More than 100,000 property owners have been affected by the new system as more than 50 per cent of properties are in need of urgent repair.
The Treasurer has promised a review of the system to look at how to prevent more damage and improve the process of determining if you qualify for a loan.
Mr Hockey has also said that he is committed to ensuring the Government does not have a backlog of property claims in the next two years.
“I am determined to get on with our job and to deliver the financial stability we need,” he said.
“That’s why I’m bringing in the review.
It’s one of the important things we can do to make sure that we don’t have a massive backlog of claims in future.”
What you need to know about the new property systemA $4.4 billion new property insurance system to provide for the sale of residential property.
Property insurance premiums will rise by 4.4 per cent to 3.75 per cent over three years.
The change means the cost of property insurance premiums, including deductibles and interest, will rise from $25,000 to $30,000 per year.
Pensioners will also see their contribution to their personal income tax and other payroll tax increase by $1,400.
All property owners will be required to pay a $1 per year charge to the Property Tax Fund, which will increase to $2 per year in 2017.
A total of $2.3 billion will be paid to the Government to cover costs for the system.
There will be a new $10 million ‘fair go’ grant to ensure that property owners who do not have property insurance are not penalised.
Mr Hockey said the changes were designed to ensure the system was fair and equitable, not a way to subsidise property owners.
“The fair go grant will be available for properties that do not provide a fair deal to the average household,” he told reporters in Melbourne.
What are the changes?
The system will include a range of different methods of property assessment, including the ‘value’ method, a ‘predictability’ method and the ‘economic factors’ method.
Under the value method, property owners can be asked to provide a list of the costs of their property, including any repairs they may have incurred.
Each property will be assessed using the ‘best available evidence’ from local planning agencies, community and private sources.
If a property is deemed not to be in the “best available” market, the Government will then make a recommendation on whether the property should be listed for sale.
Once a property owner receives a recommendation, it is then up to the buyer to negotiate a price.
When property is sold, the price will be the median value of all the available properties in the market, rather than the median selling price.
Mr Cameron said the system would “help protect the value of the property and ensure that it is sold at a fair price”.
“This is not just about getting more homes into the market.
It is also about ensuring that the taxpayer doesn’t end up paying higher prices to owners who aren’t prepared to pay the fair price,” he added.”
This will help ensure that the market is competitive and that all taxpayers are getting fair value for their money.”
The system is currently in the planning stages.
It is expected to be rolled out in 2020.
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