In the Federal Budget announced October last year, the Albanese Government outlined the National Housing Accord, and its goal of building one million new homes in the next five years.
Several of the announcements in Tuesday's 2023 budget are geared towards meeting this goal, which some critics have said isn't ambitious enough.
They include measures intended to increase private sector investment in new residential projects, as well as extensions to public housing commitments.
Build to rent tax breaks
Revealed by Jim Chalmers prior to today's announcement, the budget includes tax breaks for build to rent projects designed to increase the supply of new houses.
'Build to rents' are projects where the government partners with the private sector to build large scale residential housing designed for renters.
They are typically owned by a single entity rather than the individual units sold off, with long term rental returns for investors.
They are more commonly owned by corporations or institutions like superannuation funds.
After 1 July 2024, the withholding tax rate for payments into funds from trusts involved with build to rent projects will be reduced from 30% to 15%.
This is a reversal of the Morrison government's decision to increase the withholding rate for residential housing investment to 30%, in a bid to have foreign investors 'pay their fair share'.
According to Core Logic head of research Eliza Owen, many industry figures believed this hindered the development of build to rent in Australia, so this is likely to be a well received move amongst those in building and construction.
Mr Chalmers said he was proud of the tax breaks that are intended to incentivise investment in these projects.
The government has also confirmed an increase to the capital works tax deduction depreciation rate for eligible new build-to-rent projects.
Annual deductions on build to rent projects that start after today (9 May) can now be claimed at 4.5%, up from 2%.
Home equity guarantee extension
There are several components to the home guarantee scheme, where the government effectively acts as a guarantor for the home loan of eligible participants.
This means home buyers can purchase a home with a deposit size as small as 5% of the property value, and avoid paying Lenders Mortgage Insurance (LMI).
These include the first home guarantee, the regional first home guarantee and the family home guarantee.
All will now see the eligibility criteria expanded, included changing the definition of a 'couple' to now simply be any two eligible participants rather than a married couple or de facto relationship.
Siblings, other family members and friends can now take advantage.
Single legal guardians of dependents are also now eligible for the Family Home guarantee, while all have been opened up to permanent residents.
However, the allocation for each has not increased, and Ms Owen questioned whether this will make these schemes any more effective in making home ownership more viable.
"The relatively high-income thresholds around the First Home Guarantee in particular may help people into housing faster, who would have achieved home ownership anyway, limiting more equitable home ownership across income distributions," she said.
Social and affordable housing
The government have allocated additional funds to increase access to affordable housing.
The liability cap of the National Housing Finance and Investment Corporation has been raised by $2 billion to $7.5 billion, to provide more low cost loans to community housing providers.
This is expected to translate into an additional 7,000 affordable homes.
The Housing Industry Association (HIA) welcomed the 'continued focus' on social housing.
"Social and affordable housing is one important part of Australia's housing continuum," said Jocelyn Martin, HIA Deputy Managing Director of Industry and Policy.
"Greater investment in new housing servicing this part of the market will assist in reducing the number of households experiencing housing stress."
The HIA though estimates that Australia needs 1.66 million additional houses by 2030, so don't believe these measures will be enough.
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