- REIA is calling in the Government to address key issues in the property sector
- They have identified 12 priorities to assist Australia's property customers
- REIA President says policies and investment are needed to drive property growth
The Real Estate Institute of Australia (REIA) has welcomed the opportunity to contribute to the May 2021 Budget.
REIA acknowledges the work of the Federal Government and National Cabinet in addressing the economic hardship caused by COVID-19.
However, as the nation begins a return to normalcy, the institute is calling for assistance to Australia’s property customers, including tenants, first home buyers, owner-occupiers, investors, and agencies.
This is especially important given the property industry’s strong economic credentials, employing 133,360 Australians, creating 46,793 Australian businesses, and contributing $182 billion to GDP.
The institute’s first priority for the Government is ensuring targeted solutions are provided to those in working sectors taking longer to recover beyond JobKeeper finishing in March 2021.
REIA President, Adrian Kelly said that over 80% of agents surveyed in 2020 believed that ongoing solutions would be needed such as extended JobKeeper and rental support for Australians impacted by sectors unable to recover including tourism and international education.
The institute has also called for an independent review of all property taxation through the Council of Federal Financial Relations, considering the proposed reforms to stamp duty in New South Wales and Victoria (The Property Tribune has covered reforms to stamp duty in NSW here).
First home buyers
Mr Kelly has proposed interest rates for first home buyers be made tax-deductible.
“REIA estimates this would provide a benefit of around $4,000 per annum to Australia’s first home buyers (which NHFIC places at around 15% of the housing spectrum). At least six other OECD nations have a similar incentive.”
The institute has also called on the Government to allow any voluntary super contributions and earnings to be used and accessed for all first home buyers.
This is justified on the grounds of their 2020 Retirement Income Review, which identified owning your own home is the most critical plank of retirement security. It is also noted that other nations such as Canada, the Netherlands, and New Zealand have adopted programs that allow the use of retirement savings to buy a home.
There are also calls for expanding the First Home Loan Deposit Scheme (FHLDS) to be a long-term program. REIA claims the program has been very successful in supporting new entrants into the market so far, and hence strongly believes additional places could be created.
It is recommended that negative gearing (and capital gains tax) on property investments are to be retained in its current form.
The institute argues that until an official review has objectively addressed all property taxes, negative gearing should remain a legitimate deduction of expenses.
Mr Kelly said the REIA is also seeking to help real estate agents manage their cash flow in response to the disruptions from COVID-19.
He explained that cash flow problems continue to be a major issue for small businesses with 90% of small business failures due to poor cash flow management.
“We’re proposing a kit that is a predictive tool to assess a business’s viability and whilst the kit can be used at any stage of the business lifecycle, it is particularly useful to prevent financial stress.
“Assistance from $2000 to $5000 per agency will allow for the individual advice from a trusted adviser to improve financial viability and productivity which will assist in the Government achieving a higher economic growth rate than would otherwise be the case.”
Training incentives should also be developed for the Australian property industry to support additional qualifications for both new entrants to the industry and existing employees.
Mr Kelly concluded that there is a need for policies and investments that will continue to drive growth in the property sector.
“Wherever you are in the housing market, an agent, tenant, buyer, investor or vendor, there should be support for you in the next Federal Budget to have confidence to succeed in a COVIDNormal Australia.”
Head over to REIA Budget Priorities for the 2021-2022 Federal Budget to read the full report of 12 recommendations.