Federal Budget 2025-2026: social and affordable housing snapshot

• The most important new budget measure is that Housing Australia’s cap on liabilities has increased from $10 billion to $26 billion. The increase in the liability cap allows Housing Australia to enter into commitments (whether HAFF Funding or Housing Australia loans) up to the cap.
• Government has re-affirmed its commitment to achieve the national target of 1.2 million new homes over five years.
• While the national target has not increased, the increase in the liability cap points in the right direction for the community housing sector in terms of future funding under the Housing Australia Future Fund.
• $9.3 billion has been allocated to states and territories for homelessness support, crisis housing, and social housing maintenance. This includes the doubling of funding for homelessness services to around $400 million a year.
• An additional $1 billion has been announced through the National Housing Infrastructure Facility (NHIF) for crisis and transitional accommodation, prioritising women and children escaping family and domestic violence (FDV) and at-risk youth.
• The budget papers refer to Commonwealth Rent Assistance rates being increased by 45 per cent. This is a continued measure and not new. However, importantly, there has been no change to this measure.
• An additional $12.3 million in 2029-30, to improve housing outcomes for First Nations people.
• Additional $8.9 million over three years from 2025-26 to improve and expand support services for vulnerable Australians, including those experiencing housing insecurity and family, domestic, and sexual violence. Funding includes:
  • $6.2 million over three years from 2025-26 to housing and homelessness peak bodies for research, sector development, and policy advice.
  • $2.5 million in 2025-26 to provide emergency accommodation for women and children experiencing domestic violence under the Safe Places Emergency Accommodation Program.
  • $0.2 million in 2025-26 to extend funding for complex case management and support services for victim-survivors of domestic and sexual violence.

• The modular construction industry is a big winner in this Budget in terms of new funding.
• Government has announced a $54 million investment to support the prefabricated and modular housing construction industry by:
  • $49.3 million to support state and territory programs that grow the prefab and modular housing sector; and
  • $4.7 million to develop a national certification process to streamline approvals and maintain quality standards.

• First homebuyers have also had some wins under the Budget.
• An additional $800 million investment has been made to property price and income caps, with the goal of seeing around 40,000 Australian households into home ownership over four years.
• There has been an increase to the annual income threshold for access to the scheme from $90,000 to $100,000 for individuals, and from $120,000 to $160,000 for couples and single parents. This makes the scheme more accessible to first home buyers.
• Property price caps have also been adjusted to better reflect market conditions, including:
  • Sydney and regional NSW: $1.3 million
  • Melbourne: $950,000
  • Brisbane: $1 million
  • Adelaide: $900,000
  • Perth: $850,000
  • Hobart: $700,000
  • ACT: $1 million
  • Northern Territory: $600,000

The Government previously announced a variety of tax measures to encourage Build-to-Rent developments. The federal income tax law provides accelerated tax deductions for construction costs and reduces the managed investment trust (MIT) withholding tax rate in respect of eligible BTR investments. This is relevant to the community housing provider sector, because of management opportunities for affordable housing within Build-to-Rent developments.

The Budget papers refer to the requirement to supply 10 per cent affordable tenancies and offer five-year leases to tenants. This is not a new measure and had been previously announced.

The Treasurer had previously flagged there was likely to be additional standards for Build to Rent introduced, including:

• requiring community housing organisations to be involved in managing affordable dwellings to get the tax incentives;
• ensuring a proportion of affordable dwellings are reserved for lower income earners based on their household income; and  
• preventing no fault evictions.

We did not see these additional changes come through in the Budget papers, although they may come through in the future.