What makes affordable housing so hard to achieve?
Build-to-rent schemes must be a more inviting prospect for investors if Australia’s housing affordability issues are to be fixed, a chief investment officer has highlighted.
Speaking ahead of a Committee for Economic Development of Australia (CEDA) event, First State Super’s chief investment officer Damian Graham said it’s crucial for the government and the housing industry to work together to improve investment in the build-to-rent sector.
As a major investor in affordable housing, Mr Graham said First State Super wants to see some of the barriers removed from investment in the area.
“Build-to-rent is popular overseas in countries like the United States, but is still in its early stages in Australia,” the CIO stated.
He considers growth in the domestic sector as not as financially viable due to “a number of challenges presented by the Australian financial system with its current tax laws”.
GST reform and a reduction in stamp duty are just two of the reforms Mr Graham is calling for.
He’s also advocated reductions to land tax, and additional concessions for density requirements as present in planning laws.
“In order for build-to-rent projects to be successful there needs to be a reduction in land tax and more release of [state and federal] land available for development,” he stated.
“The Australian landscape has proven to be difficult with a higher cost of land holding it back compared to some overseas markets.”
The CIO’s comments come after the New South Wales government recently announced it would be cutting land tax for the next 20 years where new build-to-rent housing projects are in the works.
It will also be providing a 50 per cent discount on land tax to developers who invest in build-to-rent schemes.
But, Mr Graham has hinted his desire for additional schemes to be put in place: “Now is the opportunity for governments, industry and investors to work together and respond to these challenging issues and allow for more investment opportunities of scale in affordable housing and build-to-rent developments”.
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