This article is from the Australian Property Journal archive
SHOULD it win the May election, Labor will implement changes to negative gearing and capital gains tax by 1 January 2020 and at the same time, it has pledged to halve the Managed Investment Trust withholding tax rate for build to rent housing.
Shadow treasurer Chris Bowen said on Friday that Labor has listened to concerns that the measures would be introduced by 1 July and as a result, will provide seven months to introduce the policies.
From 1 January 2020, current arrangements will remain in place for all properties purchased before 1 January 2020 and from that date, negative gearing will only apply for new properties.
All existing negative geared investment properties made prior to the 1 January 2020 fully grandfathered. The capital gains tax discount will be halved for investments purchased after that date.
Bowen said the independent Parliamentary Budget Office has costed Labor’s policy and it will raise $2.9 billion over the forward estimates (to 2022-23) and $35.1 billion over the medium-term (to 2029-30).
The PBO has also advised that the Build-to-rent policy would have an unquantifiable financial impact.
Bowen also announced that Labor will revamp the Build to Rent scheme – giving institutional investors better tax concessions to encourage investment in the fledgling sector.
“We will cut the managed investment trust withholding rate in half, on tax distributions attributable to investments in build-to-rent housing. The rate will be lowered from 30% to 15% – encouraging new housing supply.
“Build to Rent provides more stable long term tenancies and more housing in desired locations close to public transport and close to employment opportunities,” he added.
PowerHousing Australia, which represents 32 of Australia’s largest Tier One and scale-growth community housing providers, has welcomed the BTR announcement.
CEO Nicholas Proud said the move will see greater investment into the development of build-to-rent properties as part of a burgeoning new domestic asset investment class.
“Build-to-rent is already established in the US where it is known as multifamily housing, and its great success has been followed through in the UK. With house prices still out of reach to many Australians, increased investment into this emerging asset class will see more rental stock available to the market.
“PowerHousing Australia met in the past year with the key pension funds, financial and affordable housing providers as well as intermediaries in San Francisco, New York and Washington and the runs are on the board for the past 30 years.
“Build to Rent in the US supplies up to 10% of all residential housing delivery per year, and is a safe, government backed investment class which has the lowest volatility in a down turn such as the Great Recession which decimated the US housing market a decade ago.
“The increased federal focus on tackling the housing crisis will go a long way to addressing the shortfall in affordable and appropriate housing across the country, and ensure more Australians can be adequately and fairly housed,” Proud said.
Australian Property Journal
