As the 2018 budget was announced on Tuesday night, Australia’s housing crisis has once again been highlighted as a pivotal issue. In an attempt to dissuade investors from hoarding bodies of land in hopes of cashing in later on, the new budget will deny deductions for costs associated with owning unoccupied land. This comes on top of 2017’s vacant land tax in Victoria, and raises the same questions of how these measures will be accurately enforced. The hope is that the move will discourage ‘land banking’ by investors with no intention to earn an income off the land, effectively opening up opportunities for home owners or encourage investors to make properties available on the rental market.

However, developers have criticised the measure, claiming that the budget will punish developers with slow moving projects. With some housing packages taking up to ten years to fully implement, being unable to claim deductions could come with a hefty cost. Others, like the national tax director at BDO in Australia, Lance Cunningham, say that the measures could be an effective deterrent for developers purposely dragging out projects or holding onto land for unreasonable amounts of time, in hopes of selling to maximise profits later on. It’s been predicted that the measure could add up to $50 Million to the budget’s bottom line over the next five years.

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