The talk is all around budgets this past week with the Turnbull Government handing down its 2018 budget on Tuesday evening following the unveiling of the Andrews Government’s 2018 budget last week.
We’ve collated some important commentary around property and real estate to help decipher the good and bad news from both a state and federal perspective, post budget week 2018.
According to Elite Agent Manager’s Samantha McLean “apart from the infrastructure upgrades, which is likely to be positive around the industry, there was not a lot of property in this year’s budget compared to last year”.
In summary Samantha explains the budget delivered:
- No mention at all of anything for First Home Buyers and other than the 2017-19 super savings scheme allowing tax-free savings for a deposit (so not much there for struggling property owners).
- There was a commitment to establish a $1 billion National Housing Finance and Investment Corporation and release more land suitable for housing.
- From July 2019, property owners leaving land sitting empty will no longer be able to claim expenses such as council rates and maintenance costs (adding $50 million to the bottom line).
- $1.6 billion to support state affordable housing services (down $295 million from last year’s budget) and $4.8 billion over four years to the ABS to construct better estimates of the stock of affordable housing.
- $1.6 billion to go into providing 14,000 home care packages for seniors that want to remain in their homes, and expanding the pension loan scheme (possibly disadvantaging growing families looking for larger homes).
- No changes to tax or negative gearing.
In a media release published on Friday May 4 the Real Estate Institute of Victoria (REIV) slammed the Victorian State Budget as one of “missed opportunities”.
The release stated the Andrews Labor Government “has failed to deliver any tangible tax relief to property purchasers or investors”.
REIV President, Richard Simpson said in the release “it is disappointing to note that the Government could not see fit to provide tax relief in the form of reductions in rates of Land Tax or Stamp Duty or indexation of thresholds when times are so good.”
The release also stated that property taxes will account for over $11.5 billion of the state’s $24 billion tax revenue in 2018-19 - an increase of 7.5% over the revised 2017-18 estimates and Simpson explained that “despite a healthy take-up of the Stamp Duty concessions offered to first-time home buyers, the Government’s total take from Land Transfer Duty has increased this year and is projected to rise again in 2018-19, and every year over the forward estimates.”
“Many property investors, including self-funded retirees, are struggling with the burden of rising land tax and the Government with the move to annual valuations, have forecast a massive increase in the Land Tax take of 23% for 2018-19.” Mr Simpson said.
“We believe that lower taxes on land, and on real estate transactions, would incentivise investment and we cannot comprehend why or how the Government has missed this opportunity.
“When the Government refuses to cut taxes at a time of Budget surplus, strong economic growth, Triple A credit ratings and a rapidly growing population, when will they be able to do it?” he said.
The media release also explained how the REIV was also disappointed that the Andrews Government had made little provision for additional public housing in the Budget.
“Given low rental vacancy rates and rising rents across the state, the Government has missed an opportunity to allocate more money to reduce the significant waiting list for Public Housing in the State,” Mr Simpson said.
“In this election year, the REIV will continue to urge both sides of politics to commit to a reduction on the reliance on Property Tax to fund the State’s initiatives.” he said.
On a positive note the REIV supports the cuts to payroll tax in regional Victoria, while noting that many businesses may be too small to take advantage of this, however, it may encourage some larger businesses to relocate.
“REIV also welcomes the continued commitment to improving road and rail infrastructure. Access to efficient public transport, better roads and faster rail, as well as proximity to essential services are needed to support Melbourne’s continued outward march,” Mr Simpson said.