Build to Rent bill passes through Parliament

While the bill passed through on Thursday, the last sitting day for the Senate in 2024, it was only this morning that the House of Representatives waved through the Treasury Laws Amendment (Build to Rent) Bill 2024 delivering tax setting changes to incentivise BTR investment, and the Capital Works (Build to Rent Misuse Tax) Bill 2024 introducing stricter penalties around improperly claimed tax concessions for BTR development.

Alongside this reform, the legislation also now includes revisions put forward by the Community Housing Industry Association (CHIA), National Shelter, and the Property Council of Australia (PCA), which increased the minimum tenancy to five years, as opposed to the previous three years.

The changes also prohibit BTR operators from using no-fault evictions, and specified the definition of “affordable tenancies” to ensure that rents are capped below 74.9 per cent of market value or 30 per cent or a tenant’s income, whichever is lower.

CHIA CEO, Wendy Hayhurst, described the passage of the legislation as a “critically important step forward”, noting that “the challenge is far from over, but we have built incredibly important foundations”.

“When done correctly, Build-to-Rent provides tenants the sort of stability they badly need but can’t get because private ownership is out of their reach,” Hayhurst said.

Property Council chief executive, Mike Zorbas, welcomed the passage of the bill, highlighting that EY modelling shows the amended legislation can deliver 80,000 new rental homes over the next 10 years.

“The government’s legislation is a welcome investment in 80,000 new, secure rental homes over the next decade. This is the largest ever federal supply of rental homes,” Zorbas noted.

“Of these, 8,000 are affordable homes and 1,200 would become available to rent in the near future,” he said.

While Zorbas stressed that “there is the potential to deliver more than twice this number of rental homes if we get it right”, he nonetheless emphasised that “today Australians will have 80,000 reasons to be pleased”.

“We are ambitious to see even more homes delivered over time and look forward to working with a future parliament on the best investment settings to achieve this,” Zorbas said.

The Real Estate of Australia (REIA) also welcomed the passage of the Build to Rent bill, and described the legislation alongside the recently passed Help to Buy bill as “vital steps in addressing the nation’s housing crisis”.

REIA president Leanne Pilkington emphasised that “housing affordability and the cost of living are key concerns for Australians”, and stated that the Build to Rent bill will “encourage institutional investors to deliver rental housing, including affordable tenancies, by offering tax benefits”.

“This is a significant step in stabilising the rental market but not the panacea; the role of small private investors will continue to be an integral part of the solution and the government needs to ensure tax settings remain the same; so as not to contract supply in this segment,” Pilkington said.

The president also highlighted that the urgent housing supply shortage remains a critical issue, stating that “Australia is currently building only 160,000 homes annually, far short of the 240,000 needed to meet the target of 1.2 million new homes by 2029”.

While Pilkington described the bills as a “step in the right direction”, she stressed that “they must be part of a broader strategy that prioritises increasing housing supply to meet the needs of Australians today and into the future”.