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Victoria’s affordable housing issues will not be solved by increasing residential rates and reducing or removing negative gearing.

REIV Policy and Public Affairs Manager Robert Larocca said that the four-point plan by Australians for Affordable Housing would not solve the state’s affordability issues.

“Replacing stamp duty with an annual land tax on everyone’s home will not make housing more affordable. Whilst there is now broad agreement that stamp duty is an inefficient tax and ought to be replaced, there is no agreement on what to replace it with.

“The Henry Tax Review was prevented from considering the GST as a way to replace the revenue gap created by abolishing stamp duty. Until the GST is properly considered as an option, it would be a mistake to make every home owner pay an annual land tax.

“Suggestions by Australians for Affordable Housing to phase in the change are unworkable, as governments would need to run dual taxation systems for a number of decades.

“The suggestion to abolish or curtail negative gearing ignores the increasing expectation that is placed on the private sector to provide rental homes. As there has been a reduction in the provision of public housing over the past few decades, it would not be sensible to make it harder for individuals to invest in rental stock.

“Governments need to make it easier, not harder, for individuals to invest in housing. This requires more equitable taxation arrangements and making it easier for the supply of new homes to be increased when necessary.

“For instance, in Victoria the provision of affordable housing is not assisted by charging investors higher rates of stamp duty compared to owner-occupiers. The higher tax simply results in higher rents being charged.

“The ideas advanced in the Housing Supply and Affordability Reform (HSAR) report by the Council of Australian Governments (COAG) should also be considered. The report highlights the role that every level of government can play to reduce the time and cost in delivering new homes.

“Ensuring an adequate supply of housing, especially affordable housing, is critical. The mismatch between supply and demand that occurred between 2005 and 2010 in Victoria resulted in significant reductions in affordability for buyers and renters alike,” Mr Larocca concluded.

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