This article is from the Australian Property Journal archive
THE Albanese Government has taken a significant step toward addressing Australia’s housing crisis by introducing an initial set of affordability requirements for Build-to-Rent (BTR) developments.
The new initiative which takes effect from January 1 this year, means at least 10% of dwellings in eligible Build-to-Rent projects must be classified as “affordable dwellings,” with rents capped at 74.9% or less of the market rate.
The government has also introduced income thresholds to ensure the homes are accessible to eligible tenants, including frontline workers and others on moderate incomes.
The measure is aimed at providing secure, long-term rental options for moderate-income workers and vulnerable Australians, bolstering the housing supply while offering affordable alternatives.
The affordability standards follow recent legislative changes that offer tax incentives to attract investment in BTR. The government and the Greens struck an agreement at the 11th hour in Parliament’s last sitting day for the passage of the bill, after the Greens secured a provision for build-to-rent leases to be extended to up to five years, as well as a $500 million boost to social housing funding.
The passage of the bill will allow eligible BTR projects will be provided with a reduced 15% managed investment trust withholding rate.
EY modelling shows the amended legislation can deliver 80,000 new rental homes over the next ten years. Of these, 8,000 would be affordable homes and 1,200 would become available to rent in the near future. Vacancy rates in the rental market remain crushingly low amid a national housing crisis. The federal government’s National Housing Accord is aiming to deliver 1.2 million “well-located” homes over five years in a bid to pump supply into the market.
The measure forms part of the Albanese government’s ambitious $32 billion Homes for Australia plan, which aims to deliver 1.2 million new homes by 2029.
It comes as the housing crisis shapes up to become the biggest issue at this years federal election.
The government is also preparing a second tranche of reforms to further enhance tenant protections and affordability. Key upcoming measures include:
- Mandating involvement of community housing organizations to manage affordable units.
- Preventing no-fault eviction clauses in tenancy agreements.
- Reserving a portion of affordable dwellings specifically for lower-income households.
Furthermore, there is also a 45% increase in Commonwealth Rent Assistance, benefiting over 1 million households.
