By Greg Smith, Partner and Matthew Barry, Partner
The so-called “housing crisis” in Australia has been part of the national debate for some time now. Most recently, the proposed scrapping of the CGT discount in the federal Budget 2026-27 has really set it on fire.
Some people are looking to the national Government for a silver bullet. The reality is that, while national policy settings can and should be part of the solution, housing is not like cyber space: it exists (or not) in a place; the place falls within the boundaries of a State or Territory; and much of the law relating to housing – planning, construction, ownership rights, tenancy rights / rights of occupation – is specific to each State and Territory (we will come back to this).
For much of our history since the Commonwealth was formed, this perhaps wasn’t an issue, at least in archetype: the “Australian dream” of a house in the suburbs would have working adults owning the housing they lived in. This merely required such adults to purchase the title (perhaps with the help of a bank). Now, a focus on the archetype seems myopic: Australians are living longer than ever before; tertiary education has become pervasive since World War II; poverty has become a focus since the late 1960s; people are getting married later, if at all; divorce rates are getting higher for older Australians; the cost of housing has sky-rocketed and there are more “non-traditional” households – the list goes on. To have all Australian residents living in their own homes poses challenges, and not only because of supply.[1]
The Living Sectors try to meet these challenges. Very briefly:
A unifying difference from the owner-occupied home, though, is that all of these solutions contemplate ownership of the housing and/or its associated infrastructure, such as common areas / facilities, at least in part and sometimes wholly, by someone other than the people living there. More recently this is being supported by institutional capital. Generally speaking, institutional capital does not like complexity. What complexity? This is where we come back to the law relating to housing being specific to each State and Territory.
Although there are commonalities, laws governing each Living Sector vary across the States and Territories. For brevity, we are going to home in[2] on the Later Living Sectors – the same analysis can be applied to any Living Sector, though.[3] Differences can be broken down as to:
| Difference | Example | |
| 1. | form – whether there is a standalone Act, allowing an operator to more easily comprehend the boundary of what is regulated, or not | Regarding retirement villages, every East Coast State has a “Retirement Villages Act”; regarding land lease communities, Queensland and NSW have a dedicated Act whereas Victoria does not. |
| 2. | degree – the number of points the law seeks to regulate and the extent to which it seeks to regulate them | It is fair to say that in the land lease (sub)sector Queensland is the most regulated State. Its regime includes, for example, requirements for maintenance and capital replacement plans and buyback schemes that do not exist in other States or Territories. |
| 3. | substance – what the law requires on a given point, with different States solving the same issue in different ways | One of the hottest topics in land lease has been rent increases, particularly the ability of a homeowner to understand how they are calculated. That single issue has been solved in very different ways, from allowing only a single method to be used in NSW to a cap on increases in Queensland (while permitting more than one method, with a cumulative impact). |
| 4. | nuance – different formulations, even where the substance of a law is the same, which for a boundary situation (at the edge of the issue the law seeks to address) might lead to different results | For example, all Retirement Villages Acts include a concept of recurrent charges, which are essentially service fees. In substance, the Retirement Villages Acts all attempt to prevent recovery of inappropriate costs by operators (take, for example, a gift made by an operator). In detail, the definition in the Victorian Act sets out two limbs of what will qualify; the NSW Act works the opposite way, providing it is any amount under the resident’s contract, unless prohibited, and then by regulation has a list of more than 10 prohibited matters. The boundary of what can and cannot be charged is a common point of contention with residents. |
An institution looking to invest in the Living Sectors in “Australia” needs to grapple with all of these jurisdictional differences and what they mean for returns. That is no easy task.
What might a solution look like? That would require either convergence in the form of the States and Territories ceding power to the Commonwealth, like what happened with the Corporations Act 2001 (Cth), or at least implementing a model law, like the model Work Health and Safety Act, inevitably with some differences across States and Territories albeit more limited. The States and Territories have (aged care aside) maintained control over property laws since federation, and neither ceding power nor model laws are part of the debate today, so a national approach does not seem realistic in the foreseeable future.
For now, anyone scaling in the Living Sectors across Australia needs a team who can help them navigate the differences.
We have a team that has considerable experience in all matters relating to the Living Sectors. If you would like more information about the services we provide, please contact us.
[1] As an example, provision of aged care would need to be resourced differently if every elderly Australian were to live in their own home.
[2] Pardon the pun.
[3] Obviously, laws also vary between Living Sectors, but that is not the point we are exploring.
If you would like further information or have any queries regarding other matters, please do not hesitate to contact:
