Foreign institutional investors in Australia鈥檚 build-to-rent (BTR) sector will see their withholding tax rate halved from July next year.
The new tax rate of 15% 鈥� down from 30% 鈥� was announced in the latest Federal Budget.
Under the country鈥檚 investment regime, foreign investors need to use a management investment trust (MIT) to hold their assets. While all other commercial real estate investments, including purpose-built student accommodation, pay a 15% MIT withholding tax rate, BTR projects currently attract a higher rate.
The government will also increase the capital works tax reduction rate from 2.5% to 4% for BTR projects with at least 50 apartments.
BTR investors, including , Sentinel and Oxford Properties, have actively campaigned for a level playing field.
Michael Streicker, president of Sentinel Real Estate Corporation, said: 鈥淏y making investments in long-term, sustainable housing in Australia more competitive with other international markets, the Albanese Government has enacted a change that will attract billions of dollars into the local sector and support the creation of tens of thousands of quality rental apartments over coming years to help address Australia鈥檚 growing housing shortage.鈥�
Streicker told 91传媒在线: 鈥淲e have enormous belief in the value that BTR communities can add to the local housing mix and welcome this significant step towards enabling BTR to achieve its potential in Australia.鈥�
Chris Key, Greystar鈥檚 managing director, Australia, told 91传媒在线: 鈥淭he decision to reduce the withholding tax treatment of BTR projects is a step in the right direction.
鈥淲e expect it will encourage more interest in build-to-rent projects from international institutional investors and unlock more capital.鈥�
Key said the policy recognised BTR as an institutional asset class and equalised the tax treatment investors were afforded in the other institutional real estate sectors.
Peter Menegazzo, CEO of , which runs the Indi BTR platform that manages Oxford Properties鈥檚 projects in Australia, also said the budget announcement would 鈥渆qualise鈥� the investment landscape for offshore investors.
鈥淎s a nascent sector, investment certainty is vital to ensure Australia continues to attract offshore capital. Securing offshore capital will allow the BTR sector to be part of the solution to ease the housing undersupply issues we are facing in Australia,鈥� he said.
The Australian government has also cut the withholding tax rate on clean data centres and warehouses from 15% to 10% to help raise minimum energy efficiency requirements for existing and new clean buildings.
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