Rental crisis deepens
Young Melburnians excited to live in the centre of our vibrant city are struggling to find a place to rent and are being priced out of our inner suburbs.
As a millennial MP, and a former renter of a shoebox apartment in Abbotsford, I empathise with the pain many young Victorians are feeling. Annual rent increases of as much as 17 per cent year-on-year show there is a serious failure in our rental market.
We know the primary driver of this crisis is a crippling shortage of new housing supply in our inner suburbs, and since my election to Parliament last November I’ve been raising the alarm on this issue.
Victoria is growing, and we should welcome new migrants who are excited make Melbourne their new home and contribute to our economy.
But with a rising population, comes an obligation by government to provide the policy settings to create new housing supply.
This Labor State Budget has decided to take the opposite approach, hiking taxes on new housing investment, which I fear will turn our rental crisis into a catastrophe.
Cost blowouts from the Andrews Government’s mismanagement of major projects and the economy and has led them to increase taxes across the board. The latest cash grab is a radical overhaul to land tax, which will only result in young renters paying more.
Now almost every rental property in the state will be subject to land tax, with the tax-free threshold will be cut from $300,000 to $50,000 and levying charges of at least $975 plus on any land worth over $100,000.
The Treasurer has been forced to admit that this will be $1300 in extra land tax for the average rental property, a cost which will inevitably end up being borne by renters and those who can least afford it.
To large landholders this new tax is a rounding error, but as the Real Estate Institute of Victoria highlights, two thirds of investors own just one investment property, close to half earn less than $100,000 a year, and like the rest of us are just trying to save and invest for retirement.
When we have a crisis of housing supply, the worst thing we could do is raise taxes that disincentivise new housing investment and development, yet that is exactly what Labor has done.
I’ve been vocal about the need for local government to be more constructive when it comes to approving new housing developments, and there is much more to be done across all levels of government.
But when we see a housing catastrophe unfolding before our eyes, it’s time to start getting real about the drivers of this disaster. Let’s stop trying to tax our way out of every cost-blowout and start providing the economic incentives and investment opportunities that will fix housing supply and drive down rents.
Evan Mulholland is Liberal MP for Northern Metropolitan Region and Shadow Cabinet Secretary. •