The National Cabinet has made a decision to take on a national approach to reforms that address the housing crisis – from tackling infrastructure investment, increasing housing supply and affordability, to promoting sustainable growth across states and territories.
“Industry will work closely with the planning ministers and National Cabinet to ensure all options are on the table and there are no unintended consequences of other reforms that may dampen this effort,” said Denita Wawn (pictured above left), Master Builders Australia CEO.
The Commonwealth government also announced a series of other measures to boost investment for increasing housing supply. This includes increasing the depreciation rate for eligible new build-to-rent projects and lowering the managed investment trust withholding tax rate from 30% to 15% for build-to-rent housing projects.
“We are seeing rental inflation accelerate to its fastest pace since 2012, brought on by shortages in land supply and exacerbated by rising interest rates,” Wawn said.
“For many builders and developers, initiating large-scale home building projects in the current environment is simply too risky as medium-to-high density is most sensitive to interest rate fluctuations.
“Measures to make the housing industry a more attractive place to invest is welcome at a time when communities are crying out for more supply.”
Mike Zorbas (pictured above right), Property Council CEO, lauded the government’s decision to reduce the withholding tax rate for build-to-rent properties, in particular, saying it was “a strong step toward addressing and reversing Australia’s growing housing shortage.”
A recent study by EY, commissioned by the Property Council, showed levelling the withholding tax rate, in line with investment in other property asset classes, could create an additional 150,000 Australian homes over the next 10 years.
“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,” Zorbas said.
“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.”
The new tax rate is expected to apply to all new build-to-rent housing projects commenced after the date of this year’s federal budget, ensuring any construction project that is completed from May 9 to July 1, 2024 will be eligible to claim the rate from July 1, 2024 and onwards.
Master Builders Australia and Property Council both believed that the latest move from the government is just one piece of the jigsaw, as they continued to advocate for the passage of the Housing Australia Future Fund and related housing legislation in the Senate.
“More needs to be done to speed up the delivery of new housing in the medium and high-density part of the market over the short term,” Wawn said. “Government efforts to expand the stock of build-to-rent will provide welcome support.
“The challenge will be to make sure that we put downward pressure on building and construction costs to increase output.
“Builders continue to face regulatory burdens and prolonged delays in approvals for building applications, occupation certificates and land titles. Additionally, land shortages in the wrong places, high developer charges and inflexible planning laws are restricting opportunities to meet demand, speed up project timelines, and minimise costs to both builders and their clients.”
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