Housing groups say changes will also expand affordable rental options
Housing industry groups have welcomed new federal regulations that could pave the way for up to 80,000 build-to-rent (BTR) homes over the next 10 years, including more than 8,000 affordable rental properties.
The Income Tax Assessment (Build to Rent Developments) Amendment (Expanding Affordability Requirements) Determination 2025 has now come into force, outlining key provisions of the BTR legislation passed in November 2024. The rules are designed to allow eligible BTR operators to access tax concessions in exchange for meeting affordability and tenancy standards.
The Property Council of Australia, Community Housing Industry Association (CHIA), and National Shelter — three organisations that played a role in shaping the legislation — say the changes will help relieve pressure on Australia’s strained rental market.
Property Council chief executive Mike Zorbas (pictured above left) said the reforms represent the most significant federal commitment to rental housing in recent memory.
“This is a welcome investment in 80,000 secure rental homes over the next decade,” he said. “Of these, 8,000 will be affordable, with 1,200 ready to be rented in the near future.”
The updated legislation includes several key changes, including five-year minimum lease terms and a requirement that 20% of affordable homes be made available to low-income tenants. These homes must have rent capped at either 74.9% of market value or 30% of the household’s income — whichever is lower.
CHIA chief executive Wendy Hayhurst (pictured above centre) said the scheme offers urgently needed relief for lower income households. “This is a critically important initiative that will provide a pipeline of genuine affordable housing for households that have few other alternatives,” she said.
National Shelter chief executive Karen Walsh (pictured above right) also praised the move. “This legislation is badly needed, especially for people on lower incomes,” she said. “With the changes to reserve some affordable tenancies for people on low incomes, a good piece of legislation is now great.”
The legislation also requires affordable tenancies to be managed in partnership with registered, not-for-profit community housing organisations. These organisations will be responsible for assessing tenant eligibility and ensuring compliance with reporting requirements, although they will not manage the physical properties or leases.
The reforms extend the 15% managed investment trust withholding tax rate to eligible existing BTR projects that meet the affordability criteria. This is expected to immediately unlock more than 1,200 affordable homes. It comes as nearly 6,750 properties lost affordability status with the wind-down of the National Rental Affordability Scheme between April and December 2024.
Tenants will not be charged additional service fees for shared amenities such as gyms or swimming pools. The legislation also supports transitional arrangements for tenants whose incomes rise above eligibility thresholds, allowing them to remain in place with appropriate adjustments.
A key condition of the tax concessions is that BTR operators must not use “no cause” eviction clauses, a move welcomed by housing advocates who argue it will enhance long-term security for renters.
While build-to-rent is still emerging in the Australian market, it has become a mainstream housing option in other countries such as the UK, US, and Canada. Supporters say the model can deliver high-quality, professionally managed homes with long-term lease options, helping bridge the gap between rental housing and homeownership.
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