It was with disappointment that we observed the announcements in this week’s budget that are targeted at “multiple” property owners in Victoria. Whilst we view this super-tax on investors as unreasonable and excessive, the Government has gotten itself in significant financial difficulty and those with “multiple” properties are seen as best able to pay to fill the shortfall. The demonstrable facts otherwise simply don’t factor into it. The significant majority of investment properties are held by households with modest incomes and owning just one additional property. Our unhappiness at this strategy won’t change the Government’s resolve and the apparent desperation will mean the levy will only increase.
We are already aware of owners who have “had enough” and decided to sell. The consequence on availability of rental properties is clearly not the main agenda item and this situation will likely worsen over coming months (and years?). Our expectation that prices had now bottomed due to a shortage of properties for sale is now in question. Should financial pressure result in an uptick in sales (whether from these land tax initiatives or the looming expiry of fixed interest loans), prices may yet slip into a second wave down.
Many will be willing to ride out the jump in expenses and be content to hold long term, and for them, rent rises will likely continue. For those reconsidering their desire to ride it out however, the trickle may become a stream. If the decision is made to sell, this would be best done before too many decide to do so.
See below for full details on the budget measures:
The Victorian Budget 2023–24 includes a number of measures that impact legislation administered by the SRO.