In addition to announcing further details regarding the Labor party’s negative gearing and capital gains tax changes, the shadow treasurer also announced reforms on the build-to-rent tax model.
Chris Bowen announced the Labor party’s intentions to reform how the build-to-rent model operates in Australia, with changes he said will create more supply close to public transport and employment opportunities.
The changes, outlined in a Labor party document published by Mr Bowen, will lower the managed investment trust withholding rate on tax distributions for investments in build-to-rent housing from 30 per cent to 15 per cent.
The document claimed this will encourage new housing supply.
“Labor will encourage new housing investment by reforming the tax treatment for Build-to-Rent to ensure it’s a viable part of Australia’s housing landscape, in line with the US and UK,” the report noted.
“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, while it also boosts construction jobs and economic activity.”
This reform would be in addition to the party’s plan to build 250,000 affordable homes over 10 years.
The Property Council of Australia and its CEO Ken Morrison “strongly” welcomed the proposed reforms to build-to-rent.
“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.”
Mr Morrison added that getting investors involved in the build-to-rent model is “critical to delivering the new housing units and bringing the management expertise to enable the sector to flourish in Australia”.
“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,” he said.
“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,” Mr Morrison said.
While Master Builders Australia’s CEO Denita Wawn also welcomed the announcement of the build-to-rent reforms, she added that negative gearing and CGT need not be changed as a result.