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{{propApi.successMessage}} {{region}} Change locationCan the Feds lower housing costs faster than states can increase them?
Can the Feds lower housing costs faster than states can increase them?
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“For example, the Victorian Government has just introduced legislation that will:
- Introduce a new building insurance scheme which will increase the cost of premiums, further limit the number of homes many home builders may build, and deny some home builders insurance which they need to legally operate;
- Introduce a new development bond for projects outside the domestic building insurance system that will add at least 2 per cent to the cost of building homes;
- Stop home builders from seeking payment for their work until the client lets the regulator know that they don’t want to make an insurance claim against the builder;
- Allow the regulator to make a rectification order for minor defects against a home builder or developer for more than ten years after completion of a project; and
- Deny the builder the opportunity to review a rectification order – an effective right of review is necessary to determine if the defect is the builder’s responsibility.
“This Victorian legislation will strangle the businesses of home builders and force many to exit the industry, reducing competition and adding further to the costs to construction.
“The additional requirements in Victoria will go a long way to offsetting the reduction in lenders mortgage insurance requirements proposed by the Prime Minister a week ago.
“This is in addition to a range of new taxes added to the cost of new home building in Victoria which includes:
- Value capture tax: on its own is an efficient tax, but without a reduction in Stamp Duty, it is simply an additional tax on land supply.
- Second home taxes: Which will see the state government increasingly dependent on taxing housing as their primary source of revenue.
“The ideal solution to increasing housing supply is to first stop governments increasing the cost of home building, such as in Victoria. Then to remove taxes, red tape and delays and reduce infrastructure costs. This will take decades to flow through to households as lower new home building costs.
“In the short term however, the only way in which the Australian government can lower the cost of home building is through policies similar to those both parties announced last week that provide financial support to first home buyers to build new homes.
“To achieve this outcome, substantial taxation reform is likely required to remove state government dependence on housing taxation. This should include removing the GST from new homes, as it is imposed on new homes but not on established homes, until such time as Australia builds 1.2 million homes within five years.
“Housing is taxed less like a necessity and more like a vice, like alcohol or tobacco,” concluded Ms Martin.
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