‘Lazy place tax’ push to turn empty buildings into creative hubs
By Linda Morris
Owners of vacant commercial property would be subject to a “lazy place tax” to encourage them to lease their idle buildings out to musicians, actors and artists under options up for discussion at the state’s cultural arts tax summit.
City of Sydney councillor Jess Miller is urging a “carrot and stick” approach to state and federal taxes to unlock furloughed or “lazy” commercial spaces that could be put to creative use.
Jess Miller outside the Green Park Hotel in Darlinghurst. Credit: Edwina Pickles
Top of her list is the shuttered former home of Gould’s Books on King Street, Newtown, the Green Park Hotel in Darlinghurst, the old Glebe Post Office, the Hopetoun Hotel in Surry Hills, and the Newtown Tram Depot.
“We must explore a financial mechanism whereby if you lease your space to a creative at a discounted rate, then you’d receive land tax credits and/or concessions, and conversely if a property is doing nothing, there would be a penalty – something like a lazy space tax,” Miller said.
“Everyone talks about the need to activate spaces to enliven local high streets. The opposite of active is lazy. It captures that frustration of looking at a beautiful building that sits there empty and lifeless. We need a way to encourage these spaces being used that is more compelling than overt land-banking, where money is parked in Sydney property.”
Arts Minister John Graham has called the cultural arts tax roundtable for September 25, with early submissions backing the exemption of prizemoney from GST, and added incentives for wealthy benefactors to donate.
Taxing vacant commercial spaces has also emerged as a dominant theme to arrest the flight of creatives out of Sydney for more affordable accommodation in Queensland and Victoria.
Inner-city Sydney lost nearly 30 per cent of its creative work areas between 2012 and 2022 despite overall floor space surging by 15 per cent, a 2024 study by the Committee of Sydney found.
All up, 172,970 square metres of creative warehouse, studio and rehearsal space has been lost, prompting the think tank to call for tax deductions for landlords who lease properties to certified creative organisations at below-market rates.
Committee for Sydney’s Matt Levinson says the system of property valuations for commercial premises needs reviewing and leads to “perverse outcomes in which landlords consider it better to keep properties vacant rather than rent to creatives at below-market rates, which could jeopardise their book valuation”.
Rather, property owners could receive a deduction equivalent to the difference between market and lease value. For the concessions to work, eligible organisations would be limited to charities and non-profits, and not necessarily architects or advertising companies that might consider themselves “creative” but not subject to the same cost pressures.
The specialist arts consultancy Left Bank Co, which is leading a City of Sydney study into affordable cultural spaces, says the threshold at which a lease could be judged affordable for creatives was breached in Sydney decades ago.
Most creatives rent from the private market, where affordability is tied to buildings slated for redevelopment, rezoning or demolition, its director Michelle Tabet said in her submission.
In its research, the firm had been unable to find any creative operators or artists paying full commercial cost of their space, and many had to choose between maintaining workspace and securing housing.
Most arrangements were only viable due to rent discounts from sympathetic landlords, grants from government property owners, volunteer-led maintenance and repairs, and personally absorbed establishment costs – sacrifices that were ultimately unsustainable.
Floor space incentives and cultural-use zoning were blunt tools and failed to deliver the right space at the right price points. To be effective, any new system must be tied to existing creative clusters, employment data and sector activity – and supported by tailored levers, including taxes, Tabet said.
Land tax exemptions or rebates should be introduced for landlords who lease to eligible creative tenants at affordable rates, council rate relief considered through a new “cultural use” classification, and stamp duty concessions given for properties transferred to public-interest cultural use.
In addition, Tabet suggests GST relief on building upgrades, purchases, or leases involving not-for-profit cultural use.
She points to Toronto, Canada, where a land tax exemption for cultural leases permits landlords leasing to registered creative tenants to access land tax exemptions or rebates. A government-managed certification system would ensure transparency and accountability.
For her part, Miller suggests landlords only be eligible to claim tax deductions such as interest on loans, maintenance and travel expenses when these properties are actually tenanted. Currently, deductions are claimable when a “reasonable effort” has been made to lease the space, even when the advertised rent remains extraordinarily high.
To encourage supply to adapt to market prices, Miller says landlords could be asked to reduce the advertised rent for every three months that a building remains vacant. She has issued a call-out for the public to identify other properties in their neighbourhoods that could be occupied and put to use.
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