Media Release: Government-owned land is ripe for housing and must stay in public hands

Tuesday, May 23, 2023 

Government-owned land is ripe for housing and must stay in public hands  

The Victorian Budget 2023/24 has flagged a new approach to land use planning, paving the way for increased density and optimising under-used government-owned land.  

The McKell Institute Victoria welcomed investment into the Land Coordinator General function, based in the Department of Premier and Cabinet, to expand and develop a new government-owned land database.  

“There is an incredible amount of government-used land that is around transport corridors, leftover from transport projects, or is no longer needed by government, and it must be used to ease our housing crisis,” McKell Institute Victoria Executive Director Rebecca Thistleton said.  

The McKell Institute has urged the Victorian Government to retain ownership of land ripe for housing and enter into leasehold agreements with institutional investors and the community and social housing sectors.  

“Once public land is sold off, it’s out of the people’s hands forever. This is a rare chance to boost housing supply while keeping public land in public hands. Selling land off to the highest bidder means sale prices are passed on to buyers, delivering little more than a quick sugar hit to the state’s coffers.  

Ms Thistleton said the recent federal budget included tax incentives for institutional investment into build-to-rent properties of 50 units or more, and working with this sector to use government-owned land would ease the state’s worsening rental crisis.  

The McKell Institute urges all state governments to work with councils and communities to build support for new development to ease housing pressures and to make them a part of the process, promoting a “yes in my backyard” attitude to easing housing pressures.  

Stamp duty abolished for commercial and industrial properties  

Stamp duty reforms for industrial and commercial properties will be introduced from July 1, 2024. The Budget outlined new measures to replace existing duties with annual land tax that will be applied 10 years after sale.  

The McKell Institute supports this change because it will help to incentivise new business development closer to where people live, making inner-urban areas attractive for investment and creating new jobs for workers in existing communities.  

“We hope this change marks the start of Victoria transitioning to a land tax model across the property sector,” Ms Thistleton said.  

First homebuyer stamp duty incentives remain the same. In Victoria, first homebuyers are exempt from stamp duty for homes bought at up to $600,000 and then a sliding scale applies up to $750,000.  

Ms Thistleton said both rates should have been increased considering the median house price in metropolitan Melbourne was nearing $1 million.  

“We don’t need any more heat in housing market demand, but the existing measure was introduced to help first homebuyers and it is now redundant. First homebuyers face rising house prices while they pay rising rents, making a deposit even harder to save.”   

As part of a suite of revenue raising measures designed to help pay down the Victoria’s COVID debt, the absentee owner surcharge rate will rise from 2 per cent to 4 per cent, which the government has been quick to point out is in line with the New South Wales rate.  

The McKell Institute welcomed this increase given Victoria’s rental vacancy rate has hit a record 1 per cent low this year. 

“The quick fix for anyone wanting to avoid that rate hike is to put their vacant property into the rental market,” Ms Thistleton said.  


Rebecca Thistleton, McKell Institute Victoria Executive Director 

The McKell Institute is a national progressive research institute driving for solutions and change through policy innovation.