Housing groups urge MPs to pass negative gearing reforms

Australia’s leading community and housing groups have called on federal parliament to quickly pass Labor’s proposed changes to negative gearing and capital gains tax, arguing the reforms would improve fairness for renters and young homebuyers.

The government is expected to introduce the negative gearing and CGT changes in parliament as soon as the upcoming sitting fortnight, aiming to pass the legislation soon after with support from the Greens.

The reforms would limit new negative gearing to newly built homes and grandfather existing properties, while altering how capital gains tax is calculated. Labor has described both measures as a way to shift the housing market’s balance toward first-home buyers rather than property investors.

Maiy Azize, spokesperson for housing advocacy group Everybody’s Home, said there was “no excuse for landlords to hike rents because of these changes.”

“Existing landlords get to keep these tax perks. Any attempt to use these reforms as a justification for raising rents is opportunistic profiteering,” she said.

“We urge all politicians to see through the fearmongering and back these long overdue changes.”

In a joint statement, the Australian Council of Social Service (Acoss), Everybody’s Home, Better Renting and National Shelter said the changes would “improve fairness and level the playing field.”

The social and housing groups predicted the reforms would enhance housing stability for renters by encouraging long-term investment in housing over short-term gains.

This echoes arguments from Housing Minister Clare O’Neil, who said limiting new negative gearing to newly built properties would help control rent prices.

Treasury modelling in the federal budget forecasts 35,000 fewer homes will be built over the next decade as investors redirect funds, but the impact on rents is estimated at an additional $2 per week for the median renter.

Acoss policy director Jacqueline Phillips said negative gearing and CGT had “supercharged inequality, driven up housing prices, and added little to rental supply.”

“We call on all politicians to back the reforms that are clearly in the national interest,” she said.

Concerns have been raised by some economists, who believe home values are headed for their first national slump since 2022, as well as by parts of the property lobby. Shadow Treasurer Tim Wilson cited SQM Research modelling suggesting Sydney rents could increase by $160 per week and Melbourne rents by $130 per week.

Labor sources countered that the SQM modelling does not reflect the government’s policy, which allows currently negatively geared homes to retain that tax treatment and restricts new negative gearing to new builds.

Treasury modelling in the budget estimates the changes would result in an additional 75,000 first-home buyers and regulatory adjustments would support construction of 30,000 extra new homes over the next decade.

Azize from Everybody’s Home said it was “dishonest for the property lobby to run a scare campaign and spread misinformation about reforms that will not even affect existing landlords.”

O’Neil also pointed to the government’s increases in Commonwealth Rent Assistance in the 2023 and 2024 budgets as additional support for renters.