What You Need To Know About Victoria’s Housing Statement Sep 2023
In This Week’s How's The Market | Edition 65
What You Need To Know About Victoria’s Housing Statement
Why Some Agents Are Selling Properties At A Discount
How Much Is A Beach Facing Terrace In Middle Park Worth?
What You Need To Know About Victoria Housing Statement Sep 2023
You may be aware that Premier Daniel Andrews announced last week, just prior to his resignation, a huge 44 page housing statement which some are calling the largest shake-up to the state property sector in a generation.
It certainly comes at a time of need with the nations housing market in a supply crisis.
I have read through the report which you can find here and wanted to touch on what I think are the biggest takeaways that will affect the industry and the changes that you need to know when making your upcoming property decisions.
But firstly, I wanted to highlight a key message from the introduction of the housing statement that details why these reforms are so necessary over the next 30-years. A direct quote is below:
Melbourne is set to become Australia’s biggest city by the end of the decade, with the population estimated to grow by another 3.5 million people over the next 28 years. If we’re going to make sure the current problem doesn’t get worse, we need to build 1.6 million homes by 2051 – that’s around 57,000 homes a year. To ease the acute pressure people are currently facing, we need to deliver 2.24 million homes by 2051 – that’s around 80,000 a year. On current trends, we are expected to build around 540,000 homes over the next decade. The work we’re doing in this Housing Statement will facilitate an extra 250,000 homes being built in Victoria over the next ten years.
Now let’s jump into some of the key changes!
Changes To Planning Policy
Dwelling garden units or Granny Flats won’t require a planning permit if they’re less than 60 square metres. The government also aims to introduce more permit exemptions for single dwellings for things like extensions to sheds and carports. Interestingly, I believe this will see more people buying blocks of land and living in tiny homes as well as increase the amount of tiny homes you will find on Air BNB which we can touch on later.
The government aims to clear the backlog by bringing in a dedicated team to fastrack the 1400 applications that have been sitting with council for over 12 months and make the approval process faster in general.
Convert commercial buildings to residential
The Property Council of Australia (PCA) and the City of Melbourne have identified close to 80 commercial office buildings that are currently under-used because of changing work patterns and demand for flexible floor space increasing. The government aims to facilitate the conversion of these offices into around 10,000-12,000 apartments and mixed-use properties. This will bring on a huge amount of new supply into the apartment market around the CBD.
Boost the Victorian Homebuyer Fund
The government will release another $500 million from the Victorian Homebuyer Fund which will support around 3,000 more Victorians into a home through a shared equity model.
Introduce a Short Stay Levy
The revenue raised following the introduction of a Short Stay Levy will go to Homes Victoria, supporting their work building and maintaining social and affordable housing across the state. To make sure our regions get their fair share, 25 per cent of funds from the Short Stay Levy will be invested in regional Victoria.
Regional Housing Fund
The government is providing a new $1 billion Regional Housing Fund to deliver more than 1,300 new homes across regional Victoria.
The revenue raised following the introduction of a Short Stay Levy will go to Homes Victoria, supporting their work building and maintaining social and affordable housing across the state. To make sure our regions get their fair share, 25 per cent of funds from the Short Stay Levy will be invested in regional Victoria.
Restrict rent increases between successive fixed-term rental agreements
The government will now restrict rent increases between successive fixed-term leases, cracking down on an emerging trend that has seen some landlords evict tenants at the end of their first fixed-term lease in order to raise the rent substantially when re-listing the rental property. If agents or landlords are issuing a new lease after they’ve evicted previous tenants on their first fixed term, they’ll have to offer the property at the same rent for at least 12 months. It’ll reduce the incentive for landlords to churn through renters by evicting them, and give renters more certainty over their living arrangements.
I believe that there needs to be some more fine print regarding this. What if the market has shifted significantly within the fixed term and the tenant can no longer afford market rent in the area? Is the landlord supposed to be punished and bear the full brunt of the increased holding costs whilst not being able to increase rent to true market value?
Ban all types of rental bidding
In 2021, the government made it illegal for real estate agents or landlords to solicit or encourage higher offers than the advertised price of a rental property. But a tight rental market with vacancy rates at record lows has put an incredible amount of pressure on prospective tenants. More and more, we’re seeing people make their own unsolicited bids – either to pay more weekly rent or to pay more than four weeks in advance – to try and give their applications a competitive edge. We’ll level the playing field for renters by closing this loophole and banning all types of rental bidding for good. We’ll make it an offence to accept bids, and introduce tougher penalties for agents and landlords who break the law.
I believe this will simply encourage landlords and property managers to increase the advertised prices of their rental properties so that if someone is willing to pay a higher amount, they can accept that application without the risk of breaking the law. I’m not sure this will actually benefit renters in any way.
Extend notice of rent increase and notice to vacate periods to 90 days
This is fairly self-explanatory and I agree is a good policy change considering the difficulty of finding rental accommodation with the extremely low vacancy rates.
Deliver a Rental Stress Support Package
Right now, around five per cent of Victorian households are facing serious renting stress – meaning they’re at risk of being evicted because they can’t afford to pay their rent. There are a range of organisations who work tirelessly to prevent homelessness and help renters stay in their homes, providing legal assistance, financial information and advice, and advocacy services. The government will now back their critical work for Victorians in need by delivering a $2 million Rental Stress Support Package through the Victorian Property Fund.
Rental Bond
The government will build a portable rental bond scheme, where tenants can carry their rental bond from one property straight over to another – rather than having to pay a new bond each time. It’ll ease the financial burden on tenants, who won’t have to fork out a substantial amount of money every time they move – or wait until they’ve got their old bond back to pay their new one. It’ll streamline the administrative process for agents and property managers, who handle dozens of rentals at any one time. And it’ll create a more efficient rental market – which is good news for both renters and landlords.
Social Housing
Our $5.3 billion Big Housing Build is delivering more than 12,000 social and affordable homes across metropolitan and regional Victoria – including more than 9,300 social homes.
What The Agents Are Saying
I was speaking with an agent that operates across Middle Park, Albert Park & South Melbourne who is dealing with a very wealthy vendor that is giving this agency a good chunk of their stock across Spring.
This vendor, who apparently lives in a $10m+ house, is going to be selling all of their investment properties in Victoria which includes 8 $2m+ houses in the above areas.
The vendor has told the agents they will be selling as they cannot justify paying the large increase in land tax as well as keep up with the headaches of all their maintenance requests.
In this particular case, it may be because the vendor has done so well through property that it is simply time for them to cash out and the time investment is no longer worth the return, however, this has been such a common theme amongst agents over recent months.
Stock is definitely starting to pick up and October is looking like a busy month for auctions in Melbourne. I have already had an agent say they would sell listings off-market at a heavily discounted rate as they simply want to clear their diaries so they have time to put into their upcoming listings…
Opportunities are plenty.
The Wow Factor!
212 Beaconsfield Parade, Middle Park
How much is a beach-facing classic Victorian terrace in the heart of Middle Park worth?
The answer should be that it’s priceless.
Though the price guide says…
Price Guide: $4,900,000 - $5,300,000
In The Media
Aussie house prices ‘set to soar 15 per cent’: KPMG
An interesting read as to why one of the big four accounting firms has predicted a 15 per cent increase in prices across Australia by the end of next year.
Final Thoughts
There has been a lot to unpack today with the massive string of announcements from the Victorian government, though we hope you’ve enjoyed the shortened version here!
Thanks for reading this far!
We value feedback and if you have any suggestions on what you would like covered in the future please email me at tristan@tomii.com.au
Happy Buying!
Note: This is general advice and does not take into consideration your objectives, situations or needs. Please consider if this advice is suitable for you and your circumstances and speak to a professional before making any financial decisions.
