Victorian Greens-Labor Deal to Triple Vacancy Land Tax for Owners

A sale board stands out the front of a property in Melbourne, Australia, on June 17, 2011. Quinn Rooney/Getty Images

Victorian residents who own multiple homes could face a triple vacancy land tax following a deal between the state Labor government and the Green Party.

On Nov. 28, the Greens announced that it had reached an agreement with Labor over a proposal to reform Victoria’s land tax system.

If the legislation passes the parliament, the state’s vacancy tax for homes that are unused for more than three years will rise from one to three percent.

A Win for Renters: The Greens

The Greens hailed the outcome as a “win” for struggling renters, saying that wealthy investors were keeping homes empty while people experienced record levels of housing stress and homelessness.

The party believed that raising the vacancy land tax could force thousands of homeowners across the state to offer their unused homes for long-term rentals.

“Every day, this housing crisis is getting worse. We’re seeing renters face unlimited rent increases and struggle to find a rental home,” Victorian Greens Leader Samantha Ratnam said.

“With up to 5,000 extra homes freed up as long-term rentals, these changes secured by the Greens will help drive down rents and mean more people can access a home.”

The Greens also noted that they had secured a trial of a new enforcement system across metropolitan Melbourne, which would make it impossible for homeowners to avoid the tax.

Around 5,000 empty properties in Victoria will be required to make their home available for rent or pay the vacancy tax.

The Greens’ announcement comes as the state Labor government is pushing for a land tax reform that would expand the vacancy land tax to the whole state rather than just metropolitan Melbourne.

The bill will be put before the state upper house in the week ending Dec. 3, and Labor needs the support of crossbenchers as the Opposition opposes the legislation.

Ms. Ratnam explicitly stated that Labor needed to work with the Greens if it wanted to pass the bill.

The Greens are currently calling on the state government to introduce a two-year rent freeze and provide more funding for affordable housing.

Response from Relevant Parties

Following the announcement, Shadow Treasurer Brad Rowswell allegedly stated that Labor was engaging in a desperate cash grab as it had not shown how the land taxes would lift Victoria’s housing supply.

“The new and increased taxes in this bill will punish Victorians at a time when they can least afford it,” he said, as reported by The Age newspaper.

Property Council Australia’s Victorian executive director, Cath Evans, also did not support the tax rise.

“Victoria already has the heaviest property tax burden of any state in the nation,” she said.

“The reality is that this is creating an economic environment where Victorian businesses are struggling to attract capital investment to our state – jeopardising the capacity for our industry to build more homes.”

Greens MP Samantha Ratnam speaks to the media in Melbourne, Australia, on Oct. 26, 2021. Darrian Traynor/Getty Images

Currently, Victoria is under huge debt pressure due to high infrastructure spending and massive debts caused by its COVID-19 pandemic measures.

A recent report by the state’s Auditor-General office revealed that Victoria experienced a fourth consecutive year of operating loss in 2022-2023, resulting in accumulated losses of $43.7 billion (US$29 billion).

The state’s total gross debt is also expected to hit $256 billion by June 30, 2027.

However, the report pointed out that the Victorian Labor government had not provided any specific details about how and when it would be able to start to pay down the accumulated debt.

Since the release of the state’s budget papers in May, the Labor government has introduced a number of new taxes to raise revenue, including a proposal for a “tourism tax.”