A Radical New Housing Model: Pay More Upfront, Earn It Back Later

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Imagine a property system in Victoria where short-term speculation is penalised and long-term renting is rewarded. Instead of offering upfront incentives, the government could impose extra stamp duty on purchase, apply additional duty if the property is sold within the first five years, and then return that money gradually as rebates between years 7 and 11 — but only if the property is genuinely rented out.

Such a system would turn the housing market on its head, reshaping incentives for both local and overseas buyers.

1. Penalising the Quick Flip

Under this model, property flippers face the highest costs:

  • Extra duty at purchase increases the upfront hurdle.

  • If the property is sold early, another surcharge applies, tapering down from a peak in year one to zero in year five.

  • Quick profits are neutralised, making speculative churn far less attractive.

2. Rewarding Long-Term Commitment

For those who hold and rent:

  • The extra duty acts as a deposit into a “future rebate account.”

  • Between years 7 and 11, the surcharges are repaid in reverse, gradually flowing back to the owner.

  • Only properties that have been genuinely rented at fair market rates qualify — stopping ghost apartments and fake listings.

This way, stable landlords, whether local or overseas, are rewarded for contributing to housing supply.

3. Rental Market Benefits

By tying rebates to genuine rental occupancy, landlords have a powerful incentive to:

  • Keep properties tenanted at realistic rents.

  • Maintain stable rental agreements rather than short-term churn.

  • Provide long-term supply, especially in Melbourne’s inner city and new suburban estates.

Tenants would see more choice, fairer rents, and greater housing stability.

4. Developers and Supply

Developers benefit as both local and overseas buyers remain active in the new-build market. The surcharge-and-rebate model means investors are still buying off-the-plan apartments and house-and-land packages, but their motivation shifts from speculation to long-term rental provision. This creates consistent pre-sales and stabilises construction pipelines.

5. Winners and Losers

Winners:

  • Tenants, who gain long-term housing stability.

  • Long-term investors, rewarded with rebates over time.

  • Developers, supported by sustained investor demand.

  • The state, which collects surcharges upfront and only repays them when rules are met.

Losers:

  • Short-term speculators seeking fast profits.

  • Owners hoping to flip within five years.

  • Sellers of established homes, as demand shifts towards properties where rebates are achievable.

The Bigger Picture

This inverted surcharge-and-rebate model aligns the market with real housing outcomes. Speculation is discouraged, renting is rewarded, and rebates are only unlocked by sustained contribution to the rental pool. By restructuring property taxes this way, Victoria could balance the interests of buyers, renters, developers, and the state — creating a more stable housing market for the long term.