Property Council warns proposed ESL changes could drive up rents and stall investment
Confidence in New South Wales’ property sector is showing signs of recovery, but industry leaders warn that the outlook may deteriorate if the state government proceeds with plans to overhaul the Emergency Services Levy (ESL).
The Property Council of Australia has cautioned that the proposal — under which the full ESL cost would be transferred to property owners — could lead to higher rental prices and reduced investment in housing supply.
According to the council’s NSW executive director Katie Stevenson (pictured above), new figures indicate the property market rebounded in the last quarter. However, she warned that momentum could stall if additional costs are imposed on property owners.
“The data predicts more jobs, rising investment, and a strong pipeline of future projects – all clear signs that optimism is returning,” she said. “However, if the government keeps increasing property taxes, charges and fees, that confidence could vanish overnight.”
Stevenson said the government is weighing a plan that would eliminate the ESL from insurance premiums and instead have property owners cover the full amount. She noted this could disproportionately affect smaller investors.
“The government wants property owners alone to foot the bill, even though many of Fire and Rescue NSW’s 140,000 annual callouts – road crash incidents, medical assistance, and animal rescue – have nothing to do with property,” she said. “It’s an unfair hit on smaller landlords, many of whom will have no choice but to pass on the costs, pushing rents even higher when housing affordability is already in crisis.”
In its latest state budget submission, the Property Council urged the government to fund emergency services through general taxation — similar to health and education — rather than levying property owners exclusively. An alternative, Stevenson said, could involve a broader user-pays model, such as adding a modest charge to vehicle registration.
Survey results from the Property Council and Procore suggest optimism is building across multiple areas of the sector. Business sentiment around hiring increased from +8 to +12, future work pipelines rose from +30 to +51, and confidence in the broader NSW economy improved from +3 to +7. Office asset values, which had been in decline, moved into positive territory, up from -6 to +10.
Still, concerns about policy remain. A quarter of respondents identified rising property taxes and fees as a growing issue, while confidence in the government's ability to manage growth continues to sit in negative territory.
“The property sector is ready to drive economic growth, but we need the government to back that confidence with stable, supportive policies,” Stevenson said. “Reform should encourage investment and housing supply – not hit mum-and-dad landlords with another tax.”
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