Coalition picks its first fight with Labor – on housing ‘nightmare’

The Coalition will launch its first legislative attack on the federal government over housing, seeking to reverse a tax incentive that the building industry believes will deliver the country 80,000 new rental properties.

Opposition housing spokesman Andrew Bragg said on Tuesday the Coalition would move in the Senate to disallow regulations for the government’s build-to-rent program, describing them as a foreign investor tax cut that would drive people into a “nightmare of lifelong renting”.

The Coalition is going to target one of the government’s signature housing policies, its build-to-rent tax concessions.Credit: Courtney Kruk

Housing was one of the most important issues in the May election because of a sharp lift in house prices since 2020 and annual rental inflation climbing beyond 10 per cent a year in some capital cities.

The Coalition promised first home buyers could make interest on their mortgage tax-deductible for five years, while the government committed to allowing new buyers to purchase a property with a 5 per cent deposit.

The build-to-rent laws were passed by the parliament late last year, forming a key part of the government’s target to build 1.2 million homes by mid-2029. The government is estimated to already be at least 260,000 properties behind on its target, with Treasury warning in an official briefing to Treasurer Jim Chalmers that on current policy settings it would fall short.

Bragg said the build-to-rent laws did little but reward foreign property investors while keeping people in rentals rather than helping them buy their own home.

“Labor’s obsession with foreign landlords and big super taking over Australian housing once again prioritises vested interests over Australia’s national interest. The Australian dream is about people – not corporations,” he said.

“The Coalition’s priority is for Australians of all ages to own their own home. While the Coalition strongly supports foreign investment, it needs to fit with Australian culture and expectations.”

Under the government’s laws, withholding tax rates from managed investment trusts that build long-term rentals were halved and made available to foreign residents. Capital works tax-deduction depreciation rates were increased to 4 per cent, enabling companies to more quickly write off their projects.

Qualifying projects must consist of at least 50 apartments or dwellings that are available to rent to the general public. The homes themselves have to be held under single ownership for at least 15 years.

The rental and building industries have estimated the new regulations, which bring Australia largely into line with other countries, would lead to an extra 80,000 rental homes over the next decade. About 8000 are estimated to be “affordable rentals”.

Bragg said the government should focus on reducing red tape across the building industry rather than putting in place a “promotion scheme for foreign asset managers”.

“The thicket of red tape faced by tradespeople, builders and developers has grown like Topsy under this government,” he said.

Despite pressing to overturn the laws, the Coalition is unlikely to succeed. With the Greens, the government now holds enough seats in the Senate to block any disallowance motion. The build-to-rent laws were passed last year with support from the Greens.

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