Following recommendations by the Urban Development Institute of Australia (UDIA WA), the State Government has introduced legislation today that will provide a land tax exemption for eligible build-to-rent developments.
According to UDIA WA CEO Tanya Steinbeck, the move will support much needed build-to-rent projects in Perth and the regions by offering a 50% land tax exemption for up to 20 years.
“This will help to improve the dire rental shortage that is gripping the state,” Ms Steinbeck said.
“Longer term housing supply is at a critical point in WA and any practical measures the government can implement to get more stock onto the rental and broader property market is welcome,” Ms Steinbeck said.
UDIA WA has been working with government for several years now to identify opportunities to facilitate more affordable housing stock being delivered ‘on the ground’ and build-to-rent has been a significant focus.
“Build-to-Rent’ (BTR) offers an effective longer-term solution to many of our current and long-term rental challenges, however current taxation settings have deterred investment in this sector,” Ms Steinbeck said.
“It is promising to see State and Federal Governments aligning on this important issue and making changes to taxation setting in recent months at both levels of government, to bolster investment in the build-to-rent sector,” Ms Steinbeck said.
The Federal Government announced measures in the recent Federal Budget papers to reduce Managed Investment Trust (MIT) withholding tax for BTR from 30% to 15% after 1 July 2024.
That decision aligns with UDIA’s calls to create a level investment playing field, by lowering the rate to attract at-scale international investors familiar with funding large investments in housing.
“The recent announcements at a State and Federal level respond directly to UDIA’s recommendations in our Budget submissions over the last few years and ongoing advocacy efforts,” Ms Steinbeck said.
“It is great to see the government listening to practical advice that makes a real difference to the product mix that industry can deliver to the market to benefit all West Australians who are seeking an affordable roof over their head,” Ms Steinbeck said.
“As we have said repeatedly in recent months, all cards must be on the table in relation to addressing the critical housing shortages that we are facing, if we want to keep a lid on longer term housing affordability,” Ms Steinbeck said.
What is Build-to-Rent?
BTR is an emerging development model that is gaining traction in Australia following many successful projects around the world.
Put simply, BTR apartment projects are designed and constructed by a developer who retains ownership of the building when it’s complete. The apartments are then rented out directly to tenants by the developer, who also manages and maintains the complex.
BTR projects differ from traditional ‘build to own’ models, where a property developer might build an apartment complex and then sell the units off to individuals, who will either choose to live in them or rent them out as investment properties.
While the model can provide an effective option for affordable rental accommodation, taxation settings have been a deterrent. With the most recent State and Federal Government changes, we hope to see more of this kind of development in WA and around Australia.
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Contact:
Gemma Osiejak
Executive Manager Communications & Marketing
P: 0421 506 819
E: gosiejak@udiawa.com.au