Budget 2023: What’s in it for housing?
The Albanese government has delivered its first full-year budget since winning last year’s election. Here, we give a run down of how the spending will impact the nation’s housing market.
Describing secure, affordable housing as being “out of reach” for many Australians for too long, Federal Treasurer Jim Chalmers used his budget speech to further the Labor government’s commitments to support the national housing market.
As part of the government’s pledge to provide further assistance as the global economy slows over the next two years, Mr Chalmers announced the maximum rate of Commonwealth Rent Assistance would increase by 15 per cent.
The $31 extra per fortnight afforded to private market and community housing renters was described by the Treasurer as “the largest increase in more than 30 years”.
However, in acknowledging Australian renters are doing it tough, the Treasurer noted that “an essential part of the solution to pressures in the housing market is more homes.”
Following the announcement in last October’s mini-budget of the National Housing Accord, which targeted the construction of one million “new, well located homes” over the five years from 2024, and to boost national housing supply, Mr Chalmers announced the expansion of several schemes targeting the build-to-rent (BTR) sector on budget night.
As part of this scheme, he revealed the managed investment trust withholding tax would be halved from 30 per cent to 15 per cent.
In addition to these BTR initiatives, Mr Chalmers announced an increase to the liability cap of the National Housing Finance and Investment Corporation by $2 billion, adding this was enacted to “support more lending to community housing providers.”
Following announcements made after the most recent National Cabinet Meeting, where Prime Minister Anthony Albanese, had revealed greater collaboration on matters related to housing would be undertaken between state and territory governments and the Commonwealth government, the Treasurer doubled down on intergovernmental collaborations to “improve planning, build more houses, and deliver a better deal for renters.”
“We want more Australians to know the security of a roof over their head,” he declared.
“For the same reason, implementation of the $10 billion Housing Australian Future Fund is critical — to build more of the social and affordable houses that our people need.”
Here’s a breakdown of the housing-related provisions in the 2023 spending document:
Build-to-rent projects encouraged
BTR projects will see a boost, with the government pledging to accelerate tax deductions and reduce the managed investment trust withholding tax rate.
According to the budget documents, “this measure will encourage investment and construction in the build-to-rent sector, expanding Australia’s housing supply.”
Applicable to projects consisting of 50 or more apartments (or dwellings) that are made available to the general public for rent, the government has stipulated that dwellings “must be retained under single ownership for at least 10 years.”
Landlords must also offer a lease term of at least three years for each dwelling in the development.
In practice, that means for any eligible new BTR projects where construction commences after budget night (7:30pm, 9 May), the government will increase the rate for the capital works tax deduction — the depreciation — to 4 per cent, per year.
The government will also reduce the final withholding tax rate on eligible fund payments from managed investment trust (MIT) investments from 30 per cent down to 15 per cent, from 1 July 2024.
It was reported that consultation will be undertaken on implementation details, including any minimum proportion of dwellings being offered as affordable tenancies and the length of time dwellings must be retained under single ownership.
A boost to buying power (and increasing social and affordable housing supply)
The government has also revealed a number of new measures to increase social and affordable housing supports and “improve access for home buyers”.
Firstly, the government will increase the government-guaranteed liability cap of the National Housing and Finance Investment Corporation (NHFIC) by $2 billion to $7.5 billion.
It will also alter NHFIC’s Investment Mandate to require the corporation “to take reasonable steps to allocate a minimum of 1,200 homes to be delivered in each state and territory within five years of the Housing Australia Future Fund commencing operation”.
As previously revealed, the government is set to expand the eligibility of the Home Guarantee Scheme. This will allow any two eligible people to be joint applicants for a guarantee, which has previously been restricted to spouses and de facto partners only.
It will also allow non-first home buyers who have not owned a property in Australia for at least 10 years to access the First Home Guarantee and Regional Home Guarantee; allow a single legal guardian of children to access the Family Home Guarantee; and enable Australian permanent residents to access the scheme so long as they are otherwise eligible.
You can read more about the expanded Home Guarantee Scheme here.
Bolstered housing and homelessness supports
Also in the budget, under the headline of National Housing and Homelessness Agreement Transitional Funding, the Labor government pledged an additional $67.5 million in the 2023–24 financial year to boost homelessness funding to states and territories, with this funding to be used to “support the provision of homelessness services through the National Housing and Homelessness Agreement in 2023–2024”.
The current agreement provides over $1.6 billion to states and territories.
Improvements to energy efficiency relief
In another welcome relief for Australian home owners, Mr Chalmers announced up to $3 billion in direct energy bill relief for eligible households and small businesses, an initiative co-funded by the states.
“More than 5 million households will have up to $500 deducted from their power bills in the next financial year,” he detailed.
“Real relief, right off your power bill, right when you need it,” he said.
Moreover, the budget includes a $1 billion investment to help provide “low-cost loans for double-glazing, solar panels, and other improvements that will make homes easier — and cheaper — to keep cool in the summer and warm in the winter.”
SPI’s coverage of the federal budget will continue over the coming weeks.