Experimental data released last year estimates that between 100,000 to 140,000 residential properties across the nation remain uninhabited, constituting about 1.3 per cent of all dwellings. According to Duncan Young of the Australian Bureau of Statistics (ABS), these figures were derived from electricity usage data and government records.
The distribution of these vacant properties reveals a surprising trend: while rural and remote areas exhibit higher vacancy rates, even urban centers like Sydney and Melbourne report substantial figures, with vacancy rates reaching 3.1 per cent and 5 per cent respectively. Young cautions interpreting the data, noting the unusual circumstances of 2021 influenced by COVID-19, which disrupted international borders and domestic migration patterns.
Local governments, however, face limited options in addressing vacant properties unless they pose a public safety risk. Linda Scott, a City of Sydney councillor, highlights the challenges local councils encounter in compelling action from absentee property owners. She suggests that while councils have powers to intervene under specific conditions, the process is often protracted.
Constitutionally, state governments possess significant powers to address vacant properties, including the ability to impose higher rates or taxes. Professor Cathy Sherry from Macquarie University underscores that while private property enjoys protection, state governments can acquire land under the just terms act, offering compensation to owners.
Critics, such as Tim McKibbin from the Real Estate Institute, oppose increased taxation on vacant properties, arguing that property is already heavily taxed. He emphasises the potential consequences of government intervention in property use decisions. However, proponents of vacancy taxes argue that such measures are necessary to alleviate housing shortages, citing examples from cities like San Francisco and countries such as Ireland and the United Kingdom where similar taxes have been implemented.
Victoria stands out as the only Australian state to have implemented a vacant residential land tax (VRLT) since January 2018, initially targeting empty homes in Melbourne’s inner and middle suburbs. Recently expanded statewide, the VRLT aims to incentivise property owners to bring their vacant homes to market, thereby increasing housing availability.
Victorian Treasurer Tim Pallas defends the tax as a crucial measure to alleviate housing pressures, noting its positive impact on reducing property investor activity while stimulating first home buyer participation. Despite controversy within the property sector, the government remains steadfast in its commitment to ensuring that property wealth does not come at the expense of housing accessibility for all Victorians.
As debates continue over the efficacy and fairness of vacancy taxes, the issue remains a global concern. With housing shortages intensifying and public pressure mounting, the question of how best to utilise vacant properties to benefit communities is more urgent than ever. State governments across Australia face a balancing act between property rights and public interest as they seek solutions to this complex and pressing issue.
Contact Accountancy Insurance
We would love to hear from you.
About Accountancy Insurance
Thousands of accounting firms offer our tax audit insurance solution, Audit Shield to their clients.
Find out why.