Prosper Australia today welcomed the announcement that the Vacant Residential Land Tax (VRLT) will be expanded to include suburban undeveloped and regional sites.
“Our taxation system should be encouraging the most efficient use of resources. In a housing crisis, our most important resource is land. It is absolutely appropriate to tax those who are hoarding land in the hunt for easy capital gains” said Prosper Australia President Catherine Cashmore today.
“Prosper’s research has shone a light on the problems of land banking in Victoria and we are pleased to see the government responding.”
“Unfortunately this announcement doesn’t address the main concern we had with the original VRLT – why does it rely on voluntary self-reporting by landholders? If Victorian landlords don’t know about a tax and there is no enforcement, who is going to pay it?”
“Overseas models show clear evidence that the policy works when implemented properly. The very low amount currently received by the SRO shows how necessary these amendments are.”
Prosper Australia specifically welcomes the inclusion of new developments.
“Our Staged Releases report showed large-scale market manipulation by corporate developers in order to maintain high prices. This practice is contributing to the sky-rocketing prices of housing.
Prosper Australia research key findings:
- 69,004 vacant properties in metropolitan Melbourne (2019) – at current density this is enough housing for 185,000 people. [1]
- After an average 9.5 years of production time, Master Planned Communities (MPCs) [in the report] still held 76.2% of their land bank vacant across all forms of permitted housing. [2]
Speculative Vacancy Report VRLT recommendations:
- Apply to all land within Greater Melbourne.
- Use Site Value as the tax base to incentivise development.
- Levy at a rate greater than 1%, to account for strata titles that have a lower land value share of total property value.
- Heavy penalties e.g. up to $10,000 per day, should be imposed for the failure to lodge a vacancy notification.
- Vacancy should be monitored by a means that includes water consumption.
- Tax auditing should focus on high-risk, high-vacancy, and unaffordable areas.
