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Among the federal government’s reforms are notable incentives for investment in build-to-rent projects.
In December, the government announced that it intended to cut application fees for foreign investment in build-to-rent projects to support the delivery of homes. Now, in its new framework for assessing foreign investment, the government has gone one step further, and will allow foreign investors to buy established build-to-rent developments – despite the fact that foreign nationals are generally barred from buying existing property.
Hoping to spur on this subsector of housing – to which it has also promised to deliver tax incentives – the federal government has said that the reforms are in part an attempt to increase housing supply.
Treasurer Jim Chalmers described the new approach to reviewing foreign investment proposals as “risk‑based”, as it adds resources to screening and compliance and attempts to cut down average processing times in low-risk sectors.
At the same time, the government is promising to carry out a more robust examination of how certain proposals – particularly those involved in critical infrastructure, critical minerals, critical technology, sensitive data sets, and investment in close proximity to defence sites – relate to the country’s national interest and security.
The Property Council of Australia’s group executive of policy and advocacy, Matthew Kandelaars, said the approach is welcome, particularly if it proved effective in “streamlining the process for trusted partners in non-sensitive sectors”.
“Trusted partners who have been investing in our country for years should be treated as such,” he said, adding that it is important to “create a more dynamic and responsive investment market for the capital we need to build our nation”.
In the eyes of the Property Council, the first test of the new framework will be its ability to support the burgeoning build-to-rent sector, which the organisation argues is critical to meeting the nation’s housing needs.
“We welcome the government’s move to ensure foreign investors can purchase existing build-to-rent properties, supporting liquidity in a market that attracts patient long-term investment, and commonsense suggests that this also extends to other commercial-residential asset types like purpose-built student accommodation,” Kandelaars commented.
“If executed well, the government’s proposed changes to the managed investment trust withholding tax rate for build-to-rent can leverage the support of institutional capital to meet our housing goals.
“If mishandled, we will waste the opportunity to create 150,000 rentals and 10,000 affordable rentals by 2033,” he 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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