Give homeowners a tax break to boost economy and employment, says Everitt

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That’s the word from Berry Everitt, chief executive officer of the Chas Everitt International property group, who says the quickest and easiest way to do this would be to give all homeowners an annual tax break, such as the bond-interest deduction already available to those who own rental properties.

“This would immediately make home-ownership more affordable and attractive across the whole income spectrum, and not just for those first-time buyers who are eligible for the First Home Finance subsidy.

"It would also help many existing homeowners who are currently battling with high interest rates to avoid having their properties repossessed, which has a negative effect on the economy and on investor confidence.

“The positive effect of a tax break would make for a more active real-estate sector that contributes directly and indirectly to the GDP growth and job creation that SA needs so urgently.

"Increased housing demand stimulates the development of new homes and boosts economic output starting with the investment in land and building materials even before the new homes are purchased. It also prevents steep declines in home values and the associated negative economic impacts.”

Economic impact of homebuyers

As many studies have shown, jobs are not only created during the construction of new homes but also on an ongoing basis as homeowners continue to buy home-related goods and services, he says.

“Homebuyers spend on furniture, appliances, home improvements, security, maintenance and various services, which boosts demand in a wide variety of economic sectors other than real estate and construction.

“In SA, the State also collects Vat on the sales of newly-built homes and transfer duty on the purchase of pre-owned properties so more home sales mean more revenue. Local governments also earn more when there are more residents paying property tax and this additional revenue can be used to improve public services and infrastructure and further stimulate economic activity.”

Everitt says homeowners have also been shown to be more likely than tenants to invest in their local communities, support local businesses and contribute to the overall stability, upliftment and security of the areas in which they live, thereby making these more attractive for further investment, development and job creation.

“Home-ownership can also enable people to access and keep jobs in their own areas more easily, because they don’t have to contend with rental increases that could force them to move to a less expensive property further away.

“Also of especial importance in SA is the fact that home-ownership is the primary way for lower- and middle-income families to build wealth, not only through the increase in the value of their homes over time but often also through the use of their homes as places to start new business enterprises.

"A tax incentive that encourages and enables such families to achieve home-ownership could thus be an important key to reducing SA’s high level of wealth inequality.

“Consequently, we believe that although housing was an issue that received very little attention in the recent elections, our new coalition government should institute a tax break on home-ownership as soon as possible, because the initial reduction in revenue would rapidly be offset and exceeded by the proceeds of more robust economic growth, employment creation and consumer spending.”