New housing developments in Geelong will soon be taxed as part of a state government plan to increase funding for social housing.
The state government announced last week that it would introduce the Social and Affordable Housing Levy from July 2024 for new housing developments in Greater Geelong, as well as Melbourne, Ballarat and Bendigo.
Under the new tax, all newly built developments with three or more dwellings or housing estates will be taxed at 1.75% of the value of the completed project.
The tax will go to the Social Housing Growth Fund, which is then expected to finance up to 1,700 new social and affordable housing units each year.
Housing Minister Richard Wynne said the Social and Affordable Housing Levy is expected to bring in $800 million a year for the first 10 years and will affect less than 30% of all residential planning permits.
“Our historic Big Housing Build is changing lives, putting a roof over the heads of those in need and creating jobs, but we will need to continue building more homes beyond 2024 and these reforms deliver just that” , did he declare.
“We are establishing a steady stream of funding to provide the dignity of a home for thousands more Victorians now and in the future, while locking in social and economic benefits for years to come.”
However, the state opposition and property developers have raised concerns about rising house prices.
The national lobby of property developers, the Property Council of Australia, estimated that the impact of the tax on median house prices would be the same as a 28.8% increase in the stamp duty rate.
He said the tax would mean homebuyers in Armstrong Creek would pay an average of $11,725 in additional tax.
“The new Labor Contribution for Social and Affordable Housing…is another council tax that will drive up the cost of housing and make buying a home more difficult,” said Victorian Senator and former Corangamite MP Sarah Henderson.
“The Property Council calculated that the tax would result in an additional tax bill of $11,725 on the median home price in Armstrong Creek. This is a huge financial blow for the residents of Corangamite and demonstrates once again that higher taxes are in the DNA of the Labor Party.
“I call on Victorian Federal Labor MPs, including the Labor MP for Corangamite, to stand up to Daniel Andrews and stand firmly against his insidious council tax.”
While backing more social housing, Acting Chief Executive of Master Builders Victoria Saeed Mirbagher said the building and construction industry was already making a strong contribution to the overall health of the Victorian economy.
“Our industry remains Victoria’s largest full-time employer and contributes over 46% of state tax revenue, with the housing sector alone generating $3 of economic activity for every dollar invested,” said he declared.
“This is a new tax on our industry at a time when many builders are still recovering from the effects of the COVID-19 pandemic and getting back on their feet.”
Along with the tax, the state government also announced that social housing properties would be exempt from paying the rates.
The tariff reform will be phased over four years from July 2023 and will only apply to social housing in Geelong, Melbourne, Ballarat and Bendigo.
The state government will reinvest the $54 million spent on public housing tariffs into public housing maintenance and upgrades.