Conveyancers slam ‘ridiculous’ tax changes in Budget

CONVEYANCERS have slammed controversial tax changes announced in last week’s Federal Budget, saying the industry has already taken a hit as investors retreat from property.

Treasurer Jim Chalmers’ fifth Budget has drawn criticism over changes to negative gearing and capital gains tax, moves Labor says are aimed at improving intergenerational equity.

The government insists it is taking the correct approach to tax reform, despite polling that shows the measures have been poorly received by voters.

In NSW, Australian Institute of Conveyancers NSW president Jennie Tonner said the tax changes were “ridiculous”.

And she said it showed the government had “no idea what the existing capital gains and negative gearing does and has done to help people save for their own retirement”.

“If these changes stay, then we will have the younger generations looking at retirement without any savings or investments to support themselves, with the result being a large increase on people needing government pensions that we, the people, will have to fund,” Tonner said.

She said the industry had already been hurt by the changes, which were flagged weeks before the official May 12 announcement.

Conveyancers started to see a slowdown about four weeks ago, according to Tonner.

“We are looking at a lot less work coming in, both on sale and purchase sides,” she said.

“There will be less investors in the market wanting to purchase, so our numbers will continue to decrease.

“We are already seeing properties not being sold as the market has turned and prices are down.”

Across the border, AIC Victoria president Shakila Maclean said conveyancing, being heavily tied to property transactions, meant “when confidence slows, the industry feels it fairly quickly”.

There was industry concern, she said, that the change to negative gearing could prompt a repeat of the 1980s when the Hawke Labor government scrapped the tax concession.

“Rents increased sharply in a number of areas and the policy was eventually reversed in 1987,” Maclean said.

Given the property market relied on confidence and stability, there was also worry the changes could add to pressure on rental supply and affordability, she added.

She tipped a softer housing market ahead due, in large part, to investor and middle-income buyer concerns about the tax changes.

“They’re already dealing with higher interest rates and cost pressures. Markets rely heavily on confidence and stability,” she said.

The measures added to the strain on an industry that was already grappling with rising costs and new AML/CTF compliance burdens, she said.

“At the same time, clients are becoming more cost conscious, while the work itself is becoming more complex and regulated,” Maclean added.

Queensland was also being hit by Budget fallout, Queensland Law Society CEO Matt Dunn said.

Dunn described the Budget measures as “some of the most far reaching tax changes to property in the last decade, which will have a significant impact on the property market”.

However, he said that the measures may not be “as cataclysmic as some pundits predict”.

Dunn’s view was that the tax changes would be unlikely to have a long-term impact on the numbers of properties transacted in the market.

“We may see some reduction in purchases of existing stock by investors but this may be replaced by increased interest and competition in off-the-plan and new builds,” he said.

“I expect the salient mid to longer term change for conveyancing businesses will be the mix of clients, rather than the flows of sales.”