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The Property Council is celebrating a win after the Prime Minister announced a reduction in the Managed Investment Trust withholding tax rate in order to encourage build-to-rent (BTR) projects.
Most recently, the advocacy body commissioned a study from EY to show how the sector could balloon under a 15 per cent reduction in the tax rate, from 30 per cent to 15 per cent.
The research suggested that levelling the investment playing field for BTR homes could deliver as many as 150,000 new apartments in 10 years.
Property Council chief executive Mike Zorbas said the move, which was announced following a national cabinet meeting, would “breathe life into this vital asset class, unlocking desperately needed supply through a new form of housing”.
“Today’s announcement is a strong step toward addressing and reversing Australia’s growing housing shortage,” Mr Zorbas said.
“More supply means downward pressure on the cost of renting and buying homes, and will offer more housing choices and affordable options at a time when we desperately need them”.
He argued that the asset class was particularly valuable given the long-term security it offers to renters, who do not have to worry that that property will be sold, thus ending their tenancy.
“Build-to-rent housing, like purpose-built student accommodation and retirement living, is a positive part of the national housing equation and provides tenants with long-term security of tenure, superior amenities and professionally managed properties,” Mr Zorbas said.
At this stage, the new tax is believed to apply to all new build-to-rent housing projects commenced after the date of this year’s federal budget, ensuring any project that finalises construction between 9 May 2023 and 1 July 2024 will be eligible to claim the rate from 1 July 2024 and onwards.
In Mr Zorbas’ view, the sooner these changes take effect, the better, with long-term solutions desperately needed to address the country’s rental crisis.
“The earlier these changes come into force, the earlier additional investment can commence”.
And with this win under its belt, the council is now turning its attention to another area of advocacy.
“The next public policy improvement will be to introduce an incentivised tax rate of 10 per cent for Affordable ‘Key Worker’ Housing (rent at 20 per cent below market) to domestic and international investors that incorporate supply of affordable dwellings within their build-to-rent communities,” Mr Zorbas said.
ABOUT THE AUTHOR
Juliet Helmke
Based in Sydney, Juliet Helmke has a broad range of reporting and editorial experience across the areas of business, technology, entertainment and the arts. She was formerly Senior Editor at The New York Observer.
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