20000 properties could flood the market (link in description).

This is exactly what I said last week. An article by Your Property Investment just came out saying the exact same thing. 20,000 properties could flood Melbourne

Are they a reputable source?

 

They're talking about vacancy tax. They say its creation will lead to all the vacant properties coming online to avoid it.

There's a couple problems with this. If you can afford to keep property vacant (mortgages probably paid off or never had one) then either:

1. Even with the tax you can probably afford to keep the property vacant still, or
2. Make it look like its not vacant. Ie get mail there and use some utilities.

So I think they are overstating the issue.

I also think vacancy tax isn't a very good idea. Should look at why they're being kept vacant and address that instead.

 

Financial penalties are one of the best incentives for people to do something or change their behaviour if you are super rich and money is of no concern then it won't make a difference but for everyone else where money matters, it will get them moving.

I think in the ACT you can't keep the block vacant for more than 2 years after that penalty start to kicks in and you don't see many vacant blocks in the ACT, no one land banking in the ACT.

 

Tax the landbankers out of existence? Do non-residents get the CGT reduction or land tax threshold?

A massive beat up of an article which comes around every cycle... IIRC last time around the article read " ...10% of homes are vacant across the north shore".

Why? Circa ±5% vacancy rate, houses with DAs awaiting demolition/ under construction/ refurbishments/ occupation certificate, deceased estates, houses for sale/sold/not settled, permanent airbnbers who take stock out of the market. Oh, there's a very small category of overseas owner's and other local but absentee owners too who have these places at holiday homes/weekenders - think the central coast apartments at Terrigal or at The Entrance, Sussex Inlet, Blue Mountains etc.

 

I read an article about a year ago on the subject. It made the point that these vacant houses are not vacant long term ( many months rather than many years). Example: family buys a new home in Autumn, want to sell old home but speculate that they will get a better price if they wait until spring. The house is vacant 6 months. Not sure this would or wouldn't account for the majority of vacant houses. It would be interesting to know the average duration these houses are vacant for.

 

The site is a legitimate media source (or at least, reputable), but as @D.T. said, the headline is overblown.

 

There goes new product for all the agencies out there!

Utilities Check Package:
- On site visit to turn on water tap and power for half an hour every fortnight.
- $39.95 per fortnight.

 

If you can afford to leave a property sit empty, I don't think a relatively small tax will make you sell.
Marg

 

That should help soak some of the demand in Melbourne...apparently most of these are units in the inner city.

They have found this out by electricity use ....

 

Nah, Bunnings timer mate.

 

For a power water hungry nation, what a waste this will be.

 

So why are they keeping them vacant? I always assumed they were foreign buyers because I couldn't understand why locals would forgo 30k income from rent.

 

surprisingly only 10% of them are in the city. The others are in Suburban areas like Moonee Valley and Glen Eira, according to the article.

 

If I was betting man they have high Asian populations...those areas could take a pummelling....

 

If these owners can afford to leave them empty and not need them tenanted I can’t see the 1% fine being a deterrent

 

Just a way for the Government to make money under different names...it is not going to change anything. Empty apartments are not investments as we consider them, it is just a way for rich people to park money.

 

I suspect this is also the way the government will try get votes from uneducated voters. They've incited hate towards property investors particularly overseas 'Chinese' investors who by assumption, are the ones leaving these properties empty.

Surely deep down, they know that people who can afford to leave the properties empty can afford this tax. And even then, it's very easy to make it seem like people are living in a house. After all, I've done this on a number of occasions whilst awaiting new tenants to go in.

 

Optics matter. The appearance to be doing something- even it delivers jack all - is usually enough for people to nod and move on to the next thing in life to gripe over.

 

You're not wrong there.

 

I dont know the specifics on this Vic/Mel specific tax/policy change so I can't provide constructive commentary there.

What I will say though, is to look to Canada's vacancy-tax implementations at a provincial-level (we have states, thet have provinces...).

Seems to me that if you jack up a vacancy tax high enough, then yes... Cashed up overseas buyers *will* suddenly start to give a crap. So to me.... Vic introducing this tax at a low level is strategic. Vic gov will wait and see. If it has little impact at current %, I'd say they'd just keep raising it.