Real estate investors to get tax breaks for providing cheaper rental stock

Australian Labor Party will consider giving tax breaks or even cash to property investors who invest in cheaper rental housing to create more housing stock and thus ease Australia's housing crisis.

Labor's housing spokeswoman Tanya Plibersek said that while Labor will not tamper with negative gearing, its flaw is that it delivers only expensive rental properties as owners seek to maximise tax advantages.

Ms Plibersek said she wanted to push for Labor to adopt the policy where investors received tax incentives or tax credits for providing housing at cheaper than market rent rates.

"Anything we do should actually increase housing stock, we have to build more houses if we want to do something about housing affordability so I'm particularly interested in measures that increase the supply of houses," Ms Plibersek said.

Two weeks ago, Labor leader Kevin Rudd released a paper in Brisbane entitled New Directions for Affordable Housing, which canvasses various proposals to end the crisis and also proposes a July 26 housing summit.

Ms Plibersek said that of the various options, she favoured a rental incentive scheme.

That would provide a subsidy to developers or community housing providers to build affordable accommodation.

The subsidy would apply for as long as owners rented properties out at affordable rental levels.

"They will be able, some time down the track, to rent them out at market rates," she said. "But while they get the subsidy, they will be renting it at below market rental.

"It might not be cash, it might be reduced taxation, but it's a fixed amount of benefit - in many instances, the way you'd do it is reduced tax or tax credits so they can use it in other areas of their business or they might pay less capital gain over time".

Ms Plibersek said many people were investing in housing but were most likely to invest in high cost properties.

"The tax treatment in many ways privileges that type of investment," she said.

"If there are other ways of privileging investment at the more affordable end of the rental market ... that is something that I'm enthusiastic about."

Her comments came as Peter Costello revealed he had written to state governments, the housing industry and land developers to begin an audit to identify land able to be released for housing.

The Treasurer, who blames high housing costs on land shortages that could be eased if states released more public land, said it was essential to identify land that is available for housing so that demand from a growing population does not put extra pressure on house prices.

"The Federal Government recognises that housing affordability is a complex issue, and there are many aspects that govern it on both the demand and the supply side," he said.
Source: The Australian