Key takeaways
The NSW Government is planning to increase property owners' insurance costs by shifting the cost of the Emergency Service Levy (ESL) onto them, and increasing surcharges for foreign purchasers, raising the surcharge land tax, and freezing the land tax threshold.
The Government's solution to the state's economic woes is to transfer the increased insurance costs for emergency services to property owners, which will reduce investment in property.
The Real Estate Institute of NSW (REINSW) has uncovered another underhanded plan by the NSW Government to charge property owners more, aiming to offset increasingly "unaffordable" insurance costs.
Buried within the Budget’s explanatory notes is a reference to the NSW Revenue Legislation Amendment Bill 2024.
This bill outlines the NSW Government’s strategy to shift the cost of the Emergency Service Levy (ESL) away from insurance companies and onto property owners instead.
The state’s emergency services are primarily funded by the ESL.
With the growing impacts of climate change and more frequent natural disasters, these funding requirements are rising, making insurance less affordable, according to the Bill.
The Budget Paper states:
“The Government will remove the ESL on insurers and instead spread a replacement levy across a broad base of property owners.”
Among the proposed measures are increasing surcharges for foreign purchasers, raising the surcharge land tax, and freezing the land tax threshold.
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REINSW has expressed shock but not surprise at the move to transfer the increased insurance costs for emergency services to property owners, given the Government’s track record.
REINSW CEO Tim McKibbin said:
“This Government’s solution to the state’s economic woes is clearly and unashamedly singular: property owners must be able to afford it, so they can pay for it.
If the Bill passes, property owners and buyers will face higher charges so the Government can reduce insurance costs.
The expectation is that insurance companies, in good faith, will adjust their premiums accordingly.
More tax on property owners means reduced investment in property.
In a housing crisis, this is among the most reckless courses of action."
