Controversial QLD Land Tax Law ChangedOctober 06 2022
"The QLD land tax law sent investors with diversified portfolios scrambling when it was announced. They'll be relieved to hear it has been back tracked." - Marco Zande, Strategy Executive
Investors will be circling the Sunshine State on the hunt for their next purchase after Queensland Premier Annastacia Palaszczuk backed down from a controversial land tax change.
The tax would have penalised interstate landowners with investment properties, but the premier was forced to dump the land tax after a public backlash from the property sector and other state leaders.
The decision follows heavy lobbying from the property sector.
The Real Estate Institute of Australia is relieved that Palaszczuk has had a change of heart on the land tax, arguing that a government can’t treat investment in housing differently to that of other asset classes without significant consequences.
“The proposal showed a total lack of understanding of the investment market, with recent studies showing that investors were moving out of that market in response to the possibility of paying more tax,” REIA president Hayden Groves said.
He likened the land tax proposal to when the then-Labor government ceased negative gearing in 1985, only to reinstate it two years later.
However, suggestions that the controversial land tax was impacting renters and was tied to the rising rents in Queensland were incorrect, according to Tenants Queensland, which insisted that it’s a lack of supply that has resulted in steep rent increases.
Domain data shows Brisbane’s vacancy rate remained unchanged over the month of September at an extremely low level of 0.6 per cent for the fourth month in a row – but it also worsened considerably in the past year, falling from 1.3 per cent in September 2021.
However the number of vacant rentals had increased, which indicated that Brisbane’s rental market could be stabilising, providing relief to potential tenants, said Domain’s chief of research and economics, Nicola Powell.
The Property Council of Australia has also agreed that abandoning the land tax was the right decision given the unpredictable impact it could have on rental affordability and investor sentiment.
“The complexity of the tax and its reliance on self-disclosure of individuals and data-sharing of other states further reinforces that this plan needed to be completely scrapped as opposed to just put on the shelf for another day,” PRIA Queensland executive director Jen Williams said.
Queensland was grappling with interstate migration and a large number of infrastructure projects to be delivered, with housing affordability as one of the most pressing issues for the state, she said.
PRD Real Estate chief economist Dr Diaswati Mardiasmo described the scheme as lacking sophistication, adding that shelving the land tax was a sensible measure at this point in time.
“Queensland investors are on shaky ground already, and this land tax would further shake confidence and result in added pressure for the rental market,” she said.
Hendy, N. (2022, October 6). https://www.domain.com.au/news/scrapping-of-controversial-queensland-land-tax-a-win-for-mum-and-dad-investors-1172661/