Ray White has warned potential changes to property investment tax settings could reduce the supply of rental housing and place further pressure on tenants.
In a letter sent to its 10,500 Australian members, senior leaders at Ray White outlined their opposition to possible reforms to capital gains tax and negative gearing being considered ahead of the federal budget.
The letter, signed by chairman Dan White and chief economist Nerida Conisbee, was circulated across the network’s offices, which collectively manage 222,036 properties for landlords across Australia.
Property tax reform has been widely discussed in the lead-up to the federal budget due to be handed down on May 12 by Treasurer Jim Chalmers.
According to Ray White, it is possible the budget could include changes to the capital gains tax (CGT) discount currently available to investors on established residential property.
Under current rules, Australian residents who hold an investment asset for more than 12 months are generally eligible for a 50 per cent CGT discount, meaning only half of the net capital gain is added to their taxable income.
The concession applies across investment asset classes, not just property.
There has also been speculation that restrictions on negative gearing could form part of the government’s housing policy response, aimed at reducing investor demand for residential property and improving access for owner-occupiers, particularly first-home buyers.
Ray White said it recognised the growing challenge of housing affordability but argued that reducing or eliminating the CGT discount could have unintended consequences for the rental market.
The group said renters had already absorbed rent increases of 49.6 per cent over the past five years, affecting around 2.9 million households across Australia.
It also warned that policy settings that discourage investors could reduce the number of properties available for rent.
The company pointed to developments in Victoria, where it said higher land taxes and increased property compliance regulation had contributed to a reduction of 24,000 rental properties in 2024.
In Melbourne over the past five years, house prices have increased by about 20 per cent, while rental prices have risen by 34.9 per cent, according to the figures cited in the letter.
Ray White also argued that rising costs faced by landlords were already flowing through to tenants.
In New South Wales, it said land tax had increased by 60 per cent over the past five years, while insurance costs had risen by 51 per cent.
Over the same period, rents increased by 49.4 per cent for houses and 53.6 per cent for units.
The company also raised concerns about proposals that would limit tax concessions such as negative gearing or capital gains tax discounts to newly built housing.
According to Ray White, such measures could concentrate investor activity in new development corridors and reduce the range of rental options available in established suburbs.
The letter also highlighted the rise of “rent-vesting”, a strategy used by some younger Australians who rent in locations close to work or lifestyle amenities while purchasing a more affordable investment property elsewhere.
Ray White said restricting negative gearing or capital gains tax concessions could reduce the viability of that pathway.
The group also warned that if smaller private investors withdrew from the market because of less favourable tax settings, institutional investors could increase their share of housing ownership.
In some supply-constrained markets in the United States, institutional investors account for more than 20 per cent of single-family home ownership.
Ray White also cited modelling from Treasury suggesting that changes to the CGT discount would have a small or negligible impact on overall housing prices and supply.
Private landlords currently represent 83.1 per cent of Australia’s rental market, according to the figures referenced in the letter.
The company also raised concerns about the potential impact on housing market activity if tax settings change.
Ahead of the 2019 federal election, the then opposition Australian Labor Party proposed similar changes to negative gearing and capital gains tax rules.
Ray White said uncertainty around those proposals contributed to a contraction in housing market activity, with monthly transaction volumes falling by more than 37 per cent between late 2017 and early 2019.
The group said it was engaging with government on the issue, including participating in economic consultation roundtables convened by the Treasurer.
Ray White said it would continue to advocate on behalf of both investors and renters as the debate over housing policy continues.
Ray White said it was engaging with government on the issue and warned that if the proposed reforms proceed, they could set a precedent for further tax changes that would erode investor returns and reduce rental supply across Australia.
Mr White and Ms Conisbee wrote in their letter to members:
“We are actively engaging with the Government and our Chief Economist has been invited to participate in Treasurer Jim Chalmers’ economic consultation roundtables. We are seeking industry collaboration through media and regulatory communication, and ensuring our business owners and members can communicate this position clearly and confidently, backed by data.
“We are deeply concerned that if these reforms proceed, they set a precedent for further tax changes that will continue to erode the returns of property investors and with them, the supply and affordability of rental housing across Australia. We will continue to make this case clearly and loudly.”
