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Stapled Structures and Build-to-Rent legislative package bring certainty

New rules that clarify the framework for institutional investment in real estate, including allowing investment in Build-to-Rent housing, have been warmly welcomed by the Property Council of Australia, although tax levels for international investors in Build-to-Rent remain a concern.

Today Treasury released revised exposure draft legislation regulating Managed Investment Trusts (MITs) operating within stapled structures including long-awaited confirmation of the Government’s approach to the treatment of Build-to-Rent housing.

Property Council Chief Executive Ken Morrison welcomed the release of the exposure draft legislation, saying the package brings certainty in these important areas.

“This announcement brings welcome certainty to one of the world’s most sophisticated real estate markets and makes the vital decision to allow Build-to-Rent housing,” Mr Morrison said.

Managed Investment Trusts (MITs) and Stapled Structures

A stapled structure allows property groups to ‘staple’ together passive investment in institutional real estate with an active property business (such as development) under the one ownership structure with each part of the business taxed appropriately.

“The transparency and professionalism of Australia’s institutional real estate sector is the envy of the world, and today’s stapled structures package will encourage this performance to continue,” Mr Morrison said.

“We congratulate the Government for recognising that the existing stapled structure arrangements are in the best interests of almost 15 million Australians who invest in commercial real estate through their superannuation, and that compliance concerns relate to sectors other than property.

“We appreciate the Government’s consultative approach to this process and look forward to working with them further on the details of the stapling arrangements.”

Build-to-Rent

The exposure draft also makes it clear that institutional investors can invest in Build-to-Rent housing through a MIT.

“This is an absolutely vital step to enabling the creation of a new form of rental housing and a new option for the more than six and a half million people who live in rental accommodation. 

“We thank the Treasurer for recognising the importance of unlocking investment into this new form of rental housing for Australia and the benefits it can provide for those who rent.

“However we are concerned that the package also sets up an imbalance in the investment playing field, with international investment in Build-to-Rent MITs to be taxed at twice the rate of those in office buildings or shopping centres.

“We urge the Government to reconsider this setting.”

 

Media contact: Matt Francis | M 0467 777 220 | E mfrancis@propertycouncil.com.au