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How could you enforce a vacancy tax in practice?

This content is from a post written by former Gabba Ward Councillor Jonathan Sriranganathan on 28th September, 2021.


Australian cities have a high proportion of empty homes - both apartments and free-standing houses. These aren't homes that are temporarily empty after a long-term owner dies, or homes that are left empty for a few months while someone goes on holiday, but homes which are sitting empty long-term, usually because the investor-owner doesn't think it is worth the trouble to rent them out.

A range of groups (including the Queensland Greens) have suggested that some form of vacancy tax could be introduced (either at the level of State Government or City Council) to encourage more efficient use of this empty housing stock.

The most common objection is that it's too difficult to prove that a home is actually empty long-term. Some economists quickly dismiss the idea, saying that if you looked at electricity or water usage as the primary indicator of whether a house is unoccupied, investors would just leave the lights on or a sprinkler running. But here in Brisbane, I don't actually think it would be that hard. You could identify properties which are likely to be empty using two simple data sets that are readily available to the government.

1. Brisbane City Council offers an owner-occupier discount on quarterly council rates. Owners can only claim this discount on the property they are actually living in. There is probably some illegal rorting of this current system (e.g. one house might be held in the wife's name and another investment property is held in the husband's name, but they claim the owner-occupier discount on both properties even though they are renting one out for profit), but the list of properties claiming the rates discount is a pretty accurate list of owner-occupied homes in the Brisbane local government area.

2. The Residential Tenancies Authority ('the RTA') is a State Government Statutory Authority that among other things, holds onto bond payments for all private rental properties in Queensland. If you are renting out your property, the bond is supposed to be registered and deposited with the RTA - the landlord is not legally allowed to hold onto the bond themselves. This list also isn't 100% perfect, but it's an up-to-date database of most properties in Queensland that are currently rented out to tenants.

The government could easily compare these two lists. If a property isn't claiming an owner-occupier rates discount, and also doesn't have a bond registered with the RTA, it's pretty likely to be empty.

On this basis, the government could shift the burden of proof, writing to owners and saying "We suspect your property is long-term vacant. You are therefore required to pay a vacancy tax unless you provide proof that it is currently occupied." The second stage of assessment could then rely on evidence like water and power usage, in-home inspections, and statutory declarations from residents. It's possible that some of these homes genuinely would be occupied, such as if an investor-owner is allowing a friend or relative to live in a home rent-free without registering a bond with the RTA. In general though, this would be a straightforward and cheap method of identifying homes that are likely to be long-term vacant.

No system is perfect. There will always be loopholes and people who try to cheat the system, particularly when it comes to evading tax. But the fact that some people might break a rule isn't a good reason not to introduce a rule in the first place.

The naysayers who describe vacancy taxes as too difficult to enforce just haven't spent enough time thinking it through.