This article is from the Australian Property Journal archive
THE Greens and the Coalition are again at loggerheads with the Albanese government over housing legislation, this time teaming up to stall a bill aimed at encouraging more build-to-rent developments – with the Greens unveiling a last-minute demand that every single build-to-rent property to be affordable.
The Greens and the Coalition – who combined last year to trouble passage of the government’s $10 billion Housing Australia Future Fund initiative – voted to split tax changes out of Labor’s bill, which would lower the managed investment trust (MIT) withholding tax for build-to-rent assets to the same level as other types of investments such as offices, shopping centres and hotels.
The tax has been considered as a major obstacle in trying to attract institutional funds needed to develop projects in the nascent sector, which sees developers build and rent out dwellings long-term. Modelling from EY, commissioned by the Property Council, has shown that implementing a 15% MIT withholding tax rate and an incentivised rate of 10% for projects with affordable housing could deliver 160,000 homes over 10 years.
Build-to-rent is seen by some as a potentially cheaper, more secure and more liveable form of housing than the private market. Largely centred around Melbourne in its infancy, with major developments by Mirvac, Greystar, and Gurner, the sector has been gaining momentum across the country, and has attracted the attention of key global investors such as Dutch pension fund PGGM.
The Albanese government’s legislation currently requires 10% of build-to-rent developments to be affordable (rented out at 75% of market rate) for investors and developers to qualify for the lower tax rate.
The bill will be sent to an inquiry that will give its findings in early September.
The Greens yesterday demanded that all build-to-rent housing being affordable – which they said would be defined as the lower of 70% of market rate or 25% of a renters’ income – and also for rent rises to be capped at 2% every two years.
Greens spokesperson for housing and homelessness, Max Chandler-Mather said Labor’s plan “boils down to giving tax handouts to property developers to build apartments almost no one will be able to afford, with no protections against unlimited rent increases”.
“Under this plan a developer could pocket government tax handouts, then jack up the rent by hundreds of dollars, evict tenants, and sit on hundreds of vacant apartments in an effort to further drive up market rent.
“Once again Labor is tinkering around the edges and announcing a policy that makes it look like they are doing something for renters, when in reality it is just a plan to give property developers more tax handouts.”
The Greens’ demands for a beefed-up Housing Australia Future Fund last year yielded an additional social housing initiative entirely – the Social Housing Accelerator, which saw $2 billion immediately released to the states and territories for the delivery of 4,000 homes for Australians on social housing waitlists.
Shadow assistant housing spokesperson Andrew Bragg told the ABC, “The Australian dream is not about foreign fund managers renting out houses to Australians.”
“The perpetual renting policy of the Labor government would fundamentally change the character of housing forever,” he said.
The Coalition’s current housing policy includes a proposal for first home buyers to be able to withdraw from their superannuation for a deposit to build a home.
Amid a cost-of-living and national housing crisis, governments at all levels have come under pressure to act on affordability and access to housing. National cabinet’s National Housing Accord, which aims to deliver 1.2 million “well-located” homes over five years, officially begins next week, concurrently with the Housing Australia Future Fund and National Housing Accord Facility. Together, they aim to deliver 20,000 social homes and 20,000 affordable homes. The Social Housing Accelerator, aiming to create 4,000 new social homes, is underway.
However, a number of analysts and a broad-ranging report by the Albanese government’s own National Housing Supply and Affordability Council have said the National Housing Accord target will not be reached on current construction and economic conditions
Property Council of Australia CEO Mike Zorbas said that with rental vacancies at historic lows across the country, “delaying legislation that can boost the number of rental properties will work against our need for greater supply and affordability of housing across the country”.
“We need all parties to recognise the essential role build-to-rent can play as a pathway to more stable household savings and faster savings for future home ownership.
“We desperately need more homes in Australia, across the full spectrum – from social and affordable housing, to market rental housing and to homes for people to purchase.”
Chandler-Mather yesterday again touted the Greens’ fully-costed policy for a public property developer that would “build 610,000 good quality homes for rent and purchase at prices people can actually afford”.
