Shadow treasurer Chris Bowen has revealed that, if elected, the Australian Labor Party (ALP) would cut the managed investment trust withholding rate in half (from 30 per cent to 15 per cent) on tax distributions attributable to investments in build-to-rent housing.
According to Mr Bowen, the scheme would incentivise the development of affordable properties for families seeking stable, long-term housing solutions.
“Build-to-rent provides more stable long-term tenancies and more housing in desired locations close to public transport and close to employment opportunities,” Mr Bowen said.
“This is good for families who want to spend more time with each other and less time travelling to and from work.”
He continued: “Many families around Australia have faced the situation where they’ve tried to create a comfortable home, but unexpectedly have been forced to move after their landlord decides to sell their investment and move on.
“Boosting affordable and stable rental accommodation has a double dividend – it is critical for Australia’s 2.7 million renters that can’t afford to buy a home or are saving to do so, and it boosts construction jobs and economic activity.”
Property Council CEO Ken Morrison welcomed the ALP’s announcement, stating that he’s confident the reforms would achieve their desired objective.
“Build-to-rent housing is an internationally proven way to provide better housing choices for people who rent their home and can play a big role in Australia with the right policy settings,” Mr Morrison said.
“Labor’s pledge to tackle the taxation disincentive for institutional investors by creating a level playing field for managed investment trust tax rates will help to attract investment into the build-to-rent sector.
“This will help deliver better choice and more certainty for the 2.7 million Australians who rent their homes.”
Mr Morrison added that the scheme would enable the property industry to partner with government in providing “more affordable housing choices”.
“Labor’s support for build-to-rent is a big step forward in promoting the establishment of this new form of housing in Australia, especially in our growing cities where people need more and better housing choice that is close to work, schools and transport.
“Build-to-rent will deliver Australians who rent more choice and more certainty, while stimulating new construction and supporting jobs at a challenging time for the property industry, which supports 1.4 million jobs across Australia.”
Nicholas Proud, CEO of PowerHousing Australia, also welcomed the announcement, noting the overseas success of similar schemes.
“Build-to-rent is already established in the US where it is known as multifamily housing, and its great success has been followed through in the UK,” Mr Proud said.
“With house prices still out of reach to many Australians, increased investment into this emerging asset class will see more rental stock available to the market.”
He added: “Build-to-rent in the US supplies up to 10 per cent of all residential housing delivery per year, and is a safe, government-backed investment class, which has the lowest volatility in a downturn such as the Great Recession that decimated the US housing market a decade ago.”