The Victorian state government has expanded the eligibility for its build-to-rent incentive, entitling rental properties completed prior to 2032 to a halved land tax and no absentee owner surcharge (AOS) for 30 years.
First announced last November in the 2020/21 Victorian budget as a way to reinforce the emerging build-to-rent sector, the initial framework of this incentive was to provide eligible developments to receive both a 50 per cent land tax discount and a full exemption from the AOS from 1 January 2022 to 31 December 2040.
However, under these changes, any eligible project completed and operational between 1 January 2021 and 31 December 2031 will receive the land tax discount and AOS exemption.
According to a statement provided by the Victorian Treasurer Tim Pallas, the state government elected to extend this deadline following consultation with industry and relevant stakeholders.
Speaking of these changes, Mr Pallas said: “This will not only ensure Victorians have access to more rental homes and a greater range of housing options – it will create thousands of jobs as we rebuild from the coronavirus pandemic.
“Home has never felt as important as in the past 20 months and this initiative will ensure Victorians have access to safe and secure rental properties for a long time in the future.”
The Property Council of Australia warmly welcomed this expansion, citing analysis by Ernst & Young which suggests that delays could have prevented the start dates of roughly 6,500 apartments in the state.
This development also adds to the discourse surrounding home ownership and increasing property prices throughout Australia.
Last week, the Australian Prudential Regulation Authority (APRA) raised its minimum interest rate buffer, requiring lenders to evaluate any new borrower’s ability to repay their loan at an interest rate at least 3 percentage points above the loan product rate.
Speaking to Mortgage Business on the subject, Connective executive director Mark Haron called for regulators to intervene in the housing and mortgage markets sooner rather than later to avoid a “knee jerk reaction” that could ultimately impact the industry’s sustainability.
Last month, federal Treasurer Josh Frydenberg announced movements to address high debt-to-income lending, which in turn followed APRA’s revelation that it was aware of this practice.
The International Monetary Fund (IMF) also expressed concerns last month about Australia’s housing affordability and financial stability.