State legislation comes on the heels of federal incentives for build-to-rent projects
The Real Estate Institute of Western Australia has lauded new state legislation providing a 50% land tax exemption over 20 years for eligible build-to-rent projects.
“Build-to-rent is seen as an innovative, contemporary solution to get more supply into the market, and this incentive by the McGowan government will reduce costs and encourage much-needed development in this space,” REIA CEO Cath Hart said. “WA is in the midst of a rental crisis, and any steps to build more homes – particularly more affordable homes – is very welcome. It won’t solve the problem overnight, but it is a move in the right direction and will help WA to meet future demand as population growth continues.”
Federal action
The state legislation comes on the heels of build-to-rent tax concessions announced in the federal budget last week.
“The federal government will increase the tax rate for the annual capital works tax deduction (depreciation) to 4% for build-to-rent developments,” Hart said. “It will also reduce the final withholding tax rate from 30% to 15% on eligible fund payments from managed investment trust (MIT) investments starting 1 July 2024. These measures should encourage new builds and increase housing supply over time.”
“Stable regulatory environment”
Hart also urged the government to tread carefully when it came to rental reform measures.
Read next: REIWA lauds expansion of Keystart loan program
“It’s also important to have a stable regulatory environment for the rental market to attract and retain property investors both large and small,” she said. “The ongoing debate over rental reform makes investors nervous about keeping their investment property or entering the market.
“Since the recent talk of rent freezes, I’ve been told by a number of investors that they would sell their properties if it happened here,” Hart said. “I’ve also heard feedback from other states of large investors shelving build-to-rent projects after hearing suggestions of rent freezes.”
Have something to say about this story? Let us know in the comments below.
