No ‘silver bullet’ for housing found in Victorian parliamentary inquiry

A parliamentary inquiry into Victoria’s rental and housing affordability crisis delivered mixed opinions on stamp duty, vacant land tax and social housing strategies.

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In May this year, members from Victoria’s Legislative Council began an inquiry into the challenges facing renters across the state.

Six months later, the Legal and Social Issues Committee – comprising members from the government, the opposition and independent parties – have released their final research and recommendations.

The findings are mixed. Committee chair Trung Luu stressed that the Victorian government has “an important role to play in supply”, but also conceded that the government “has relatively few levers to pull”.

“This is a problem that has been decades in the making,” Mr Luu stated. “The state government still has a role to play, but the solutions to the problems we are facing require a national approach involving all sectors of society, both the private sector and government.”


He underscored that any recommendation offered “should be part of a suite of packages – there is no one ‘silver bullet’ that will fix these problems”.

When it comes to ameliorating housing conditions for Victoria’s most vulnerable renters, the committee generally warned against home owner grants and rent freezes, fearing these could lead to further price inflations.

Nevertheless, the report suggested there are some extreme circumstances in which it is appropriate for these measures to be used, such as during the COVID-19 pandemic or for Victorians who are at risk of homelessness.

“Although rent freezes provide obvious benefits to renters, the committee believes that they should only be considered as a short-term solution in extreme times,” the report stated.

Instead, the committee recommended greater focus on tax rebates, spot purchases and head leasing, keeping Crown land in public hands, built-to-rent and built-to-sell developments, modular prefabricated construction, and addressing the missing middle.

While acknowledging the financial concerns of private developers and investors, the committee recommended mandatory affordable housing requirements “in some form or another” in major new developments.

Currently, Victoria taxes land owners who own inner Melbourne properties that are vacant for more than six months per year, with this vacant residential land tax set to expand to all of Victoria in 2025. The committee did not give any recommendations about the vacant land tax.

However, a Greens minority report included in an appendix recommending the Victorian government to “increase the vacancy tax rate to at least 3 per cent and increase compliance”.

The minority report also recommended the state government to “replace stamp duty with a broad-based land tax and advocate to the federal government to abolish negative gearing and capital gains tax discounts”.

The Victorian government has six months to respond in writing to any recommendations made in the report.

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