Real estate industry voices concern over government’s housing investment policies

The Real Estate Institute of Australia (REIA) has issued a warning to the Albanese Government regarding its new tax policies which, according to the industry body, could deter investment in the housing sector.

Leanne Pilkington, President of REIA, highlighted concerns over the government’s decision to hike taxes on foreign investments, coupled with lowering application fees for foreign investors in Build to Rent (BTR) projects.

Pilkington expressed that foreign investment is vital for augmenting housing supply but criticized the government’s approach for seeming to favor corporate entities through tax incentives for properties often leased at higher rates.

“Our concern lies in the apparent penalising of individual investors contrasting with the incentivisation of corporations,” Pilkington stated. She noted problems within the BTR model, including incidents where corporate landlords have evicted tenants to increase rental prices, potentially worsening housing affordability.

The government’s measures as part of the Mid-Year Economic and Fiscal Outlook include significant increases in foreign investment fees for established homes and a doubling of vacancy fees for foreign-owned dwellings purchased since May 9, 2017.

Pilkington acknowledged the Albanese Government’s initiatives to improve housing affordability such as the Commonwealth Rent Assistance increase, the Social Housing Accelerator, the New Homes Bonus, and the Housing Australia Future Fund.

The REIA President pointed out that, typically, foreign nationals are restricted from buying existing properties, with the new measures aiming to steer foreign investment towards new developments and ensuring compliance with regulations.

She supported initiatives that encourage new housing but voiced skepticism about the effectiveness of increased fees on foreign buyers, who are crucial providers of rental housing in Australia.

Pilkington referred to ABS data indicating a nearly 20% drop in building approvals through 2023, suggesting more efforts are needed to stimulate the sector.

“It’s crucial to balance incentives for both individual and corporate investors while ensuring sustainable housing market growth and affordability for all Australians,” Pilkington said, emphasizing the importance of fostering an environment conducive to both individual and corporate investment in housing.