What the 2024 budget means for property
Tackling Australia’s housing crisis was a focus in this year’s budget, and fortunately for property investors, negative gearing, the generous 50% discount on housing investments after one year and other tax deductions property investors can benefit from were not on the table!
Homes for Australia
In this budget, the Government unveiled its ‘Home for Australia’ package, a multibillion dollar package allocating funding to crisis accommodation, social and affordable housing funding, and additional rental assistance for renters receiving other social assistance payments.
These include:
- An additional $423.1 million for the National Housing and Homelessness Agreement (taking total funding to $9.3 billion over five years) to deliver public housing and homelessness strategies. This also includes a doubling in funding for homelessness services at $400 million per year to be matched by the states and territories.
- A second-consecutive increase to Commonwealth Rental Assistance (CRA). This $1.9 billion investment over five years will increase the maximum rate of CRA by a further 10%, following a 15% increase last year.
- Additional concessional financing of up to $1.9 billion for community housing providers and other charities to support the delivery of new homes.
- An additional $1 billion targeted toward crisis and transitional accommodation for women and children fleeing domestic violence, and youth.
- An additional $1 billion for the states and territories to help speed up construction on infrastructure to support new housing (i.e., sewers, roads, energy and water infrastructure).
- Around $90 million for training and education to boost the construction workforce.
- A better targeted migration program, with student visa grants tied to the delivery of purpose-built accommodation.
Ministers have also stressed the government is still committed to the goal of building 1.2 million new homes over the course of the next five years.
Funding to bring real estate into anti-money laundering effort
Property professionals may be affected by the anti-money laundering and counter-terrorism financing (AML/CTF) regime.
As announced earlier this month, the budget earmarks $166.4 million to implement reforms to Australia’s anti-money laundering and counter-terrorism financing (AML/CTF) regime. This includes moving forward with so-called ‘tranche 2’ reforms that will see real estate included among the professional sectors that are obligated to report suspicious financial transactions.
As it stands, Australia is just one of five jurisdictions out of more than 200 that do not regulate tranche-two entities, which include lawyers, accountants, trust and company service providers, real estate agents and dealers in precious metals and stones. A failure to reform these industries could result in the nation being ‘grey-listed’ by the Financial Action Task Force.
Missed opportunities
Some industry leaders believe there were some missed opportunities in this budget; CoreLogic analysist Eliza Owen suggested more could be done to ‘beef up’ the construction workforce, pointing out it is not clear when the additional workers would be added, with those just embarking on the start of training certificates and apprenticeships potentially taking years to become fully qualified.
‘Aside from labour, investing in research and innovation in construction processes would also help to boost productivity. Investment that helps to scale modular builds, and embracing technologies that can further streamline design processes are some examples.’
Despite the recent decision to increase the CRA rate by 10%, the Real Estate Institute of Australia (REIA) analysis shows renters are still struggling to keep up with rising market rents.
The increase, which follows a 17.5% rise in December last year, has not significantly improved the financial situation for eligible families and individuals. “Despite the increase, which tops up the increase in December last year, eligible families and individuals are only marginally better off and are worse off compared to two decades ago. This is because the payments have not kept pace with movements in market rents,” said REIA President, Ms. Leanne Pilkington.
Over the past two decades, the proportion of rent payments covered by CRA has decreased by 5 percentage points of the weighted average Australian rent.
“This is why in its Pre-Budget Submission, REIA called for the CRA payment to be pegged to market rental rates at 25%,” Ms. Pilkington added. “If CRA payments had been higher, not only would eligible families and individuals have benefited, but the CPI would have been lower. A lower CPI could have led to lower interest rates, potentially prompting a supply response from builders to address the housing demand-supply imbalance.”
As members of The Real Estate Institute of New South Wales (REINSW), the peak industry body for real estate agents and property professionals in NSW we are part of the voice lobbying government, and raise issues and concerns affecting property owners on your behalf.
We do more than manage property. We are ensuring your issues and concerns are heard by Government, and give you information to help you make informed decisions about your asset.
We do all the training to ensure your property is legal and your paperwork is in order, and we work hard to ensure your property is leased with reliable and good tenants. We also take the stress out of marketing, managing and running your property, ensuring you get the best from your asset, and your asset is properly cared for.
Contact us now for more information about property management and property investment. Call us on 02 4956 9777, send us an email to mail@newcastlepropertymanagement.com.au or pop into our Cardiff office for a chat to see how our property management services can help.
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