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A tax could be the answer to making rent cheaper

If you rent a house, than you know just how expensive it can be and how hard it can be to find a suitable home when you move.

In fact, SGB Economics and Planning’s latest rental affordability index has rated housing affordability in Australia as “in crisis”.

Executive officer of National Shelter Adrian Pisarki told NewsCorp he was concerned that Australia had no “national strategy” to overcome the issue of housing affordability.

“Low income households continue to face unaffordable rents and high levels of housing stress despite some improvements in the rental market — additional supply in capitals has not eased rental affordability for low income houses,” he said.

“We are most concerned that there is no national strategy to tackle housing affordability, especially when we see that additional supply is not reaching low income households, and increases in homelessness are being reported.”

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To turn the situation around, some advocates are calling for the government to introduce a vacancy tax.

So, what’s a vacancy tax?

Well, according to NewsCorp reports, a local government in Vancouver will begin taxing property owners who leave their property unoccupied for six months or more.

As part of the tax, all property owners will be required to declare the occupancy of their properties and will be taxed 1% of the value of the property if it is unoccupied for six months of more.

According to a study by an Australian think tank last year, there are more than 80,000 unoccupied homes in Melbourne and more than 90,000 in Sydney.

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SGS Economics & Planning senior associate Ellen Witte told NewsCorp that if such a tax were introduced here in Australia, it would encourage more people to rent out their investment properties.

“Where property owners do not (rent out their properties), the tax revenue could be used to reinvest back into affordable housing,” she said.

But even then, it might not be enough to address housing affordability on a larger scale.

“It’s a wider problem than that, this would by no means be a measure to address the wider affordability issue,” Witte said.

“It needs a multi-layered approach. We need review and reform of the existing Australian tax regime, especially around capital gains tax rebate and negative gearing, and that’s really to make the housing market more attractive to first home buyers and take out some of the inflationary forces that is created by those tax measures.”

What do you think? Does it sound like a good idea?

 

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