Home Property Australia Build-to-rent bills pass Senate, unlocking 80,000 new homes

Build-to-rent bills pass Senate, unlocking 80,000 new homes

  • December 04, 2024
  • by Property Australia
Our Chief Executive Mike Zorbas joined Minister for Housing Clare O'Neil, David Pocock, Allegra Spender, Kylea Tink, Wendy Hayhurst and John Engeler to support the build-to-rent bills last week

The Australian Government has passed legislation to incentivize the construction of around 80,000 new homes to rent.

The Property Council of Australia welcomed the passage of the Treasury Laws Amendment (Responsible Buy Now Pay Later and Other Measures) Bill 2024 and Capital Works (Build to Rent Misuse Tax) Bill 2024 with amendments that will deliver the largest ever Federal supply of rental homes.

Property Council Chief Executive Mike Zorbas said EY modelling shows the amended legislation can deliver 80,000 new rental homes over the next ten years, which will give people more opportunities to achieve their savings goals, including owning a home, because of the superior rental security.

“The government’s legislation is a welcome investment in 80,000 new, secure rental homes over the next decade. This is the largest ever Federal supply of rental homes,” Mr Zorbas said.

“Of these, 8,000 are affordable homes and 1,200 would become available to rent in the near future.

“This is the largest induction of investment in new rental homes by a federal government in recent memory.

“Housing Minister O’Neil has championed this rental supply. Her pragmatic approach has delivered a solution that the property, community housing and social services sectors welcome as a positive first step.

“We are ambitious to see even more homes delivered over time and look forward to working with a future parliament on the best investment settings to achieve this.

“There is the potential to deliver more than twice this number of rental homes if we get it right, but today Australians will have 80,000 reasons to be pleased.

“We thank those independent MPs who have publicly supported build-to-rent housing from the start, especially Senator David Pocock, and our partners the Community Housing Industry Association and National Shelter for their efforts over a year and a half,” Mr Zorbas said.

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.

Rules will be made to:

  • Require affordable tenancies to be managed by community housing organisations
  • Prevent BTR operators from using no fault evictions
  • Ensure that rents on affordable tenancies are no more than 74.9 per cent of market value and a proportion of affordable dwellings are reserved for lower and moderate income earners based on their household income.