The government aims to provide diversified housing options, greater security for renters, boost residential construction and create new jobs.

This land tax cut comes at an important time for the BTR industry, significantly decreasing a key input cost helping returns achieve investment grade standards. Together with announced planning changes, this will help the sector establish itself as an alternative housing provider.

Eligibility criteria

At this stage, BTR developments eligible for the 50% discount on land tax must provide:

• 'purpose built rental units';
• at least 50 units in metropolitan areas (with a different threshold for regional areas to be advised);
• management under unified single ownership; and
• options for longer leases.

Foreign investor surcharge exemption

In addition to the land tax discount, it is expected that an exemption or refund from foreign investor surcharge purchaser duty and foreign investor land tax surcharge will be provided until 2040 for BTR developers.

Important notices

Legislation has been introduced into Parliament today to implement the key changes to the Duties Act 1997, the Land Tax Management Act 1956 and the Land Tax Act 1956.

Further eligibility criteria for BTR projects should be set out in industry guidelines in the coming weeks, but include measures to prevent the subdivision and sale of units in the developments within 15 years.

Both the proposed land tax discount and foreign investor surcharge exemption are coupled with strict integrity measures.

The government will also be exhibiting a new planning policy, until 9 September 2020, proposing development standards for BTR developments across NSW.

How can MinterEllison help

Our team has been instrumental in helping Australia's leading property companies develop their BTR portfolio. As members of the Property Council of Australia's Build to Rent Roundtable (the peak industry association and BTR committee in Australia), we are well connected within the industry and likely have the greatest exposure of any law firm in Australia.

Please contact a member of our team below if you would like to discuss your eligibility and the impact of the land tax discount on your business.