The Property Council of Australia has today welcomed the introduction of legislation to lower foreign investment application fees for build-to-rent projects as a move that will boost investment in new rental supply.
Property Council of Australia Group Executive Policy and Advocacy Matthew Kandelaars said reducing foreign investment application fees for build-to-rent projects to the lowest appropriate commercial level was the right move.
“Build-to-rent housing plays a vital role in the national housing landscape, offering tenants long-term tenure security, enhanced amenity and professionally managed properties,” Mr Kandelaars said.
“Build-to-rent has the potential to deliver 150,000 new rental homes in the next 10 years, but the settings must be right.
“In a competitive global capital market, promoting foreign investment into much-needed new housing makes sense.
“International capital, including Australian superannuation funds, is backing build-to-rent housing projects abroad as we speak. We need to redirect this capital to support the construction of new Australian homes.
“The nation won’t reach its 1.2 million homes target by 2029 without global investment. Legislation, like that introduced today, is an important step to direct that investment in new homes,” he said.
Investors in build-to-rent properties can currently be subject to varying and higher fees based on the type of land involved, such as residential land.
For example, in a $50 million residential deal, fees amount to around $1.1 million, compared to $13,200 for a commercial deal. This has hindered foreign investors in build-to-rent developments classified as residential.
Mr Kandelaars said the government could do more to support the delivery of housing in an asset class that offers high-amenity, customer led and community-oriented housing.
“The government made the right decision by announcing in its 2023 Budget a reduction in the managed investment trust withholding tax rate to 15 per cent, in line with other asset classes. However, imposing affordable housing at that tax rate will jeopardise the delivery of 150,000 new rental homes,” Mr Kandelaars said.
“Research by EY shows that lowering the tax rate to 10 per cent for build-to-rent projects with affordable housing components can fast-track the construction of 10,000 affordable homes and secure 150,000 rental homes over the next 10 years,” he said.
