are also set to suffer under this new levy,” he said. “This is not good news for Victorians."

Killian urged the government to reconsider its position and explore ways to incentivise property ownership and holding, rather than subjecting it to growing costs.

“More needs to be done to future-proof sustainable, accessible, and affordable housing for all Victorians,” he said.

Have something to say about this story? Let us know in the comments below.