Concerns are growing in Victoria that the state Labor government’s land tax increase is forcing homeowners to sell their holiday homes.
One of the worst affected areas is the small town of Bright, 320 kilometers northeast of Melbourne, which has a population of just 2,620 and relies on the tourism industry.
The picturesque town, which sits 319m above sea level, is a base for exploring Mount Buffalo and Alpine national parks, ski resorts and wineries.
But the vacation home problem has become so bad that a Reddit post about it was titled simply “How come there are so many homes for sale in Bright?”
“Rising interest rates, low capital growth and high land taxes mean people are getting rid of excess property,” one respondent wrote.
Zirky Real Estate agent Esther Kay, who handles many of the properties for sale in the area, said a combination of taxes was to blame.
“Apart from the land tax, there is also the vacant property tax or the vacant land tax that is coming in January, which will also have a bigger impact,” he said.
Kay said the problem could be about to get worse.
Concerns are growing in Victoria that the Labor government’s land tax increase is forcing homeowners to sell their holiday homes (file image)
Although there are some exemptions, Ms Kay said the new tax “will impact many property owners in Victoria”.
“It’s not very publicized and a lot of people, I don’t think, know it’s going to happen,” he said.
‘You are in a property that is unoccupied for more than six months a year. That’s why it’s called a vacant land tax, but it’s actually settled property, not land rights.
‘He The tax is one percent of the value of the property. in the first year, and then it’s two percent in the second year, three percent in the third year and it stops at three percent.’
Although there are some exemptions, Ms Kay said the new tax “will impact many Victorian homeowners”.
In a city like Bright, with a thriving year-round tourism industry, you would assume that no short-term rental property would be empty for more than six months of the year.
But Ms Kay explained that is not the case, due to the way properties are booked.
“They don’t make it to six months. “You might get a booking most weekends, and then there would be a few extra ones where you’d get bookings for the week through January and Easter, and a few other times, but it’s mainly the weekends,” he said.
“So it would be difficult to get six months of occupancy in a year.”
Ms Kay said: “In the last week I have probably had more inquiries than in the previous month.”
“So there are people who are selling their properties because of the additional tax,” he said.
The changes in the area over time were noted by an online commenter, who said they had camped at Bright for 15 summers in a row.
“The city has gone through a huge change in the 15 years I’ve been there,” they wrote.
The vacation home problem has become so bad that a Reddit post about it was titled simply “How come there are so many homes for sale in Bright?” (pictured, a property for sale in Bright)
‘Many family homes have been torn down for units that are normally high-end holiday rentals.
‘Vacant land has been developed with very large luxury houses. The prices of these homes and units are out of reach for most.
‘I wonder where all these buyers are coming from?’
Ms Kay said Bright is “certainly a pretty vibrant community and a lot of people move here”.
“But at the same time we are a tourist city and we also need accommodation for vacations,” he said.
Some commenters welcomed the fact that there are more properties for sale in Bright, saying “this is fantastic” and that it shows that the tax increases are “working as intended.”
Ms Kay said: “It’s a very short-term solution and I think it’s a short-sighted solution.”
‘I don’t think it’s It will solve long-term housing problems (affordability problems).
Although the Victorian government hit around 380,000 properties with new land taxes in last year’s state budget, the plan has failed, with a third of unpaid land tax bills already more than 12 months old. delay.
The tax was introduced to help the state’s finances recover from the costs of the Covid-19 pandemic, caused in part by Victoria being the most locked down place in the world.
The vacant land tax that goes into effect on January 1 could cause even more delinquents on their taxes.