Land tax changes scare off rental property investors, likely to lead to further rental squeeze
INVESTORS SELL
A key property investment group has sounded warnings that the changes to land tax rates in Queensland will further affect the already dire availability of rental accommodation in Douglas Shire.
According to a Property Investment Professionals of Australia (PIPA) annual investor sentiment survey, nearly 30 per cent of rental dwellings have been stripped from the market in two years.
Analysis of the data found that nearly two-thirds (65 per cent) of all investment dwellings were bought by owner-occupiers over the period, meaning rental stock has potentially fallen by an extraordinary 29 per cent over two years.
In a sign of more rental stress to come, 19 per cent of investors nationwide have signalled they intend to sell even more property over the year ahead.
The number one reason in the survey was Queensland’s new land tax law that will penalise owners if they have property in other states or territories.
PIPA Chair Nicola McDougall said it was clear that investors have had enough of being the cash cow for all levels of government.
“The fact that 45.1 per cent of investors sold at least one property in Queensland is mind blowing – especially since this was mostly a period when the ridiculous new land tax wasn’t even law,” she said.
Douglas Shire likely to see more investors selling
Property owners Newsport spoke to in Port Douglas said that many people – including most of the eight owners in one apartment block – were not even aware of the implications of the new land tax.
If the combined value of an owner’s land in Queensland and other states or territories exceeds a $600,000 threshold, they then will be liable for a pro-rata tax under the land tax changes.
Many investors have already sold other property holdings outside of Queensland because of this, with more expected to follow.
“Many interstate owners are making calls to agents now seeking clarity,” Matt Scott, Director and Sales Manager of LJ Hooker Port Douglas said.
“My personal view is that early in the new year we may see more interstate owners sell as these land tax reforms will impact returns.”
But the land tax changes are not the only reason for investors selling up. Some have chosen to stay north, including in Douglas Shire.
“Many southern owners have for one reason or another, decided to sell up down south – cash in on their market, downsize etc – and relocate to our area and into their rental invest they held previously,” Mr Scott said.
“The ability for many to work from home remotely, escape winter and city life has also been a major factor.”
Ultimately with rental supplies in the area already under severe pressure, the land tax changes will most likely affect the local market even more.
“We are seeing more people leave the area as they can’t get settled and find a suitable rental property, especially houses. Current cost of living is also a factor,” Mr Scott said.