National Shelter believes that Australia’s Future Tax System Review must form the starting point for further discussion of tax reform around housing and land dealings in order to tackle housing affordability.
There are currently a range of tax settings which distort the behaviour of home owners and investors in the Australian system which need to be addressed. These distortions encourage over-investment in large, more expensive properties for owner occupiers and to the upper end of the market for investors in rental properties. They create inflationary pressure as investors and owner occupiers compete for the same properties. These policies appear to conflict with Australia’s principal housing policy of the past 50 years, to encourage home ownership.
National Shelter supports policies which balance the goal of home ownership for most with settings to encourage investment in long term, secure, affordable, accessible and well located rental housing. As a principle, if the Australian tax system is to support investment in rental housing it could be better targeted to meet the shortfall in the supply of affordable housing available to lower income earners, which would deliver a social good in exchange for a tax benefit.