Money Encouraging older home owners to move could help housing affordability

12:16  10 april  2017
12:16  10 april  2017 Source:   Business Insider Australia

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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.

Overall, the consensus was that improved information for older people in respect of moving to retirement housing can help tackle the affordability problem — in identifying financial products to make purchasing properties more viable

  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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In this way it seeks to encourage housing diversity and affordability by expanding the permissible range of housing in areas zoned R30-R60. 40 Australian Housing and Urban Research Institute (2010) Dwelling, Land and Neighbourhood Use by Older Home Owners , pp. 188-189.

While removing the CGT exemption could potentially improve affordability , this would be achieved at significant cost to home owners . Commonwealth has shifted away from directly providing housing supply to encourage home ownership .1 Still, as Mr Eslake wrote

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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