The Real Estate Institute of Australia (REIA) has cautioned the Federal Government not to prioritise foreign investment into Build-to-Rent (BTR) over individual investors.
Recently the government announced its plan to increase taxes on foreign investment while at the same time reducing application fees for foreign investors in BTR projects.
REIA President, Leanne Pilkington, said she had concerns about the potential ramifications of making housing investment less appealing.
“While foreign investment plays a crucial role in boosting housing availability, the current announcement seems to favour corporate entities by offering tax incentives for properties typically leased at higher rates,” Ms Pilkington said.
“Our concern lies in the apparent penalising of individual investors contrasting with the incentivisation of corporations.โ
Ms Pilkington said existing issues within the BTR model, including instances where corporate landlords had evicted tenants to escalate rental prices, potentially exacerbate housing affordability challenges.
The recent changes outlined in the Mid-Year Economic and Fiscal Outlook include a significant increase in foreign investment fees for established homes and a doubling of vacancy fees for all foreign-owned dwellings purchased since May 9, 2017.
Ms Pilkington said the Albanese Government had made some efforts to boost housing affordability, particularly through initiatives such as the Commonwealth Rent Assistance increase, the Social Housing Accelerator, the New Homes Bonus, and the Housing Australia Future Fund.
โForeign nationals are typically restricted from purchasing existing properties, with exceptions granted in limited circumstances such as temporary residency,โ she said.
โHowever, the new measures aim to redirect foreign investment towards new properties and ensure compliance with regulations.โ
Ms Pilkington said she remained concerned about placing disincentives on potential investors.
“We welcome initiatives that stimulate new housing supply; however, we remain sceptical about the effectiveness of increasing fees for foreign buyers who are major providers of rental housing in Australia,โ she said.
โThe latest ABS figures show building approvals fell by almost 20 per cent over 2023 indicating more needs to be done to stimulate the sector.
โItโs crucial to balance incentives for both individual and corporate investors while ensuring sustainable housing market growth and affordability for all Australians.โ