A shake-up of NSW land tax rates, a new levy on short-term holiday rentals and charges on rezoning windfalls could help raise billions of dollars for social and affordable housing, according to new research commissioned by the Community Housing Industry Association NSW (CHIA NSW).
The McKell Institute’s Long-term Funding Options for Community Housing in NSW report identifies several potential revenue measures, with targeted land tax reform alone modelled to raise between $25.8 billion and $26.1 billion over the next decade.
For the real estate industry, the proposals could have implications for property investors, short-term accommodation operators and developers, although none of the measures has been adopted by the NSW Government.
CHIA NSW is calling for a dedicated Community Housing Enabling Fund (CHEF), with approximately $26 billion invested over 10 years to support the delivery of 50,000 social and affordable homes by 2050 through not-for-profit community housing providers.
The report comes as the state’s social housing waiting list reaches 72,232 households, including 14,155 assessed as eligible for priority assistance as at September 2026.
What land tax reform could mean for investors
Land tax reform is the centrepiece of the report, with three options modelled to generate additional revenue while retaining the existing family home exemption and $1.075 million tax-free threshold.
Under one option, the general land tax rate would increase from 1.6 per cent to 2 per cent, while the premium rate would rise from 2 per cent to 2.5 per cent. A new 2.9 per cent rate would also apply to taxable landholdings exceeding $50 million.
That option is estimated to generate an additional $25.92 billion over the 10 years to 2035-36.
The report also examines two alternative models, with estimated additional revenue of $26.11 billion and $25.8 billion respectively.
Importantly, none of the three models would bring currently exempt landowners into the land tax system, although existing land tax payers could face higher liabilities if the proposals were implemented.
McKell Institute chief executive Veronica Newman said the modelling showed how changes to existing arrangements could support housing investment without increasing state government debt.
“Our modelling shows you could raise $26 billion over the next decade through extremely targeted changes to land tax rates that wouldn’t affect the family home or the current tax-free threshold,” Ms Newman said.
“Land tax reform has massive potential because it offers the means to raise game-changing revenue without affecting those struggling with cost of living challenges, but there are other really practical revenue raising measures that could also work.”
Short-term rentals and rezoning also in the spotlight
Beyond land tax, the report examines a 7.5 per cent levy on short-term rental accommodation, including properties listed through platforms such as Airbnb and Stayz.
Similar to arrangements introduced in Victoria, the proposed levy could generate approximately $135 million annually, creating another potential funding stream for community housing.
Developers and landowners could also be affected by a proposed betterment charge, designed to capture a share of the increase in land values resulting from government rezoning decisions.
The report estimates such a charge could generate approximately $80 million a year.
Other measures include negotiating with the Commonwealth to redirect historic housing debt repayments, potentially freeing up around $270 million over four years, and making surplus government-owned land available for community housing development.
Ms Newman said long-term leasing arrangements could substantially reduce development costs.
“Surplus government land could also be leased on a long-term basis to community housing providers. This would be non-cash and our modelling shows it could save about $100,000 to $150,000 per home.”
For developers and community housing providers, access to government land could help reduce upfront project costs and support additional housing delivery without requiring the state to purchase new sites.
Industry calls for long-term funding certainty
CHIA NSW chief executive Luke Achterstraat said the research was intended to encourage discussion about how the state could fund housing beyond its existing commitments.
“We know the NSW Government is under pressure to fund a whole range of services, but we also know the housing crisis isn’t going away. We commissioned this research to generate policy discussion as the state faces a burning platform on how to fund the growing housing needs of the future,” Mr Achterstraat said.
The NSW Government has already committed $6.6 billion through its Building Homes for NSW program, announced in the 2024-25 Budget, but the report argues that a permanent funding mechanism is needed to maintain housing delivery beyond existing programs.
The research notes that community housing providers currently manage more than 67,000 homes across NSW, including approximately one-third of the state’s social housing.
Between 2012 and 2026, the sector delivered more than 9,840 homes and invested more than $3.6 billion, while its reported development pipeline includes 7,470 homes by 2030.
Mr Achterstraat said ongoing investment would allow providers to plan future projects with greater confidence.
“We need to move beyond funding cliffs and establish a long-term investment pipeline that gives community housing providers the certainty to keep building homes year after year.”
He said the industry was ready to expand its contribution but needed a clearer commitment to funding.
“Community housing providers have the expertise, partnerships and capacity to build more homes. What they need is the certainty to plan and invest over the long term,” Mr Achterstraat said.
“We’re not suggesting there’s one simple fix to the housing crisis, but this report shows there are options on the table, and we can’t afford to leave them unexplored.”
The proposed measures remain options for government consideration, with CHIA NSW calling on political parties to outline their approach to long-term social and affordable housing investment ahead of the next NSW election.