Capital gains tax and negative gearing on the chopping block to fund affordable housing, says report

Capital gains tax discounts and negative gearing for all investment properties other than social housing should be phased out over the next 10 years, a leading charity says.

Anglicare Australia executive director Kasy Chambers

Capital gains tax discounts and negative gearing for all investment properties other than social housing should be phased out over the next 10 years and the revenues gained poured into solving Australia’s housing emergency, a leading charitable group says.

Anglicare Australia is also calling for legal changes to better protect renters through banning “no cause” evictions and unfair rent increases.

In a new report, Anglicare says housing in Australia is “in meltdown”, with governments needing to step in to support the construction of 500,000 new social housing and low-cost rental properties over the next two ­decades.

“We now face a housing market that has never been less affordable or more volatile,” says the report, titled Homes for All.

“Australians are spending record amounts on housing, and people in every age group are living in rental stress.”

It proposes a 20-year road map to fix the housing crisis by driving new stock, underpinned by contentious changes to tax policy.

“The capital gains tax discount would be incrementally reduced over the next 10 years,” it says.

“This incremental approach would guard against concerns about the impact of the reform on housing markets. Negative gearing should be used to target investment in social and affordable housing. The current negative gearing arrangements should be phased out for new investors,” the report proposes.

Anglicare Australia executive director Kasy Chambers said there was about $10.3bn a year in capital gains tax from investments and $4.5bn a year in negative gearing at stake.

“The way the system works now is that we are asking the private rental market to do the heavy lifting to provide affordable housing through the tax system, but it isn’t working,” Ms Chambers said.

“Affordability for workers on the minimum wage has halved (in a decade). A couple with two parents working full-time can afford just 15 per cent of rentals, down from 31 per cent 10 years ago. This includes rent assistance and tax benefits.”

Ms Chambers said such a tax change would be controversial, but the Anglicare paper was a starting point for debate. “In any big tax policy change there will be some disadvantage. What we’re proposing would potentially disadvantage those who’ve had an advantage for some time.”

She also said there was room for tweaks, such as allowing capital gains tax arrangements or negative gearing to continue for social housing properties.

On the supply side, Anglicare proposes expanding social and affordable housing by 25,000 homes a year for the next 20 years.

“This includes 300,000 new ­social housing properties,” it says.