The government is skirting around the housing affordability crisis with a quick Budget fix and continues to fail to address the most major issues including better reforms of the capital gains tax (CGT), and foreign investment limits, according to William Buck Chartered Accountants and Advisers.
Tax director and head of Tax Focus Group at William Buck Chartered Accountants and Advisers, Greg Travers, said the government has taken a ‘feather’ to fixing the housing crisis in last night’s Budget, which is unlikely to stem any of the major issues impacting affordability.
Travers said despite confirmation of tougher restrictions on the purchase of residential properties by foreign investors, the Budget had failed to account for proxy buying.
“Enforceability will be the biggest challenge as many of the rules are circumvented simply by having an Australian resident family member or associate buy the property on behalf of the non-resident,” he said.
“It is questionable how effective these measures will be in improving the supply of housing.”
While the First Home Super Savers Scheme would also aim to help locals get into the market with the offer of tax advantages of superannuation to build a deposit, Travers said the government had not given enough of a leg up.
“In a best case, a couple using this scheme will save an extra $12,000 over three years. That’s about one per cent to 1.5 per cent of the median Sydney and Melbourne property price,” he said.
Singles who had used the scheme to save but moved in with a partner would also face major downsides.
“If a single individual who puts away money into their superannuation under this scheme then moves into a property with a partner who has already bought a house – they can lose their ability to access the scheme,” Travers said.
“This would then mean their money is essentially stuck in their super fund… they may have been better to have kept their savings outside of super.”
The two fundamental challenges of lower rental income and lower capital growth that warranted attention to encourage investment in affordable housing had also been overlooked. Traves said the increase on CGT from 50 per cent to 60 per cent for investments was not sustainable enough moving forward.
“The government should be looking to offer investors real tax concessions to encourage them to invest in affordable housing,” he said.
