Non-users may have to pay for vacant properties

It would not affect holiday homes unless they are not being used.

I personally think that this is a great idea and bring it on. If the governments keep insisting that there are housing shortages then rather just keep building, viable alternatives such as this should be reviewed.

 

There's nothing ridiculous about it. Houses within the designated metropolitan boundaries in each major capital cities should be utilised. If people want to use them for holiday houses they can afford to pay the premium. Better yet if they don’t like it don’t use it as a holiday house and sell it. Whether you like it or not it’s the Government that controls the price of housing. They do this by controlling immigration, regulating densities and zoning, releasing or conserving land supply, regulating the construction industry, regulating taxation polices around property investment, and through strong governance etc.

As for your car example similar policies already exist. For example if I want to drive a Commodore and you want to drive a Benz you’ll be slugged with a luxury tax. I’m not sure what it’s like in Victoria but in SA the cost of car registration varies by the model and power of it. So my Commodore gets taxed at a higher rate than a Hyundai Getz. The problem with the whole ‘free market’ is it doesn’t always lead to the most socially beneficial outcomes. That’s why we have Governments who are elected to make decisions and redistribute wealth to produce the best outcomes for our citizens.

 

I think when you get into the realm of folks who are buying cars and who are happy to not drive them the cost of the rego etc becomes unimportant.

A lot of car enthusiasts will have such things as a Merc, and a Porsche, an old Aston Martin etc.

How do you arrive at this conclusion?

If I go to an auction, and bid $1k more than the next bloke and win the property; how is the Gubb responsible for me doing that?

I will say this though (and I've always said it) - a large chunk of all housing cost is eaten up by GST and Stamp Duty on every sale and purchase transaction.

This is contributing to the overall cost of a house, but the sale price is not controlled by the Gubb.

If there is no interest in a property, and noone buys it; there is no GST and no Stamp Duty.

And/or; the house eventually sells for a much lower price (because of little buyer demand and a desperate seller) - the market controls the price of the house.

 

I'm all for it.

Then I'd have an excuse to get an AirBNB account.

 

Redistribute the wealth, ah that's where they got it wrong.
They've been trying to move it the wrong way to the people who already have most of the money.

 

Yes if somebody wants to pay $1 million over the reserve for a house they are welcome to. However, the fundamental driver of the market and prices is the Government policies and Government stability. After that you have economic fundamentals at play, such as income to price ratio, unemployment levels, area demographics etc. but the whole system is underpinned by the Government otherwise it collapses.

Look at the influence of governance for example. In Australia once you pay off your mortgage you own that house and nobody can take it away from you. The only time your property can be taken away is by the Government and only if it’s for the need of a greater good e.g. they want to extend a main road or build an airport landing strip etc. Compare that to somewhere like the Cook Islands where property can only be leased and not owned by anyone that doesn’t have original claim to it. Same as you and me could both invest in Nigeria or a West African country if we wanted to. Would we? No because there’s no property law and if there is a law there’s no governance to enforce it so people wouldn’t be confident in investing their money there.

Same as foreign investment is controlled by Government. If the Government turned around and declared foreign investors weren’t allowed to own any houses and had to sell immediately, what do you think would happen to prices!?

Same as if the Government decided there was no need to zoning or have density restrictions and developers were allowed to build as many houses and apartments as they liked? What do you think would happen to prices?

If the Government suddenly decided there was no need to contain urban sprawl and decided to release land supply throughout each capital city, what do you think would happen to prices?
If the Government decided to completely remove negative gearing and withdraw the capital gains tax concession on both investment properties and for owner occupiers (so home owners pay 100% tax on any profit), what do you think would happen to prices?

 

Very rarely are places left vacant long term - maybe a couple of years max. So the services & supply allowances designed into the area are still needed.

Regarding it being inefficient - yes, but the cost is already on the owner who leaves it empty. They pay for services they don't recieve - ie rubbish collection, council admin fees they dont utilise, dog pounds, sewer access ,ect. The owners who pay, but don't use the services already subsidise it for everyone else.

On a macro scale - if everyone put in a tenant following this new tax, rates for everyone would go up. It just doesn't make sense. If anything it should be the opposite - some services (like rubbish) should be based on consumption.

And yes, if you own the land I don't believe the council has the right to dictate what you do with it (as long as it is allowed within the council zoning - if they really want they can implement zoning "max 4 weeks vacant" or something and that way the buyer can make the decision if they want to purchase in that area).

 

I really don't think it's that simple - your description there sounds like a conspiracy theory (no offence intended). I doubt they are secretly sitting on zonings and trying to force prices up so folks can't live anywhere.

Plus; affordability is largely a personal viewpoint, and changes from year to year.

Gubbs have zonings for land based on their usage, basically, and vacant land outside of cities is historically farming, or Crown land. Part of the problem with releasing land is infrastrucutre to those areas. Some of the cost is shouldered by the developers I would say, but there's not much use releasing 500 acres of land out in the boondocks if there's no money to fund roads and sewerage or whatever.

Also; many of the jobs are focused in or around the existing cities and suburbs of most cities, so the demand for folks to live near to or in the cities and suburbs is far greater than out min the regional areas...towns only evolve sideways as demand grows. The Gubb doesn't force folks to want to be near the Cities; the folks do.

Also; it is cheaper for the Gubb to fund infrastructure which already has a substantial base rather than raw land.

If you remove all CGT concessions on all housing, and forced folks to pay tax on 100% of their gain, it would stop a lot folks from selling, for sure; but a lot of PPoR sellers sell for reasons other than a profit. I recently had to sell my house so I wouldn't go broke; otherwise I would be in my house for life.

So; imagine that; folks not selling, folks not buying. Yes; prices would probably stall. It is a good scenario in the short term for the FHB's.

But; many folks have set up their future through their PPoR equity (me, for example but it has gone terribly wrong and a lot of the gain I made has disappeared).

If this is a possible outcome, then many folks will think twice about using equity for investing for their financial future; less business investment, less rentals on the market.

We could see rents increase dramatically to cover the incentives taken away from LL's, and we could see a massive decrease in small business investment too. Banks very rarely lend on business ventures now - much small business is funded by PPoR (or other property) equity.

The result could be - less jobs, less GST for the Gubb, less PAYE for the Gubb, higher welfare and pensions due to folks not obtaining wealth as a result of no investment.

I reckon the overall gain in revenue to the Gubb from such a plan would be outweighed by the overall loss.

 

There's plenty of places which are vacant even in the cities and burbs. I had a client who bought from an OS vendor. The vendor bought otp, never used it, visited it or leased it.When the AUD increased, the owner sold out after holding it for several years.

 

Scott, speaking to an inner city strata manager yesterday he said that they have 5 building where the apartments would only be 40-55% occupied. These are new apartment buildings sold in the last 12 months to overseas buyers.

And he is not the only agency that would be experiencing this.