Victoria Labor to cut absentee owner surcharge for foreign developers to boost housing supply

Treasurer Colin Brooks on Wednesday announced cut the additional land tax levied on overseas developers introduced in 2015 and doubled 2023 for residential projects developments that fit Labor’s priorities. Overseas developers would be exempt from the tax during construction if projects meet criteria for the Development Facilitation Program, a fast tracked approval system which applies significant residential projects, that unlock strategic packages land or build energy efficient medium density housing. The cuts will further eate into revenue as state government battles to gain control budget ballooning debt, with falling property prices already slashing expected collection stamp duty revenue.

Analysis

Why This Matters

The state is struggling to meet housing targets and industry says taxes are holding back development.
The government faces a budget deficit and debt while cutting a revenue source.
First home buyers may benefit if more housing gets built.

Background

The Victorian Labor government introduced the absentee owner surcharge in 2015, an additional land tax on foreign property owners. It was doubled in 2023. Property taxes have been criticised by industry chiefs. Falling house prices have also reduced stamp duty revenue.

Key Perspectives

Victorian Government: Cutting tax for foreign developers will encourage more residential projects to unlock housing targets. Industry chiefs: Current property taxes are holding back meeting building goals. Critics/Skeptic: The may further strain state budget and balloon deficit

What to Watch

Whether the Development Facilitation Program criteria to projects enough to boost supply
Impact on expected collection stamp duty and budget debt
Escalate when tax cut may affect foreign investor interest

Analysis

Why This Matters

Background

Key Perspectives

What to Watch

Sources