- Tim McKibbin has listed five potential areas for improvement
- Includes Tax reform and ending the rental mortarium
- Calls for a 'Property Service Commissioner'
- Argues for re-investing of property revenue into the industry itself
- Believes the ‘clunky’ planning system is due for reform
As previously reported here on The Property Tribune, REINSW’s CEO Tim McKibbin has criticised the New South Wales State Government for the lack of reform over the past year.
Tax reform for Property
Mr McKibbin believes the lack in affordable property will limit the potential of real estate to contribute to the economic recovery. A major factor of this are taxes and charges such as Stamp Duty which he says disincentives buyers. The NSW State Government is considering replacing with an annual property tax for some buyers, but he believes this doesn’t sort out the issue.
“Most consumers are unaware that about 40 per cent of the cost of new property is taxes and charges. It’s a huge disincentive for people to transact property and the prospect of stamp duty or a property tax is particularly unattractive to people who own their home. Staying put, even if that home is no longer suited to their needs, is viewed as a better option,” said Mr McKibbin.
“Tax should be a consequence of a transaction, not a consideration. There’s plenty of empirical evidence to demonstrate that reducing stamp duty will increase property transactions, benefiting both Government and the community, with more transactions easily offsetting any reduction in tax from a revenue perspective.”
According to McKibbin, about 25 per cent of available space is not utilised. He argues this could be counteracted by incentivising an empty-nester to downsize, for example.
End rental moratorium; compensate disadvantaged landlords
Nationally, there have been growing calls to end the rental mortarium – including from the REIA – and McKibbin is especially keen for the NSW Government to do this alongside compensation for affected landlords.
“It’s simply untrue to assume all landlords are wealthy, with around 80 per cent of landlords owning a single investment property that they depend on to pay their living expenses,” said Mr McKibbin.
“Other states understand that a healthy rental market means supporting both tenants and landlords. In Western Australia, for instance, there’s assistance for landlords adversely affected by deferred or reduced rent arrangements. In Tasmania, a Landlord Support Fund has been established in recognition of the need to support landlords too.”
Property Services Commissioner
Mr McKibbin believes that NSW Fair Trading as a regulatory authority is inadequate to deal with high dollar value and often legally complicated property transactions. He proposes setting up a dedicated Property Services Commissioner exclusive to the property services industry.
“Property is an industry that demands a dedicated, experienced regulatory authority able to work constructively and cooperatively with the industry,” said Mr McKibbin.
“Fair Trading is currently sitting on hundreds of real estate licence applications, preventing fully trained agents, some with a job waiting for them, from commencing work. These delays can be remedied easily by accredited private sector operators capable of processing these applications within two business days. There is a major disconnect and it is costing the economy. “
Reinvest Property Tax Revenue and Reform Planning Systems
The last two proposals involve re-investing tax revenue from property taxes, along with reforming the planning system that McKibbin believes is ‘clunky’.
He argues that the NSW government pocketed $3.378 billion in the five months to December 2020 – $297 million more than the same period in 2019 – and that this windfall should be supporting the industry.
“With this pool of additional funds, the capacity for government to support the industry that delivered the windfall is clear. Landlords who are providing support for tenants should be supported by Government, as it clearly has the money” he said.
Lastly, he argued the planning system should be reformed to encourage the number of houses – especially affordable ones – being built. This includes a system where there are fewer disincentives for developers and fewer approval delays.
“COVID-19 may alter the design of new housing projects but the fundamental need to increase the number of homes built remains critical in metropolitan and regional locations” he said.