After months of debate and political stalemate, the government’s Bills for shared equity and tax reform to unlock investment in Build to Rent (BTR) housing have been passed by parliament.
What are the changes?
The new reforms aim to facilitate housing construction and affordable housing supply through tax concessions for Build-to-Rent projects and support low-income first home buyers’ entry into the market through a shared equity scheme.
- BTR Bill: Halves the MIT withholding tax rate on fund payments (i.e., rental income) from 30% to 15% and increases the rate for capital works deductions from 2.5% to 4% per year. These concessions will be available to eligible Build-to-Rent projects that include 10% affordable rentals.
- BTR developments already in operation or under development before last year’s Budget can access the 15% MIT tax rate, provided they meet all other eligibility criteria.
- Technical improvements dealing with trust structures to allow common head trust/sub trust arrangements. This represented a critical threshold issue for the sector.
- Requirement to provide 10% affordable housing
- Operators must offer all tenancies for a minimum of five years, instead of three years
- Regulations will be made in due course and with government undertaking to review in 12 months’ time
- Help to Buy Bill: Allows the government to contribute 30% of the purchase price of a home or 40% for a new build for eligible households. This will be available to up to 10,000 households per year, for four years, reducing the cost for the homebuyer with the contribution paid back if the dwelling is sold. (Singles $90,000 and Couples $120,000).