Property Tax (First Home Buyer Choice) Bill 2022

Property Tax (First Home Buyer Choice) Bill 2022

(Second Reading Debate, 18 October 2022, Legislative Assembly, NSW Parliament)

I support the Property Tax (First Home Buyer Choice) Bill 2022. Safe, secure and affordable housing is essential to being able to contribute to community and to being a well-functioning member of society. When someone is under housing stress—or worse is homeless or at risk of becoming homeless—it affects every aspect of their life, from their health and mental health to their relationships, employment and finances. The impacts can last for generations. New South Wales is in a housing affordability crisis. Significant numbers of people are in severe housing stress. Following a reprieve during COVID, rents are now skyrocketing at a time when house prices are out of reach to anyone on a medium to low income who does not have help from family. People are paying more for their housing than ever before, with those on the lowest incomes suffering the most. Drops in house prices have hardly made the dent needed to bring the price of homes back into reach for the average person.

The bill will provide first home buyers with the option to forgo paying transfer duty on a new home up to the value of $1.5 million and instead pay an annual tax of $400 plus 0.3 per cent of the unimproved land value. Transfer duty on a home worth $1.5 million is over $66,000, representing a significant addition to an already large amount of money a home buyer must come up with. First home buyers are often missing out on homes because, once they calculate costs after transfer duty, the property becomes outside their budget. This new option would give people who are saving for their first home some advantage over the investors they must compete with. I support the bill because I think that is a fair outcome. Home ownership in Australia is declining, particularly for young people, and owning the home you live in provides stability and security that results in wider community benefits.

But we must tread carefully in this territory. Replacing transfer duty completely would put upward pressure on housing prices by providing buyers with additional funds to spend on the initial price of a property, while potentially locking them into a lifelong tax. I acknowledge that the bill before the House is targeted solely at first home buyers and appropriately capped at the low to medium end of the market, and is therefore unlikely to raise house prices. Furthermore, the bill includes safeguards so that anyone experiencing financial hardship who cannot pay their land tax in the future is not forced to sell. But the bill does appear to mark a policy shift towards replacing transfer duty with an annual land tax across the board. Unlike under previous schemes, the bill does not waive transfer duty for first home buyers, but instead introduces a new tax, which is potentially an initial step that could be rolled out more widely in the future.

There is no question that transfer duty is an irrational tax because it links State revenue to the property market. It adds big costs to the price of buying a new home, discouraging people to sell. A smaller land tax option could provide incentives for older people to downsize, creating more movement in sales and putting some downward pressure on house prices. But before I would vote on such a proposal, I would want to see the detailed modelling on the impacts and benefits of a wholesale change to ensure it did not add to rising housing unaffordability. While the policy is restricted to helping first home buyers achieve the security of owning their own home I will support it, because that is important.

Very few people in housing stress and no‑one at risk of homelessness will likely have the option to take advantage of these changes. Most people accessing the provisions will benefit only from being able to buy a home one or two years earlier than they would have otherwise. The focus of the Government's housing affordability strategy should be on the most serious aspects of the housing crisis affecting people who will never be able to achieve home ownership. The recent Productivity Commission review into the National Housing and Homelessness Agreement found that nearly $3 billion given to first home buyers works against improving affordability, with the commission concluding that the money would be better spent on preventing homelessness. New South Wales is not giving the housing crisis the priority it needs. We are still seeing major redevelopments on publicly owned land that provide little to no onsite social and affordable housing or minute contributions.

We know that major redevelopments should include a 15 per cent provision of social housing at a minimum. The social housing building program is not assertive enough and often relies on sell-offs. We know that we must construct 5,000 new social housing homes each year over the next 10 years just to meet the current demand—and the Productivity Commission identified that demand is growing. It is good to see the new Federal Government leading the way with a commitment to build 30,000 new social and affordable homes. Action to slow out‑of‑control rocketing rents to give both long‑term renters and those saving for a home of their own some security has not happened. The State's shared equity scheme is welcome, but it targets a small cohort of people, with others left fending for themselves in the hostile rental market.

While buying a home remains out of reach and rents are rising rapidly, we must protect people who are vulnerable to becoming homeless, including women trying to escape domestic violence. We must stop people ending up in unsafe and insecure accommodation or on the street. I would like to see the Government make access to safe and affordable housing for our poorest and most vulnerable a priority. As I said, I support the bill. Much has been said about this proposal in the media and in this Chamber that has largely politicised legislation that will provide some first home buyers with an option to be able to access the housing market earlier. A number of constituents I have consulted with are supportive of the bill. They look forward to the bill passing because they know it will allow them to access the purchase of a home sooner. I commend the bill to the House.

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