Tuesday, March 07, 2017

Eliminating land-bankers

One of the problems of New Zealand's property boom is that wealthy property owners often find it easier to leave houses vacant rather than providing a home for anyone. The Australian state of Victoria has a good solution for this: tax it!

Owners who leave properties vacant will be slugged with a new tax under a Victorian government push to free up more housing for sale and reduce rents.

The new vacant residential property tax is expected to raise about $80 million over four years, coming into force on January 1.

The tax is among a suite of changes the government has announced to make housing more affordable, including scrapping stamp duty for first home buyers on properties worth up to $600,000.

This seems like a good idea. Auckland has a ghost home problem, and its even worse in Queenstown. Taxing vacant properties would help eliminate it.

Of course, this doesn't solve the problem of land-bankers who deliberately leave land under-developed to wait for capital gains. But that's what land taxes are for.