You may recall a couple of weeks ago we told you about the shock property levy the Queensland government had decided to introduce. It was a move that was met with condemnation from a number of fronts and from the other Australian states. They labelled it a cash grab that would be detrimental to the industry, discourage investment and drive the interest rate up.
Well, today we can tell you that the Queensland Government has done a backflip on the property levy. It’s not going ahead anymore, with the Premier Annastacia Palaszczuk making the decision “on Thursday night to shelve the scheme after speaking to her interstate counterparts”.
This is a move that has already been welcomed across the country, with interstate investors dropping their hesitations when it comes to looking at buying in Queensland.
Why was the Proposed Tax So Unpopular?
The levy allowed the state government to collect taxes on properties owned interstate, not just in Queensland. So investors who own properties in say Melbourne or Sydney would be slugged with local Queensland taxes on those properties.
The problem with this is the knock-on effects… the tax isn’t going to simply affect the property owners. Let’s look at renters. Investors are going to want to recoup the tax money somehow, so will pass the extra costs onto their tenants. This means that rents go up. Property investors would also be less likely to purchase new dwellings, which means rental stock declines. This is bad news for an already tight rental market.
There was also likely to be a decline in house prices, with investors turning away from Queensland to avoid paying the property levy. That would mean more stock on the market than local buyers could absorb, which would soften prices.
Why Was the Tax Shelved?
The tax was never popular amongst other Australian states. For it to be successful, it was going to require their cooperation in handing over data so the Queensland government could see who owned property interstate.
The other states refused to comply with handing over this data, so there was no workable way forward for the Palaszczuk government to impose the levy.
“It does require the goodwill of other states and if we can’t get those additional information, I will put that aside,” Ms Palaszczuk said in Canberra on Friday following a national cabinet meeting.
Reactions to the Backflip on the Tax
Reactions have been generally positive across the board, with Queensland Executive Director of the Property Council, Jen Williams, saying “As details emerged of how the new tax would be implemented, it became clearer just how untenable it would be.”
Real Estate Institute of Queensland chief executive Antonia Mercorella was also positive about the shelving of the tax, saying “Abandoning the contentious land tax regime will bring confidence back to the property investor market in a time of great uncertainty.”
PropTrack executive manager Cameron Kusher was equally pleased. He said “The good news is that, upon this news, investors now have certainty and with property prices lower than those in New South Wales, Victoria and ACT and rental returns higher than in those states, Queensland now remains an attractive market for residential property investment”.
Without this tax in place hopefully we should see a slowing in the shrinkage of the rental pool, which will be good for tenants. It should also allow for the high levels of interstate interest in investing in Queensland to remain.
Speak to a Brisbane Real Estate Expert
Henry of The Henry Wong Team® has been selling property in Brisbane for many years now. He knows this industry inside out and would love to answer any questions you might have about it. Why not get in touch to chat about how this repeal of the Queensland property levy will affect your personal situation? Henry is here to help!
