of tax tweaks to help with project feasibility.
The primary changes, agreed in exchange for 10% "affordable" dwellings, five-year leases, and banning of "no-fault" evictions, are: ✅ reduction of the tax withholding rate from 30% to 15% for foreign investors (in line with other commercial assets already) ✅ speeding up depreciation benefits by increasing the rate from the standard 2.5% p.a. to 4% p.a.
Neither of these improves the "above the line" metrics for #BTR, but they may incrementally improve the net, post-tax position, especially for lage, overseas institutions. Every bit is necessary given how tight the feasibilities are on these projects.
Any improvement is a win, but this is not remotely a magic bullet for housing supply. The bullish estimate from the Property Council of Australia is the changes will lead to ~80,000 total BTR units over the next decade.
For context, in a housing market that needs to deliver ~2.4m homes over 10 years, this would represent just 3.3% of total new supply. And its also unclear just how many of these would have proceeded regardless of these changes.
Against a backdrop of continually dropping build to sell apartment supply (down 80% from the peak), this hardly moves the dial. And with a skew towards, smaller, high-end units, it's not going solving for the #housingaffordability challenge.
🤔What we really need is urgent action to reduce #development costs after years of: 🚫 labour and material price inflation 🚫 lower productivity 🚫 increased taxes 🚫 growing red tape 🚫 increased design regulations
With a renewed focus on: ✅ funding enabling infrastructure; ✅ substantially reducing all planning approval timelines; ✅ deliving the types of homes, more people want and can actually afford to buy; and ✅ prioritising home types that can be built faster and with less cost.