Proposed CGT reforms could worsen national rental crisis

Yasmine Raso

Senior Journalist, Financial Newswire

9 February 2026

A not-for-profit (NFP) property investment peak body has warned the Federal Government against implementing any changes to capital gains tax (CGT) that would further risk investors selling off their properties and worsening the current rental crisis.

A survey of Property Investment Professionals of Australia (PIPA) members conducted last year found 35 per cent of investors would unload their investment in property if the CGT discount were lowered to 25 per cent after 12 months of ownership.

A further 19 per cent said they had already sold one or more investment properties in the previous year because they were concerned about the proposed reforms. Approximately 51 per cent said they had the same concerns that may lead them to sell in the next 12 to 24 months.

“These numbers are not hypothetical because investors are already leaving,” PIPA Chair, Cate Bakos, said

“Our 2025 survey found that 16.7 per cent of investors had sold at least one property in the year to August – up from 14.1 per cent the year before and 12.1 per cent in 2023.

“Of those who sold, 19 per cent already did so because they fear tax changes, and another 35 per cent are telling us they will walk if CGT reforms proceed, which is an extraordinary red flag for policymakers.”

Bakos also cited recent data from SQM Research, confirming the national vacancy rate is at a “critically low” level of 1.4 per cent, with Perth (0.7 per cent), Adelaide (0.9 per cent) and Hobart (0.4 per cent) all at “emergency levels”. Sydney and Melbourne also remain at 1.8 per cent and two per cent, respectively, well under long-term averages.

Bakos said the potential for any CGT reforms driving investors to withdraw from the property market would have “severe consequences for renters”, and urged the government to proceed with “meaningful” industry consultation and “evidence-based” policy design.

“When vacancy rates are this tight, removing investors from the market is economically reckless,” she said.

“Every investor who sells to an owner occupier removes a rental home from the system and tenants are the ones who suffer the consequences.

“Investors provide more than 90 per cent of Australia’s rental homes. If governments want a functioning rental market, they must stop treating investors as expendable because the rental system collapses without them.”