Home Property Australia 45 bills passed the Senate last week. Here’s what it means for the property industry

45 bills passed the Senate last week. Here’s what it means for the property industry

  • December 04, 2024
  • by Property Australia
The Senate passed 45 bills in the final sitting week of the year

The Senate approved 31 pieces of legislation last Thursday evening, bringing the week’s total to 45, according to the finance minister.

Following a late-night Senate session that extended close to midnight, the House of Representatives reconvened on Friday morning to finalize 11 of those bills requiring amendments.

The 31 bills passed included significant measures such as reforms to the Reserve Bank, the Future Made in Australia tax laws, a ban on social media use for children under 16, changes to build-to-rent policies, and the implementation of the Help to Buy scheme.

Here are some key legislation to be across. 

Treasury Laws Amendment (Responsible Buy Now Pay Later and Other Measures) Bill 2024 and Capital Works (Build to Rent Misuse Tax) Bill 2024

The Bills passed with amendments introduced by the Government, negotiated, and supported by the Property Council.

According to EY, the amended legislation will deliver 80,000 new rental homes, of which 8,000 are affordable and 1,200 affordable available to rent now.

The bills provide incentives for investors to support the construction of new build to rent developments by increasing the capital works deduction rate to 4 per cent per year and reducing the final withholding tax rate on eligible fund payments from eligible managed investment trust investments to 15 per cent.

Key features of the legislation include:

  • A 15 per cent managed investment trust (MIT) withholding tax
  • BTR developments already in operation or under development before last year’s Budget can access the 15 per cent MIT tax rate, provided they meet all other eligibility criteria
  • BTR operators must offer all tenancies for a minimum of five years, instead of three years
  • Technical improvements dealing with trust structures, to allow common head trust/sub trust arrangements. This represented a critical threshold issue for the sector
  • Improved operation of the misuse tax to limit its application only to the owner who owned the development at the time of a non-compliance
  • The homes must be retained under single ownership for at least 15 years and a minimum 10 per cent of dwellings in a development need to be made available as affordable tenancies.

Regulations will be made at a later date. The Property Council received a written commitment that the regulations will:

  • Require affordable tenancies to be managed by community housing organisations
  • Prevent BTR operators from using no fault evictions
  • Revise the definition of affordable tenancies to ensure that these are available to moderate income earners with at least 20 per cent of the affordable tenancies available to low-income earners where income eligibility limits are specified such that rents are up to 74.9 per cent of market value or no more than 30 per cent of household income, whichever is lower. 

Help to Buy Bill 2023

The bill establishes a Commonwealth shared equity program (Help to Buy Scheme) to be administered by Housing Australia that will assist low to middle income earners to purchase new or existing homes.

Through the Help to Buy scheme, the Government will support eligible homebuyers with an equity contribution of up to 40 per cent for new homes and 30 per cent for existing homes.

Homebuyers will need a minimum 2 per cent deposit to participate in the scheme and will have lower ongoing repayments while they participate in the scheme, providing long term relief.

Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) Amendment Bill 2024

The government has met its 2022 election commitment to reform Australia’s AML/CTF regime, and will regulate tranche two entities including lawyers, accountants, trust and company service providers and real estate professionals.

Under the reforms, the existing AML/CTF regime will be modernised and simplified, and newly regulated entities will have to:

  • Enrol and register with AUSTRAC, the regulator
  • Develop and maintain an AML/CTF Program
  • Conduct customer due diligence (CDD), including verifying a customer’s identity and understanding their risk profile
  • Undertake new reporting and record keeping requirements.

Customer due diligence will be undertaken by businesses on property transactions including the sale or transfer of real property.

The government decided not to regulate residential tenancies, property management and ordinary leasing of commercial real estate.

In addition, following the Senate inquiry into the Bill, the government moved an amendment to raise the leasehold interest threshold from 20 years to 30 years.

The new obligations on real estate professionals and businesses will apply from 1 July 2026, and these entities will be able to enrol with AUSTRAC from 31 March 2026.