The Property Council’s Illawarra branch says new draft legislation risks stalling one of the keys to addressing housing affordability.
The federal government last week released draft legislation of its affordable housing scheme announced in the May budget.
It included enabling investors to obtain a 60 per cent capital gains discount in affordable rental housing; enabling managed investment trusts (MITs) to invest in affordable housing; and clarifying that from September 14, MITs cannot acquire residential property, other than affordable housing.
”The draft legislation also clarifies that MITs will be able to construct or develop the affordable housing property within the MIT,” Treasurer Scott Morrison said.
“This will provide further incentive for MITs to invest in affordable housing projects.”
He said MITs not being able to acquire investments in residential property, except where it is affordable housing will prevent MITs from investing in houses, units and apartments to hold for long-term rent.
However, it has been claimed that the move to restrict MITs from regular property investment will threaten hundreds of millions of dollars in potential build-to-rent construction that would help ease the nation’s housing shortage and boost supply for low-income renters.
Kim Rawson, regional director Illawarra, Property Council of Australia said the build-to-rent construction sector was one of the answers to the housing affordability problem in Australia.
“To delay it, or affect that in any way is not a good thing, which is what the Treasury department seems to be doing,” she said.
Ms Rawson said a healthy build-to-rent sector was important in two ways.
“Firstly, it increases the supply of potential housing for the local community,” she said.
“House prices here in the Illawarra have been rising, so an increase in supply is critical.
“By encouraging and supporting a new sector to take hold, it will lead to more housing supply.
“It also provides diversity of choice.
“People who may not want to buy a home, but would still like security of tenure could live in a build-to-rent apartment, as it provides more choice for young professionals, single parents and others in the local community.”
Ken Morrison, chief executive of the Property Council said “build-to-rent is a potential game-changer in resolving the housing affordability challenge”.
He said the unintended consequence of the draft legislation is to completely close down the capacity for MITs from investing in build-to-rent accommodation.
“This risks stalling build-to-rent before it starts.”