{"id":669096,"date":"2026-05-13T22:17:07","date_gmt":"2026-05-13T22:17:07","guid":{"rendered":"https:\/\/www.newsbeep.com\/au\/669096\/"},"modified":"2026-05-13T22:17:07","modified_gmt":"2026-05-13T22:17:07","slug":"has-labors-tax-reform-killed-rent-vesting-for-young-australians-seeking-a-foothold-in-the-housing-market-australian-budget-2026","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/au\/669096\/","title":{"rendered":"Has Labor\u2019s tax reform killed \u2018rent-vesting\u2019 for young Australians seeking a foothold in the housing market? | Australian budget 2026"},"content":{"rendered":"

Rent-vesting \u2013 a popular strategy used by young Australians to save for their first home \u2013 could be killed off by Labor\u2019s tax changes on investment properties, experts warn.<\/p>\n

Renters have used the strategy to keep living in their preferred area while buying a cheaper property elsewhere, hoping it will rise in price so they can sell and put the profits towards their first home.<\/p>\n

It has boomed in popularity as young Australians struggle to break into an unaffordable housing market.<\/p>\n

But higher capital gains tax and the tight restrictions on negative gearing<\/a> announced in Tuesday\u2019s budget will make the method less attractive, according to Domain\u2019s chief economist, Dr Nicola Powell.<\/p>\n

\u201cIt\u2019s going to hurt \u2026 [and] their journey to actually buying a home and having it as a roof over their head might be delayed,\u201d Powell said.<\/p>\n

\u201cRent-vesting is all about building up equity and releasing that gain to then eventually put into a home that you want to live in yourself.\u201d<\/p>\n

Sign up for the Breaking News Australia email<\/a><\/p>\n

\u201cRent-vesters\u201d will still be able to negatively gear new builds or continue if they were negatively gearing a property before Tuesday\u2019s changes.<\/p>\n

The typical Australian home now costs eight times more than the typical income after years of soaring prices, according to property data firm Cotality. It would take 11 years to save a 20% deposit.<\/p>\n

Tuesday\u2019s tax reforms, aimed at cutting investors\u2019 competition for housing, are expected to help an extra 75,000 renters buy their first home in the coming decade and leave house prices 2% lower than they otherwise would have been.<\/p>\n

Rent-vestors had sought to use spiralling house prices and the now-scrapped tax breaks as a means to bridge the affordability gap.<\/p>\n

Since July 2019, nearly 53,000 Australians have entered the housing market by buying an investment property, according to the Australian Bureau of Statistics.<\/p>\n

Graph showing the number of first-time buyers taking out investor home loans, by state, quarterly<\/a><\/p>\n

A third of them have been in New South Wales, Australia\u2019s least affordable housing market.<\/p>\n

Ry Atkinson, a Sydney renter, has been among those investing their home deposit savings in a cheaper property further away.<\/p>\n

The 31-year-old\u2019s parents bought their home in Sydney\u2019s northern beaches while working in disability care. The only way Atkinson could afford a decent place nearby was to become a rent-vestor, he said.<\/p>\n

Ry Atkinson and his wife, Sophie, became \u2018rent-vestors\u2019 after struggling to get into Sydney\u2019s housing market<\/p>\n

\u201cIt\u2019s all luxury apartments now that no one can afford,\u201d Atkinson said. \u201cWe\u2019re priced out of the market here, so we had to look to some other options.\u201d<\/p>\n

Atkinson and his wife, Sophie, bought a house 1,200km away, in Queensland\u2019s Hervey Bay, in January, hoping it would rise in price in the coming years so they could sell it and buy in Sydney.<\/p>\n

Those capital profits will be more tightly taxed after Tuesday\u2019s budget but Atkinson still supports the reform.<\/p>\n

\u201cWe know how difficult it is and something does need to change,\u201d he said.<\/p>\n

Like most young investors, the couple spends more money repaying the loan than they earn in rent. Negative gearing allows landlords to deduct losses on tax, propping up investments with low yield.<\/p>\n

The couple will retain their access to negative gearing but people buying investment properties after Tuesday\u2019s budget will lose access to negative gearing from July 2027 onwards.<\/p>\n

Brendan Dixon, the managing director of Pure Finance, said that meant banks would cut the amount they would lend to new buyers, making rent-vesting more difficult.<\/p>\n

\u201cInvestors won\u2019t be able to borrow as much money, which will reduce their rent-vesting budget,\u201d Dixon said.<\/p>\n

The shadow treasurer, Tim Wilson, has argued the reforms harm young Australians by making the strategy more costly.<\/p>\n

\u201cIf you seek to invest your home deposit to buy your first home, the government is going to increase the taxes on that, so they\u2019re actually hamstringing young Australians who want to get ahead,\u201d Wilson told the ABC on Tuesday.<\/p>\n

The strategy is used by a small share of housing market entrants, with 7,000 new rent-vestors in the year to March, compared with 120,000 new first home buyers in the year.<\/p>\n

Samuel Power, a finance broker with Loan Market, said Australia\u2019s persistent lack of housing supply and high prices meant young people would still be left looking for opportunities to rent-vest.<\/p>\n

\u201cOlder Australians have built wealth through established property over decades, supported by the existing tax system,\u201d Power said.<\/p>\n

\u201cRestricting negative gearing to new builds increasingly locks, or at least limits, younger buyers out of the same pathway.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"Rent-vesting \u2013 a popular strategy used by young Australians to save for their first home \u2013 could be…\n","protected":false},"author":2,"featured_media":669097,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[64,63,44],"class_list":["post-669096","post","type-post","status-publish","format-standard","has-post-thumbnail","category-australia","tag-au","tag-australia","tag-news"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/669096","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/comments?post=669096"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/669096\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media\/669097"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media?parent=669096"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/categories?post=669096"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/tags?post=669096"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}