Build-to-rent backing will boost building approvals: Nicholas Proud

GUEST OBSERVATION

PowerHousing Australia today welcomes the announcement of tax breaks for institutional investors into build-to-rent if the ALP wins the upcoming Federal Election in May.

The Managed Investment Trust withholding tax rate would be cut from 30% to 15% on tax distributions attributable to investments in BTR.

The announcement today of decreased tax rates for institutional investors if focused on affordable housing will see greater investment into the development of build-to-rent properties as part of a burgeoning new domestic asset investment class.

Build-to-rent is already established in the US where it is known as multifamily housing, and its great success has been followed through in the UK.

With house prices still out of reach to many Australians, increased investment into this emerging asset class will see more rental stock available to the market.

PowerHousing Australia met in the past year with the key pension funds, financial and affordable housing providers as well as intermediaries in San Francisco, New York and Washington and the runs are on the board for the past 30 years.

Build to Rent in the U.S supplies up to 10% of all residential housing delivery per year, and is a safe, government backed investment class which has the lowest volatility in a down turn such as the Great Recession which decimated the US housing market a decade ago.

This election announcement follows the recent announcement of the ALP’s NRAS type 10-year scheme which will subsidise investment into new affordable housing and aims to deliver a quarter of a million new dwellings in areas of need.

With each monthly Building Approvals update we see the Australian new home delivery pipeline fall away. Incentivsation through an NRAS 2.0 as promised and this MIT measure would reduce the potential for new housing delivery rates to collapse with rental prices increase to impact affordability.

The increased federal focus on tackling the housing crisis will go a long way to addressing the shortfall in affordable and appropriate housing across the country, and ensure more Australians can be adequately and fairly housed.

Nicholas Proud is CEO of PowerHousing Australia, which represents Tier One and scale-growth community housing providers.