The Property Council has lodged a submission to Treasury on the second tranche of the Government’s Capital Gains Tax (CGT) and negative gearing reforms, calling for additional consultation and changes to reduce unintended impacts on housing supply and investment.
The submission argues the draft legislation contains flaws that would deter investment in housing types essential to meeting the National Cabinet target of 1.2 million new homes by 2029.
It calls for practical amendments to ensure the detailed rules do not further undermine housing feasibility, investment confidence, or the delivery of new homes.
“Confusion in tax law is projected onto the real world: delayed projects, stalled financing and new homes that never reach the market,” said Property Council Chief Executive Mike Zorbas.
The Property Council continues to oppose the CGT and negative gearing reforms legislated in June because of their projected impact on housing supply and affordability.
Treasury’s own forecasts indicate the reforms will reduce new housing supply by 35,000 homes over ten years.
Independent modelling commissioned by the Property Council, Master Builders Australia, and the Real Estate Institute of Australia found the changes would lead to fewer housing starts, higher rents, and lower construction activity, even when offset by the Government’s $2 billion Local Infrastructure Fund.
“Australia is already miles behind on housing supply,” Mr Zorbas said.
“If the Government gets these settings wrong, the result is less investment in supply and more pressure on buyers and renters. Right now, this draft legislation points us in the wrong direction on supply.”
The Property Council has also raised concerns about the consultation process for reforms of this scale and complexity, noting that industry and tax experts were given only 17 days to review and respond to the draft legislation.
The submission calls for improvements to provisions affecting build-to-rent, retirement villages, purpose-built student accommodation, land lease communities, co-living, and other emerging housing models, as well as changes to address technical issues that could discourage investment, create uncertainty, and increase compliance costs across the property sector.
“Every housing type matters,” he said.
“For example, the exposure drafts do not give certainty to build-to-rent assets across their development lifecycle and fail to comprehend or support the diversity of Australia’s housing system. Whether it’s a master planned community, a build-to-rent apartment, retirement village or student accommodation, all should be accounted for under these reforms.”
While maintaining its opposition to the reforms, the Property Council’s advocacy on the second tranche is focused on improving the detailed rules to better protect housing delivery and investment confidence.
Among the changes sought are additional consultation on the draft legislation, targeted powers to provide relief where the legislation produces outcomes inconsistent with supporting housing supply, and an independent statutory review after two years.
“The Government must give itself targeted powers to fix the inevitable unintended consequences quickly, not a system where every drafting mistake requires another round of legislation while projects sit on ice,” Mr Zorbas said.
“A statutory review after two years is the bare minimum when the Government is rewriting investment settings in the middle of a national housing crisis. Treasury should implement industry’s feedback and consult again, fix the blind spots and make sure every part of the housing continuum is backed in, not taxed out.”