Last week, Australia’s National Cabinet announced a range of reform processes to tackle the growing housing crisis and support the growth of Australian cities.
From July 2024 the Australian Government will support build-to-rent housing by reducing the Managed Investment Trust withholding tax rate from 30 to 15 percent and increasing the depreciation rate from 2.5 percent to 4 percent per year for new build-to-rent projects.
The Australian Government’s Infrastructure Investment Program will be independently reviewed, and its infrastructure pipeline reduced to $120 billion over the next 10 years.
Within the next six months, Planning Ministers will develop a proposal for National Cabinet outlining reforms to increase housing supply and affordability.
A recent study by EY, commissioned by the Property Council of Australia, showed levelling the withholding tax rate, in line with investment in other property asset classes, could create an extra 150,000 Australian homes over the next decade.
Property Council Australia Chief Executive Mike Zorbas said the move will breathe life into this vital asset class, unlocking desperately needed supply through a new form of housing.
It is understood, and subject to confirmation, the new tax rate will 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.
“The earlier these changes come into force the earlier additional investment can commence and we look forward to future consultation with the government to bring forward these arrangements with states and territories as efficiently as possible,” Mr Zorbas said.
“The next public policy improvement will be to introduce an incentivised tax rate of 10 percent for Affordable ‘Key Worker’ Housing (rent at 20 percent below market) to domestic and international investors that incorporate the supply of affordable dwellings within their build to rent communities,” he said.
The Property Council of Australia also welcomed the National Cabinet’s commitment to plan for increasing housing supply and affordability over the next six months.