Tax exemptions for developers will unlock thousands more homes

Developers and property experts say a new policy giving investors of build-to-rent projects land tax and duty surcharge exemptions will significantly assist with the housing crisis.

• Explained: Build-to-rent scheme

Thousands of rental homes are expected to be unlocked across Queensland in just a few years amid moves by the state government to slash the tax bill of developers.

Developers and property experts say a new policy giving investors of build-to-rent projects land tax and duty surcharge exemptions will significantly assist with the housing crisis in the long-term.

Treasurer Cameron Dick, ahead of a housing summit on Tuesday afternoon, revealed investors of build-to-rent projects will be exempt from a foreign investor land tax and duty surcharges for two decades.

They will also get a 50 per cent discount on their land tax bill for 20 years if one in ten units in a development are set aside for “affordable housing”.

Queensland Treasurer, Cameron Dick, during Question time at Queensland Parliament in Brisbane. Picture: NCA NewsWire / Glenn Campbell

It’s hoped the tax concessions will spur more build-to-rent development and boost the state’s rental home supply as a result, with government analysis showing it could result in an extra 3000 build-to-rent dwellings over the next four years.

Early government analysis also puts the cost of the concessions at $100m of forgone revenue over a 20 year time span— or just $5m a year.

Industry groups including the Property Council of Australia and the Real Estate Institute of Queensland have heralded the move as a positive step that encourages investment and brings the state into line with other large jurisdictions like Western Australia.

Property Council Queensland executive director Jen Williams said the tax concessions would “help rapidly increase the supply” of purpose built rental homes.

“(It will help the) sector overcome many of the financial hurdles it traditionally faces and will spur on a wave of new housing, providing better outcomes for tenants,” she said.

KDL Property Group MD Kent Leicester, Logan Reserve. Picture: Liam Kidston

KDL Property Group managing director Kent Leicester - who has four residential communities under construction in Moreton Bay and Logan Reserve – said his firm alone could add 150 houses a year for families in new build-to-rent communities if structured correctly.

He said there was no question that detached houses in outer suburban communities would need to be a part of the build-to-rent solution if chronic rental supply shortages were to be truly addressed.

“I strongly believe that if we get this model right, over the next five to 10 years, we should be moving towards multiple well established build-to-rent communities built around outer suburbs and managed really well like they are overseas.”

He said such communities would go a long way towards easing chronic rental shortfalls.

But REIQ chief operating officer Dean Milton said there were a couple of items which needed to be clarified, including the definition of “affordable housing”.

Mr Milton also noted the concessions would not be a “silver bullet” and with the current delays impacting the construction market overall it may take longer for projects to get off the ground.

Deputy Premier Dr Steven Miles, Premier Anastasia Palaszcuk and Rachel Hunter during a housing shortage round table discussion at Queensland Parliament in Brisbane. Picture: NCA NewsWire / Glenn Campbell

He noted concessions for foreign investors would be enticing particularly to large superannuation funds, based in nations like Canada, to get involved in build-to-rent projects.

It’s understood the definition of “affordable housing” under the rules of the concessions will be hashed out through consultations.

Mr Dick said the private construction sector was “at capacity” across Australia, and the government was “working with industry to identify innovative ideas that create new pipelines of housing”.

The concessions will come in on July 1, 2023, with expectations it will be worked into law as part of the upcoming budget in May.