Brisbane unaffordable for student accommodation as shortage bites

Students Isi Larraguibel 26, and Rowen Fernandopulle 23 at Scape student accommodation in South Bank, Brisbane. Picture: Lyndon Mechielsen

Student housing providers have labelled the increased tax charges for Brisbane projects as “diabolic idiocy” in the midst of the housing crisis, with thousands of beds now at risk.

Queensland state government increases to foreign land tax and changes to Brisbane City Council rate structures are expected to add 24 per cent to operating costs, or about $180 a year, to each of the capital’s 16,000 beds.

Industry experts say the state is now the second-worst in Australia to invest in student housing, only after Victoria, due to the percentage of operational expenditure that goes to state and council taxes.

Chief executive of leading provider Scape, Anouk Darling, said the changes were beyond a discussion of fair and unfair.

“It’s a case of diabolic idiocy,” she said. “We have major headlines screaming, ‘housing crisis’ and purpose-built student accommodation is a legitimate asset class removing pressure from the residential for rent market, responding to the federal government’s ambitions of increasing supply. Yet Queensland Government have thrown one roadblock after another. They are categorically disincentivising development.”

The federal government announced in April that universities would face caps on their international student numbers unless they could demonstrate a new supply of purpose-built student accommodation. Australia’s biggest universities provide just one in five foreign students with guaranteed housing, despite taking in $9bn a year in tuition fees. A recent report found they took up 4 per cent of residential rentals in local government areas close to universities.

Student Accommodation Council president Anouk Darling. Picture: John Feder

Last week, the Queensland Government increased the foreign investors’ tax from 2 per cent to 3 per cent to help cover the cost of first-home buyer transfer duty concessions. It also raised the additional stamp duty surcharge for foreign buyers to 8 per cent.

Brisbane City Council unveiled a new rates category for student accommodation owners on Wednesday, designed to better align the asset class with other types of residential housing operators. All Australian student accommodation providers rely on international backing to deliver projects.

Property Council executive director of the Student Accommodation Council Torie Brown said governments were acting in opposition to moves by the federal government to deliver more housing supply.

“At a time when this asset class has been recognised by the federal government as critical to the international education sector, it is frustrating to see unilateral decisions made that harm the viability and pipeline of this asset class in Queensland.”

“More broadly, this shows the challenge facing the federal government in stimulating supply – most of the significant blockages lie with the states and local government.”

“One PBSA owner will see an increase in their land tax surcharge and council rates bill of a combined 34 per cent. It all adds up,” she said.

Brisbane City Council’s civic cabinet chair for finance councillor Fiona Cunningham said businesses should pay their fair share like every other ratepayer. She said owners had been paying as little as $88 per dwelling a year in rates compared to $1171 for equivalent apartment owners.

“Council rates are a significantly lower impost than the land tax and foreign ownership surcharges, and other taxes imposed by state and federal governments,” Ms Cunningham said.

“Student accommodation providers should be looking to George St and Canberra to lower their tax burden, not a local council seeking the bare minimum contribution to public assets and services.”