New tax expansion on vacant residential land revealed in Victoria

A new tax expansion on vacant and undeveloped properties has been announced by the Victorian government.

Treasurer Tim Pallas announced the reform at an industry breakfast this morning, which will see the Vacant Residential Land Tax expanded to the entire state from 2025.

Homes that have been unoccupied for more than six months in Melbourne are currently the only ones caught by out by the tax. Holiday homes, however, are exempt.

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Pallas said it was a critical move to encourage vacant landholders to develop land.

"Our clear message to land owners is to develop the land or sell it to someone who will," Pallas said.

"Similarly, we are not putting in place a rule for landowners that we as a state are not going to apply to ourselves.

"We expect every government agency that is holding land to justify exactly why are they holding that land and not putting it into the marketplace."

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Premier Jacinta Allan backed the move today, on her first day at Victorian Parliament in the top job.

"We are looking at everything we can do to build more homes. Everything we can do to increase supply," she said.

Shadow treasurer Brad Rowswell criticised the tax expansion.

"The reason why they are doing that is because they've got a debt problem. And an economic problem of their own making," he said.

The Greens welcomed the news, but said they wanted the tax increased and made mandatory.

Currently, the only people paying a vacancy tax are owners who tell the government their home has been sitting empty.

"When you have a really weak system that's not enforced. People are going to lengths to not pay these taxes," Greens leader Samantha Ratnam said.