There’s no doubt the housing affordability crisis is a hot topic among the Australian populous in recent months and was in dyer need for addressing in the 2023/24 Federal Budget.
There’s no surprise that many Australians stood still in wait on May 9, when Federal treasurer Jim Chalmers handed down his second budget speech to parliament.
The announcement included the plan to ease pressure on renters, first home buyers and investors by enabling more new home builds without adding to inflationary pressure.
To achieve this, the government is hoping to address it on two fronts: more affordable housing and Improved home ownership opportunities.
The goal here, as explained by treasurer Chalmers, is to ease pressure on renters. He hopes to achieve this by introducing four key strategies, including:
1. Increase to Commonwealth Rent Assistance
The maximum rates of Commonwealth Rent Assistance are set to increase by 15 per cent at a cost of $2.7 billion over five years, this will mark the largest increase to Commonwealth Rent Assistance in more than decades.
This is set to effect approximately 1.1 million households receiving Commonwealth Rent Assistance.
2. Building more homes
States and territories, the Australian Local Government Association, investors and the construction sector will unify through the National Housing Accord with a shared ambition to boost supply and build one million new homes from 2024.
3. Build‑to‑rent investors
The Government is offering new incentives to encourage the supply of housing by:
- reducing the withholding tax rate for eligible fund payments from managed investment trusts attributed to newly constructed build‑to‑rent developments from 30 to 15 per cent.
- increasing the capital works tax deduction (depreciation) rate from 2.5 per cent to 4 per cent per year, increasing the after-tax returns for newly constructed build‑to‑rent developments.
4. Social and affordable housing investment
The National Housing Finance and Investment Corporation‘s liability cap by $2 billion to a total of $7.5 billion, supporting more lending to community housing providers for social and affordable housing projects.
Improved home ownership opportunities
Home Guarantee Scheme
Eligibility for the First Home Guarantee and Regional First Home Guarantee will be expanded to any two eligible borrowers beyond married and de facto couples, and non‑first home buyers who have not owned a property in Australia in the preceding 10 years. Australian Permanent Residents, in addition to Australian citizens, will be eligible for the Home Guarantee Scheme.
For more on how the 2023/24 Federal Budget will address the housing affordability crisis, read the official budget release. Ensure you don’t miss any upcoming training sessions or CPD opportunities by subscribing to the monthly newsletter, The Conveyancer Digest.