Yahoo Finance Aussie council's move to punish landlords in radical rates overhaul
Independent councillor James Conlan's motion to explore a differential rates system won majority support last night.
A council in Melbourne's north has taken one step towards implementing a radical new system that could massively benefit owner-occupiers but punish landlords. Independent councillor James Conlan's motion at a Merri-bek City Council meeting last night to investigate how a “differential rate” would work won the majority of support from fellow councillors.
Conlan wants to see owner-occupiers and business owners pay substantially less than what they're paying now and he hopes it would help first-home buyers get into the market. The council covers suburbs like Brunswick, Coburg, Pascoe Vale and Fawkner and the average rates bill is about $1,800 a year for a home and $2,700 for non-residential properties like shops.
Under the Independent councillor's plan, rates would be brought down to just $900 for owner-occupiers and small business owners. However, landlords and investors would have to fork out an average of $3,600 per year per property.
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Conlan said he was "very excited" to see his motion win majority support. But it was a tight race.
Six councillors, including himself, voted in favour, while five were against.
"It was interesting to see which councillors chose to side with property investors instead of local residents and businesses by choosing not to give them a massive rate cut," he wrote.
"One councillor actually said that 'Property investors are improving the rental market'."
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His motion claims investors have a fallback if they're struggling financially, however owner-occupiers don't.
“Unlike owner-occupiers and renters, investors can sell at least one residential property without making themselves homeless. Ratepayers unable to keep up with expenses associated with maintaining an investment property may sell their investment properties,” the motion said.
Concern erupts about what this will mean for renters
However, there was significant concern from people on social media about what the policy might do for renters in the area.
"Genuine question how will you prevent landlords from passing on the rate increase to tenants? Rents are already unaffordable, and landlords use any excuse to up the rent," wrote one Aussie.
"As someone who rents in this area I think what you've proposed will just make it so my rent will go up to cover these costs," said another.
A third added: "This idea will just contribute to the rental shortage problem and cause potential rent hikes further contributing to inflation."
The councillor said a similar rates system was introduced in Denmark in 2017 and he claimed "studies show that landowners wore the cost - they didn’t pass it onto renters".
Conlan wants investors to get out of Merri-bek
The councillor's vision aims to make Merri-bek Council "unattractive to be an investor".
He explained to the Herald Sun ahead of the council meeting that, if approved, it could completely change the landscape of the area.
“The change would make it less attractive to be a property investor in Merri-bek. More investors would sell their investment properties because of the higher rates, which would free up more homes for first home buyers," he said.
“Property investors are already fleeing Victoria due to higher land taxes. My proposal would have a similar impact in Merri-bek. Less property investors in Merri-bek would be a great outcome. Hopefully other councils follow suit.”
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