The NSW Government will give a 50 per cent discount on land tax to developers who invest in build-to-rent schemes providing greater security for tenants and ensuring owners who develop deliver high-quality construction projects. Land tax in NSW currently applies to investment properties with an underlying land value above $734,000.
The build to rent scheme is popular overseas, and is being encouraged here. The land tax relief measures will be welcomed by developers who wish to develop and who consider developing in this manner.
What is build-to-rent?
It simply means that a residential unit is built with the intent of it being kept long term and rented out to lower-income families at prices affordable for those families.
Who is eligible?
Any developer investing in new build-to-rent housing projects
may be eligible for a 50 per cent discount on land tax for the next
Foreign investors may also be eligible for an exemption or refund from surcharge purchaser duty until 2040 for build-to-rent developments.
What are the criteria?
To be eligible for the 50 per cent land tax discount, a build-to-rent development in metropolitan areas must have at least 50 units. A different threshold for regional areas is being considered.
Construction must have started on or after 1 July 2020 and the projects need to provide purpose-built residential rental units, be managed under unified single ownership, and include options for longer leases.
Full eligibility criteria for build-to-rent project tax cuts will be set out in guidelines for the industry in the coming weeks.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.