Councils are legally allowed to set differential rates. Last month, The Age revealed Port Phillip Council was considering tripling rates for empty shops to push owners to rent them out.
Merri-bek officers’ official response to the motion said that while councils technically had the power to introduce new differential rates, “the difficulties lie in the definition of the rate and the identification of the land to be included in the relevant category”.
The officers said the plan was “very unlikely” to be feasible. The state government was asked by The Age if the proposal would be feasible, but no response was received by deadline.
Higher rates for investment properties are in place in at least 20 Queensland councils including Brisbane City, but were successfully challenged in the Supreme Court before the Queensland state government pushed through retrospective legislation to allow it.
Merri-bek resident Colin Aslin, who pitched the proposal to Conlan, said mortgagees were facing enormous pressure and that this was something his council could do to align people’s rates with their capacity to pay and give first home buyers a chance to buy.
But Australian Landlords Association president Andrew Kent said it was “oversimplistic” to assume the sale of a current rental property would mean it would be affordable for a first home buyer.
“People should be asking why investors are leaving the market and rents are going up,” he said.
Independent economist Chris Richardson said the focus on landlords was “missing the point”, which came down to lack of supply.
“It’s irrelevant. All you want is well-priced housing, and it doesn’t matter if it’s rented or bought. It’s not going to be the right price unless we get better at building,” he said.
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The independent policy institute, Prosper Australia, applauded the conversation around the role rates play in housing affordability, but warned speculators hoarding vacant land was a bigger issue than individual landlords.
“From our perspective, vacancy (of homes and blocks) is the biggest issue in areas like Merri-bek, and state-based vacancy taxes are more effective mechanisms to encourage housing onto the market,” Prosper Australia spokeswoman Rayna Fahey said.
However, the president of Victorian ratepayer group Council Watch, Dean Hurlston, rejected Conlan’s motion.
“He has kicked his own goal. Reducing investor properties by the thousands – as he claims – will cut rental supply if they are purchased by owner-occupiers,” Hurlston said.
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