Franzen Tips #1146: The Budget’s Property Announcements

Franzen Tips #1146:

The Budget’s Property Announcements

Tuesday’s Federal Budget was the first full budget by a Labor government in more than a decade. Interestingly there wasn’t a massive number of new announcements regarding the property market as the “big ticket items” had already been announced in the mini-budget in October. The headline act is the proposed $10bn Housing Australia Future Fund which guarantees a minimum of 1,200 social and affordable houses in each state and territory over the next five years. This fund needs to be approved by the House of Representatives and the Senate however the Coalition are not supporting the proposal saying it will add to inflation and the Greens believe it doesn’t go far enough and want $5bn directly spent on housing and also a national rent freeze (which we think is probably a good topic for another Franzen Tips). As this article “goes to press”, it appears Labor have not succeeded in getting the proposal through the Senate so further negotiations will need to take place for the next parliamentary sitting which will be in June. With housing being one of the biggest issues in Australia today, one would think all sides of government would be expediting a solution but alas it appears not.

The budget however still contained several announcements regarding the housing market. The industry is highly supportive to lift the rate of the Commonwealth Rent Assistance by 15% (approximately $31 a fortnight) which will assist many in the cost-of-living crisis. However, once again some believe that it is in no way near enough given the huge increase that has occurred in the rental market in recent months. Most experts believe that the only initiative that will bring down rental prices is by increasing rental supply, but as noted above the various parties cannot agree on how to do that.

Also announced were several schemes targeted at boosting the nation’s build-to-rent (BTR) sector, most notably halving the managed trust withholding tax from 30% to 15%. This aims to build on the mini budget’s National Housing Accord which promised 1m new homes between 2024 and 2029. Mr Zorbas from the Property Council of Australia says BTR projects “provide tenants with the long-term security of tenure, superior amenities, and professionally managed properties,”

Another notable item was an additional $67.5 million in funding through the 2023–2024 financial year for the National Housing and Homelessness Agreement Transitional Funding. This will boost homeless funding to the states and territories.