$800 Million Social Housing Levy
From July 2024 all newly built developments with three or more dwellings or lot subdivisions will be forced to hand over 1.75 per cent of the expected project value.
The levy is to fund an extra 1700 affordable homes each year, under an Andrews government overhaul the industry claims will add almost $20,000 to the cost of a typical new home.
Channel 9 News reached out to our CEO, Jeff Smith this week for insight on the potential impact for developers and the new build housing market.
“Extra fees will make it tougher to enter the housing market with first home buyers and young families the most affected.”
The proposed social housing tax will drive up home prices and end up hurting those it’s trying to help. The 1.75% tax on new developments will be passed straight to purchasers. This will drive up new home package prices, which in turn will drive up the cost of existing homes.
With the price of all new homes raised, we make it harder to get into the property market, increasing the need for social housing.
The only people this tax will advantage are those that already own property. All land developers will pass the costs of this extra tax on to purchasers, and to say otherwise is naïve. We all understand that businesses pass on additional costs to their clients as the cost of business goes up, and land developers are no different. The effect of this tax will be to increase the divide between existing property owners, and those that cannot afford a home.
The State Government has stated that only 30% of planning applications will be affected by this tax, as it only applies to subdivisions of 3+ lots. Whilst that statement is accurate, over 90% of new land in Victoria will have this tax applied based on the average subdivision being 25 lots or more. The only land this tax does not affect is individual blocks that are cut off a larger property.
The next time someone complains about high property prices and how hard it is to get into the market, this is another reason why.
Victoria needs to address the need for social housing, but it should not try to fix the problem by directly targeting people trying to get into the property market. We need a better solution than this poorly conceived tax to fix a true social problem.
Perhaps the government can work with local councils, and builders to find suitable land that can be used for social housing. Or, instead of selling off state government land, re-purpose into a social housing development. There are many ways to address the need for Social Housing, but this proposed method of taxing new land will only result in widening the gap between the haves, and the have nots.
Jeff Smith
CEO – Lansell Homes
UPDATE: March 1st 2022 – Excerpt from HIA
Social housing tax shelved
The Victorian Government has announced today that it will not proceed with its proposed social housing tax.
HIA has welcomed the shelving of the tax. We have vigorously opposed the Government’s proposed 1.75% impost on new housing since it first came to light two weeks ago. It creates yet another barrier to home ownership for Victorian families and would have applied to new homes once in place.
HIA supports the government’s aims of boosting the supply of social and affordable housing, but not by introducing a new tax on new housing. HIA estimates that this tax could have added up to $20,000 for a new home buyer, adding to their mortgage repayments, and having the opposite impact of pushing people out of home ownership.
