|Type of paper:||Research paper|
1. Scott Morrison announces in Sept 2017 related to 'MITs (managed investment trusts) would no longer be able to buy residential property other than affordable housing.'
a. What is this legislation about?
The legislation as announced by Scott Morrison relates to limitations on Managed Investment Trusts. It aims at tackling the housing aspects by targeting investors and MITs. The objective is to enhance affordability of housing. According to the legislation, investors are able to access up to 60 percent discounts in capital gains. This is upward of 10 percent from the common 50 percent. It is however with a condition of holding the property that is deemed affordable for not less than three years. These gains will be on offering rental housing that is affordable to Australians. Moreover, the act enhances MITs to make affordable housing investments besides outlawing their acquisition of residential property. Instead, Managed Investment Trusts can only acquire inexpensive housing. Also, the legislation gives foreign residents 15 percent reduction in withholding taxes on their capital gain income.
b. How this legislation affect local and foreign investor in BTR sector
In the Built-to Rent sector, the legislation will highly reduce foreign capital influx. Foreign investors will be forced to change their investment strategies and look for better options. However, the legislation will be a motivating factor for innovation where investors will have to change tact and discover how to make residential investment lucrative. Foreign investors will be discouraged and perhaps leading to a crisis in the housing sector. With reduced foreign investment, local investors will most likely gain from reduced competition. It is however notable that the cash needed to engage in this investment is huge. This means the local investors will find themselves struggling with finances. These investors will now find it intricate to attract foreign capital in their ventures.
2. What current legislation (tax, GST etc) have brought benefit to BTR and what legislation have obstruction BTR in Australia? (List all legislations)
The current legislation in regard to Managed Investment Trusts, allowed receiving of a treatment that is concessional. A 15 percent withholding tax is levied from gained MIT income. BTR sector have benefited from the certainty in taxation which enables efficiency in planning. Investors will get a 50 percent discount on their capital gains which is an advantage. The legislation also, restricts the activities of BTR by limiting their investments. Foreign investors are required to engage in business through MITs thereby are not allowed to actively trade in the Built to Rent sector. The current legislation is biased and treatment by Australian Tax Authorities on BTRs hinders growth. In fact, BTR lacks tax breaks is a hindrance to development of this sector.
3. Have Property Council of Australia (PCA) released any information related to BTR sector? (Please provide link related)
The Property Council of Australia vehemently opposed the changes. According to PCA, such an amendment would hamper growth and development in the housing industry. In its statement, PCA Chief Executive Officer remarked that MITs had enhanced BTR sector to thrive and offered long term rental periods which made housing affordable. He insisted that a move to discourage BTR sector initiative would be detrimental and lead to a housing crisis. The council recommends for a dialogue between the government, and industry players to solve some pertinent issues relating to the legislation.
Cite this page
Law Essay Example: Legislation for Built-to-Rent Sector in Australia. (2022, Apr 21). Retrieved from https://speedypaper.com/essays/law-essay-example-legislation-for-built-to-rent-sector-in-australia
If you are the original author of this essay and no longer wish to have it published on the SpeedyPaper website, please click below to request its removal:
- Law Essay Example: Punishment and Sentencing
- Emotional Intelligence in Psychology - Free Essay on Recidivism
- Essay Example on Prison Overcrowding: Alternatives to Incarceration in America
- Free Essay about the "Fire in the Hole" Documentary
- Crime Prevention Essay, Free Example for Students
- Free Essay about the Marijuana Debate
- The LGBTQ Movement - Free Essay Sample for Students