Money Encouraging older home owners to move could help housing affordability

12:16  10 april  2017
12:16  10 april  2017 Source:   businessinsider.com.au

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Housing affordability is all about supply, according to a tax expert at accountancy firm BDO. He says promoting a more even spread of the population could help ease supply challenges in bigger markets.

Stabilize housing costs over time through home ownership assistance. Promote and encourage housing production that addresses gaps in the market for families with children. Revise land use code, design review process, and development standards with an eye toward affordability .

  Encouraging older home owners to move could help housing affordability © Provided by Business Insider Inc

Housing affordability is all about supply, according to a tax expert at accountancy firm BDO.

Marcus Leonard, BDO's national leader for tax, wants to scrap stamp duty and use tax incentives to help de-centralise the economy because housing affordability problems are mainly in the larger cities of Sydney and Melbourne where the jobs are.

He says promoting a more even spread of the population could help ease supply challenges in bigger markets.

"There may be tax incentives that federal and/or state governments could provide to encourage this, such as reductions in payroll tax, land tax, stamp duty and capital gainst tax (CGT) rollover relief for businesses and workers to relocate to such de-centralised areas," he says.

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Housing Affordability As the single largest expenditure in most household budgets, housing costs MOVING TO ACCESSIBLE HOUSING Older households that move are more apt to choose homes Encouraging Broader Housing Choice Communities can adapt zoning regulations to encourage

It will take years of sustained action to bring housing affordability home . Some owners of manufactured homes have been forced to abandon their investments with little compensation for having to move or find a new home . This will help encourage developers to build more rental housing .

Leonard says excessive stamp duty costs are reducing supply because older homeowners have no incentive to sell and downsize.

While advocating for the removal of stamp duty tax, Leonard says a more realistic proposal would be to provide stamp duty concessions for elderly home-owners.

And Leonard says a change in negative gearing and reducing capital gains concessions amounts to "tinkering at the edges" of the problem.

In comments preceding a speech today at the Australian Housing and Urban Research Institute, Treasurer Scott Morrison confirmed that reducing the tax benefits of negative gearing is still off the table.

However, he kept open the possibility that first home buyers have the option to access their superannuation for a home deposit.

However, Leonard says tax and superannuation changes such as stamp duty cuts and/or access to super for first home buyers don't do enough.

“The concern with these suggestions is that without corresponding increases in supply of housing, the effect of these suggested changes would be to push prices up by the amount of the concessions," he says.

"Therefore, on their own they may not have any substantial effect on housing affordability."

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