Australian Property Council Backs Build-to-Rent Bill

Two bricklayers work on a new home in Albany, Western Australia, on July 5, 2024. Susan Mortimer/The Epoch Times

The Property Council of Australia has welcomed the Albanese government’s passage of the Build to Rent (BTR) Bill during the final week of the Senate.

EY modelling shows the amended legislation can deliver 80,000 new rental homes over the next ten years.

“This is the largest ever federal supply of rental homes,” Property Council Chief Executive Mike Zorbas said.

Zorbas added that if it is done right, the government could deliver more than twice this number of rental homes.

Key Features of Build-to-Rent Legislation

The recently passed BTR legislation includes a range of measures aimed at boosting the rental housing supply.

He explained that one of the legislation’s significant features is lowering the Managed Investment Trust (MIT) withholding tax from 30 percent to 15 percent for eligible developments, making it more attractive for investors.

This change aims to encourage more investment in MITs, potentially boosting the economy and directing more funds toward key investments.

This tax rate also applies to projects already in operation or under development before last year’s budget, provided they meet all other eligibility criteria.

Moreover, the legislation will provide enhanced tenancy protections. It requires BTR operators to offer tenancies for a minimum of five years, an increase from the previous three-year requirement, and introduces rules to prevent no-fault evictions.

Structural and Technical Improvements

To address sector-specific challenges, the legislation introduces clearer rules for managing head trust/sub-trust structures within MITs.

These adjustments simplify the process for operators, ensuring better compliance and more efficient investment management. This change resolves a critical issue, reducing legal risks and enhancing operational efficiency.

Furthermore, the misuse tax is now limited to apply only to the owner responsible for a development during non-compliance.

Another key feature is to ensure that the developments remain under single ownership for at least 15 years, with at least 10 percent of dwellings designated as affordable tenancies.

Affordable tenancies must be managed by community housing organisations, with rents capped at no more than 74.9 percent of market value.

Provisions ensure that a proportion of these homes are reserved for lower—and moderate-income households based on their household income.

Greens and Coalition Criticise Build-to-Rent Bill

The Greens, who ultimately supported the Bill after demanding amendments, expressed criticism of its provisions.

Greens MP Max Chandler-Mather stated that the Treasury had confirmed there was no modelling to suggest the scheme would increase rental properties, contradicting earlier claims by the housing minister.

“Only 10 percent of the units are deemed ‘affordable,’ and that affordability is defined as 75 percent of the market rent within the development, not the surrounding area. Loopholes also allow developers to maximise profits by offering lower-quality units, with no guarantee of affordability after 15 years,” he said.

The Greens proposed an alternative approach, including a freeze on rent increases.

They also advocated abolishing negative gearing and capital gains tax discounts, which saves Australians about $38.9 billion in taxes a year.

Meanwhile, Coalition home ownership spokesman Andrew Bragg said Build to Rent would change the character of Australian housing from individuals to institutions.

“This is another sad chapter in Labor’s destruction of the Australian dream,” he said in a statement.