Federal Labor recently announced its plan to establish a new rental policy if elected, but the Real Estate Institute of Western Australia (REIWA) said the proposal conflicted with the party’s standpoint on negative gearing. On top of this, the move is not likely to contribute to the improvement of home affordability, REIWA said.
The proposal includes a 10-year plan to build 250,000 new homes across the country, with 20,000 dwellings planned during the party’s first term.
As part of the proposal, Federal Labor would grant investors who build the new homes 15-year subsidies, which amount to $8,500 per year, as long as they lease the properties for 20% below market rent.
REIWA President Damian Collins questioned the logic behind these plans. “Why [is] Labor offering rent tax offsets to people who offer new properties for rent at 20% below market value? Because they know their plans to introduce a new negative gearing policy for new builds only will increase rents, as investors retreat from the market in established areas,” Collins said.
Collins said that similar to the unsuccessful National Rental Affordability Scheme (NRAS scheme), this will barely solve issues in housing affordability.
Collins said that building 20,000 new homes in the first three years would account for less than 1% of the supply of rental properties. Rents will still rise, following the law of supply and demand, he said.
“Federal Labor’s eagerness to tinker with negative gearing will have far-reaching consequences for the Australian housing market, and this proposed new scheme will not even come close to mitigating the inevitable fall-out,” Collins said.
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