Build-to-rent: 80,000 new rental homes planned over a decade

The 2026-27 Federal Budget tightens affordability standards for tax measures that support institutional build-to-rent (BTR) developments. Industry estimates the measures will support around 80,000 new rental homes over the next decade, including up to 1,200 affordable homes in the near term. The Budget also continues a fourth consecutive increase to Commonwealth Rent Assistance.

What 'build-to-rent' actually is

BTR projects are purpose-built apartment buildings held long-term by a single institutional owner. Tenants get longer leases and more professional management; owners get a steadier yield than mum-and-dad landlords typically target. It's the dominant model for new urban rental supply in much of Europe, the UK and the US.

In Australia, BTR development has been hampered historically by tax and structuring differences relative to ordinary residential investment. Recent Commonwealth measures – the existing BTR managed investment trust withholding rate and capital allowance settings – addressed those gaps. The 2026-27 Budget keeps them in place but ratchets up the affordable-housing dedication required to access the concessions.

Renters: what else the Budget does

Commonwealth Rent Assistance maximum rates are now over 50% higher than March 2022, after four consecutive increases plus indexation. Around 1.4 million Australians receive CRA.
Continued work with states under A Better Deal for Renters to harmonise and strengthen renters' rights.
Pilot of the Consumer Data Right and Digital ID to improve rental application security and reduce friction for renters.
$59.4 million over four years for Community Housing Providers to supplement rental income for over 4,000 young people aged 16-24 at risk of homelessness.

Will rents fall, rise, or stay the same?

Treasury's modelling in Box 4.4 of Statement 4 is candid: the negative gearing and CGT changes will lift rents by less than $2 per week for a median-rent household. The dominant rental policy lever in the Budget remains CRA – which has lifted recipient incomes by far more over the last four years – plus the supply measures (Local Infrastructure Fund and BTR) that should put downward pressure on rents over time.

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Frequently asked questions

What is build-to-rent?

Build-to-rent (BTR) is purpose-built rental housing developed and held by institutional investors, who rent out the dwellings rather than selling them off as individual lots. It's a major rental supply model in Europe and North America that is still small in Australia.

Did the Budget create new build-to-rent tax breaks?

No. The Government's BTR tax measures – introduced earlier – continue. The 2026-27 Budget strengthens affordability standards for those measures, requiring developers to dedicate a higher share of dwellings to affordable rental in order to access the concessional regime.

How many BTR homes will this deliver?

Industry estimates the BTR tax measures will support the construction of around 80,000 new rental homes over the next decade, including up to 1,200 affordable homes in the near term.

Is rent going up because of the Budget?

Treasury modelling estimates the negative gearing and CGT reforms will lift rents by less than $2 per week for a median-rent household. For context, the maximum rate of Commonwealth Rent Assistance has risen by over 50% since March 2022 – roughly $20+ per week.

Source: Budget Paper No. 1, Statement 1 (page 15) and Statement 4 (Box 4.4), Australian Treasury, 12 May 2026.

Disclaimer: This information is general in nature and does not constitute financial, legal, or tax advice. Calculations are estimates only and may not reflect your exact circumstances. Eligibility criteria and dollar amounts may change without notice. Always verify with the relevant government authority, your mortgage broker, or a licensed financial adviser before making decisions.