New housing developments in Greater Geelong will soon be taxed under a state government plan to boost funding for social housing.
The state government last week announced it would introduce the Social and Affordable Housing Contribution 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 lot subdivisions will be taxed 1.75 per cent of the completed project value.
The tax will be put into the Social Housing Growth Fund, which is then expected to pay for up to 1700 new social and affordable housing properties each year.
Housing Minister Richard Wynne said the Social and Affordable Housing Contribution was expected to raise $800 million per year over the first 10 years and would affect less than 30 per cent of all residential planning permits.
“Our landmark Big Housing Build is changing lives, putting a roof over the head of people in need and creating jobs, but we’ll need to continue building more homes beyond 2024 and these reforms deliver exactly that,” he said.
“We’re establishing a stable funding stream to provide the dignity of housing to thousands more Victorians now and into the future, while locking in social and economic benefits for years to come.”
However the state Opposition and property developers have raised concerns the tax will increase house prices.
The national lobby body for property developers, the Property Council of Australia estimated the impact of the tax on median house prices would be the same as a 28.8 per cent increase to the rate of stamp duty.
It said the tax would mean homebuyers in Armstrong Creek would pay an extra $11,725 in tax on average.
“Labor’s new Social and Affordable Housing Contribution … is another housing tax which will drive up the cost of housing and make buying a home more difficult,” Victorian senator and former Corangamite MP Sarah Henderson said.
“The Property Council has calculated that the levy would see an extra tax bill of $11,725 on the median house price in Armstrong Creek. This is a massive financial hit to Corangamite residents and demonstrates once again that higher taxes are in Labor’s DNA.
“I call on Victorian federal Labor MPs, including Corangamite’s Labor MP, to stand up to Daniel Andrews and strongly oppose his insidious housing tax.”
While supportive of more social housing, Master Builders Victoria acting chief executive Saeed Mirbagher said the building and construction industry already contributed heavily to the overall health of the Victorian economy.
“Our industry remains Victoria’s largest full-time employer and contributes over 46 per cent of the state’s tax revenue, with the housing sector alone generating $3 of economic activity for every $1 invested,” he said.
“This is yet another 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 social housing properties would be exempt from paying rates.
The rates reform will be phased in over four years from July 2023 and will only apply to social housing properties in Geelong, Melbourne, Ballarat and Bendigo.
The state government will reinvest the $54 million spent on public housing rates back into public housing maintenance and upgrade works.
