Stamp duty should be abolished and negative gearing should be re-imagined to help Australians better afford property, said the National Affordable Housing Consortium.
In a submission to the Senate inquiry into housing affordability, the non-profit NAHC said there must be urgent action needed by the government to address housing problems.
“It is a sad reflection on market and housing policy failure that housing outcomes are increasingly polarized into the ‘housing haves’ and the ‘housing have-nots’, said CEO Mike Myers.
“This is an analysis that not only undermines our national perspective as an egalitarian, ‘fair-go’ society, something that has not been true in housing for many years, but it also has very real consequences for our economic and social performance.”
The consortium recommended stamp duty be abolished because it is a disincentive to mobility and downsizing, despite it being a significant source of revenue for state governments.
“If we were redesigning a modern and efficient tax system, stamp duty would go. In a housing context it impedes labour mobility and the life-time ‘housing careers’ that reflect modern trends in household formation and break-up. It doesn’t reflect modern economic and social circumstances. With an aging population and a legacy of undersupply the tax system needs to promote more rational use of existing stock, including downsizing by retirees.”
However, a revamped land tax regime should encourage people not to keep property empty; whilst new investment opportunities through non-profit providers could provide joint venture or mutual investment models to bring such stock into affordable housing use, NAHC said.
Negative gearing should also be changed, with the preferred option to re-apply negative gearing ‘savings’ to the institutional investment arrangements under National Rental Affordability Scheme, the consortium suggested.
“If such bold reforms are not politically possible, the government could consider that from the reform date, negative gearing will only be available on new supply dwellings for the period of the first investor holding.”
Myers said it is worth remembering it was only 10 years ago that the Productivity Commission Inquiry was told there was no need for government intervention because the housing market would ‘correct’ the problems of under supply and affordability.
“Ten years on and the problem is worse. Ten years on and the underlying problems are harder to fix. Ten years in which some people have suffered unnecessary hardship when solutions were already at hand.”
The inquiry will release its report on 26 June.
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