The Property Council of Australia has released the details of the Government’s draft legislation for changes to Build to Rent tax settings. The Property Council highlights that this is critical to achieving the nation’s housing target for the next five years.
2023 modelling from consultancy EY, commissioned by the Property Council, showed that implementing a 15% managed investment trust (MIT) withholding rate without an affordable housing mandate could lead to the creation of 150,000 apartments by 2033.
Further EY research showed that lowering the MIT withholding tax rate to 10% for Build to Rent projects with an affordable housing component could accelerate the delivery of 10,000 affordable homes over 10 years on top of those 150,000 rental homes.
The Property Council stated that the technical details of the draft legislation will make or break the delivery of these new homes and to achieving the national housing target.
“The enormous potential of a 150,000-apartment pipeline hangs in the balance and there’s only one chance to get this legislation right. Affordable housing is a crucial part of a broader housing mix, which is why we proposed an additional model that would protect the pipeline of 150,000 Build to Rent apartments and deliver a further 10,000 affordable rental apartments at no extra cost to the taxpayer.
“The purpose of reducing the managed investment trust withholding rate from 30% to 15% – which we welcomed – was to ensure that Build to Rent projects were put on a level playing field with other asset classes. Even with the best of intentions, drafting missteps could risk the delivery of high-amenity, securely tenured homes backed by the institutional capital that’s critical to deliver the homes our nation desperately needs.
“The Property Council is reviewing the details of the legislation and will work with the government to ensure it delivers on its potential to create 150,000 rental homes and an additional 10,000 affordable rental homes.”
Matthew Kandelaars, Group Executive Policy and Advocacy, Property Council
