Families, essential service personnel and lower income earners will be the victims of rumoured moves by the Australian Government to introduce a vendor tax and cut negative gearing on investment properties. Media reporting suggests the moves could be part of Tuesday’s Federal Budget.

The REINSW says the state’s already chronic rental crisis will be made even worse if the Gillard Government moves to target property investment as a means of dragging the budget back into surplus.

“It’s the same old story; when the budget bottomline is in trouble then bash the property sector”, said REINSW President Wayne Stewart.

“Recent media reports that the Gillard Government is seriously considering introducing a Vendor Tax and reducing negative gearing on investment properties, are extremely disturbing.

“Such moves would essentially crush private investment in the rental market and would result in rental vacancies plunging to historic lows.

According to Mr Stewart, the real impact will be felt by those already finding it tough including families and essential service workers, such as nurses, police and fire brigade officers, all of whom are struggling to find affordable and available rental accomodation.

“If you increase the tax on investment property and cut the negative gearing benefits, you are just making it even less appealing for people to invest in rental property.

“That means fewer private rental properties in the market place and even higher rents,” he said.

Given rental vacancies are already stuck in the low single digits, Mr Steward said the existing rental crisis will become even worse if these changes are introduced.

“I call on the Prime Minister and Treasurer to categorically rule out these changes and to look at how they can incentivise people to invest in private rental properties, not turn them away”, said Mr. Stewart.

March data shows Sydney’s vacancy rate stuck at 1.1 percent

Overall, rental vacancies were unchanged in Sydney but fell in both Wollongong and Newcastle.

Sydney’s vacancy rate is stable at 1.1 per cent with the ‘Outer’ suburbs (more than 25km from CBD) the only area to record an increase, up 0.1 per cent to 1.2 per cent.

‘Inner’ suburbs (0-10km from CBD) and ‘Middle’ suburbs (10-25km from CBD) both fell by 0.1 per cent to 1.1 per cent in March.

In Newcastle the vacancy rate dropped by 0.1 to 1.3 per cent and in Wollongong rental vacancies fell 0.3 per cent to 1.0 per cent.F

Central Coast vacancies rose 0.1 per cent in March to 1.6 per cent.