Property consultancy Cushman & Wakefield has released insights regarding the Australian Build to Rent sector from its APAC Living Sector Policy Radar.
Australian Build to Rent has seen substantial supportive recent policy movement at both federal and state government level. Along with removing uncertainty, the improved policy picture makes Australia a more competitive Build to Rent investment destination internationally in terms of tax treatment.
The direction of travel indicated in the National Housing Accord looks clearly positive for Build to Rent. The Accord explicitly recognises the requirement to attract more institutional capital into housing, if its 1.2m home target is to be hit.
Cushman & Wakefield believes that Build to Rent is the key mechanism for this and its high density and fast absorption profile make it an effective tool for boosting supply and bringing wider place making benefits.
However, there is still plenty of scope for policy levers to smooth the path for more Build to Rent activity. Wider recognition of Build to Rent as a distinct use class, with consistency across states, stands out as an enabling step.
At a federal level, the National Housing Accord provides the overarching framework supporting accelerated housing delivery across Australia and underpins many of the recent policy changes benefiting Build to Rent, both directly and indirectly.
The Accord’s target of delivering 1.2 million homes by the end of FY2029 has applied pressure across all levels of government to increase housing supply, prompting states to review and amend their planning policies accordingly.
This has been supported by a range of fiscal stimulus measures designed to enable new housing development, including the New Homes Bonus, which financially rewards states that exceed their housing delivery targets.
Tax settings for Build to Rent have also been materially improved. The Managed Investment Trust withholding tax rate on eligible Build to Rent-related fund payments to foreign investors has been reduced from 30% to 15%.
Eligible payments include rental income generated by Build to Rent assets and capital gains, including gains realised through the disposal of a membership interest attributable to a Build to Rent investment.
Importantly, this reduced rate applies not only to new developments but also to MITs that already own Build to Rent schemes, regardless of when those assets were constructed.
In addition, the capital works deduction rate for Build to Rent developments has been increased from 2.5 per cent to 4 per cent. This uplift primarily relates to capital expenditure incurred during construction, although in certain circumstances it can also apply to extensions or alterations to existing buildings, provided those buildings are not tenanted at the time.
Foreign Investment Review Board application fees have also been adjusted, with land acquisitions intended for Build to Rent on residential land now subject to commercial fee tiers rather than residential ones.
This represents a significant reduction in upfront costs, given the materially higher fees associated with residential land transactions.
Cushman & Wakefield notes that this guidance does not currently extend to purpose-built student accommodation (PBSA) or later living, although those sectors are not automatically excluded in all cases.
Build to Rent operators may also access additional tax concessions where at least 10% of units within a scheme are delivered as affordable housing.
State-level policy initiatives have further strengthened the operating environment for Build to Rent. Several state governments have introduced targeted tax concessions and planning policy amendments aimed specifically at the sector, including measures that can alleviate foreign owner land tax surcharges.
Queensland has taken a particularly proactive approach through its Build to Rent pilot program, under which the state partners with the private sector to deliver Build to Rent schemes and provides subsidies for the affordable housing component, improving overall project feasibility and increasing the level of affordable provision.
Beyond sector-specific measures, Build to Rent developers have also benefited from a range of broader state policies that align with the sector’s characteristics.
These include land release programs in the ACT, transport-oriented development policies in New South Wales, RenewalSA’s focus on directing site sales toward Build to Rent in South Australia, and residential intensification zones in Victoria.
In several jurisdictions, these initiatives are supported by fast-track planning pathways for significant projects, where such mechanisms have been recently introduced or updated.
Finally, Cushman & Wakefield highlights that most states have implemented recent reforms to harmonise and strengthen renters’ rights under the national Better Deal for Renters directive.
Key elements include the removal of no-fault evictions and limits on rent increases to once per year. These measures align closely with the professional management model typical of Build to Rent, where operators prioritise tenant retention, long-term occupancy and brand reputation.
