A Labor government would add 1000 new homes via build-to-rent

If it achieved government, Ms White said Labor would incentivise construction of build-to-rent properties in the state through a 50 per cent discount on land tax concession for developers, as well as an exemption to the foreign investor land tax surcharge.

Standing at the construction site of SJM Property Developments' build-to-rent project at Kingston on Monday, Ms White said the project was the only one of its type in Tasmania, and would deliver 51 new units into the Hobart private rental market.

"Build-to-rent is a concept that operates in mainland states ... and arguably this project is the only one happening in the state. This project provides opportunities for people to rent and provides jobs for people," she said.

The 51 new units would be a "massive contribution" towards solving the housing supply challenges in Tasmania, Ms White said.

Projects could be built state-wide to ease regional housing and rentals shortages, she said.

"A Labor government would incentivise more build-to-rent projects to put a roof over peoples' heads, to take some pressure off the private rental market, and provide jobs right across regional Tasmania," she said.

The opposition's build-to-rent scheme would be in addition to its plans to continue the government's target of construction of 10,000 new affordable social housing homes by 2032, according to a Labor spokesperson.

Labor will also provide developers with additional unspecified concessions to incentivise construction of affordable build-to-rent projects.

The government immediately slammed the build-to-rent proposal as "plagued by tax issues", claiming it would only incentivise construction of top-end apartments unaffordable to most Tasmanians.

"Several interstate housing experts are on record recently as saying that build-to-rent does not help ordinary Australians and that they are predominantly high-end luxury apartments," Housing Minister Guy Barnett said.

"One eminent professor said that claiming that build-to-rent is going to solve the affordable housing problem is just hype and everyone knows it."

According to an April Ernst & Young report commissioned by the Property Council of Australia, these tax and other issues have so far created a barrier to investment into the build-to-let sector so far.

The report read: "Despite the numerous pilot projects, a viable market that is liquid enough to meet demand is still not realistic in Australia. In order to create a viable market, capital investment is required ... [and] Australia needs to remove barriers to entry to allow the flow of foreign capital and the creation of a liquid and viable investment proposition".

The federal tax challenges listed by the EY report included managed trust taxes that "discriminate" against build-to-rent schemes, while build-to-rent schemes do not currently qualify for GST concessions.

Tasmanian executive director of the Property Council of Australia Rebecca Ellston said recent proposed changes at the federal level could remove some of these barriers.

"Based on that EY report, the Feds introduced some mechanisms to make build-to-rent more feasible for our members and investors nationally," she said.

These included a recent federal decision to lower the managed trust foreign withholding tax rate from 30 per cent to 15 per cent.

This will help attract to the sector more foreign investors - which currently make up the bulk of demand for buy-to-rent schemes in Australia, Ms Ellston said.

"The state-level changes to land tax proposed by Labor would add to the federal-level reforms, removing the tax disincentives that "have held back the sector's potential.

"The incentives announced today in Tasmanian Labor's policy will help attract institutional investment into new housing, giving the one-third of households who rent their home more choice, certainty and better amenity.

"This policy is a very welcome shot in the arm for new housing construction and will support jobs and investment. Build-to-rent has flourished overseas and other national jurisdictions."

Ms Ellston also dismissed government claims that the Labor policy would only incentivise construction of high-end apartments.

"Build-to-rent pipelines in other jurisdictions clearly demonstrate this is not the case - and provides diversity across the housing affordability spectrum," she said.

"The government's response today is surprising given their own budget release from 2021 stated they were exploring similar BTR initiatives."

Under the Labor scheme, build-to-rent projects will feature a minimum of 30 units for those projects in Launceston or Hobart, or 20 units in other areas of the state.

Schemes will run for a minimum of 30 years.

The cost of the policy would be nil, or even a net positive for the state budget, according to Labor.

Mr Barnett said that was unlikely.

"To claim that incentivising overseas investors and providing them with subsidies to build top-end apartments will somehow be budget positive is just another example that Labor cannot manage money or the economy,'' Mr Barnett said.

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