The Federal Budget is reshaping how property investment is incentivised, and in WA, proposed tenancy law changes will alter how rental properties are managed but while much of the conversation has focused on risk, it’s equally important to recognise this for what it is: an evolution of the market, not the end of it.
For well-informed landlords, there is still strong opportunity ahead.
What do the tax changes mean for landlords?
The Federal Budget changes are designed to reduce reliance on tax settings and redirect investment toward new housing supply.
For experienced investors, this is not unfamiliar territory. Property has always performed best when it is underpinned by strong population growth, limited housing supply and consistent rental demand. None of those fundamentals have changed, particularly in markets like WA.
Rental markets are driven by supply and demand. If investor participation weakens before new housing supply arrives, pressure on rents may remain. That is particularly relevant in markets like Perth, where rental vacancy has already been tight and population growth has continued to add pressure.
While the shift of restricting negative gearing to new builds was made to increase housing supply, we don’t believe there will be a vast uptick in new builds as the housing completion and construction industries are already starting from a low base. Those clever investors who look at ways of adding new supply to good locations, rather than competing for tenants in high house-and-land package areas will be rewarded.
Treasury forecast that rents would only rise by about $2. In areas further from the city with high stock levels, of often very similar homes, rental increases will be minimal. For new supply closer to the city within range of good amenities and good fundamentals, we may see rental prices rise in the coming years.
Similar to what happened when negative gearing was abolished years ago, it will most likely create a two-speed rental market where rents for good established areas and homes will go up, and those for run-of-the-mill packages will stagnate or rise minimally.
For landlords buying established property in the future, the after-tax return may be weaker. That means investors will need to focus much more heavily on the fundamentals: rental yield, location, land value, debt servicing, long-term demand and future growth potential.
The changes mean the more selective, disciplined, and well-researched investment decisions will be rewarded, rather than those driven purely by tax outcomes.
Stability in the rental relationship
At the same time, WA is proposing to remove no-grounds terminations, however this is still in the consultation phase.
Currently, landlords can end a periodic tenancy with 60 days’ notice without giving a reason, or end a fixed-term lease at expiry with 30 days’ notice. Under the proposed reforms, landlords would need a valid reason to terminate a tenancy.
Proposed valid grounds include situations such as:
- The owner or a close family member needing to move into the property
- The property being sold with vacant possession
- Major renovations, demolition or redevelopment
- Repeated serious breaches by the tenant
- Non-payment of rent
- The property being required for another purpose
From a tenant’s perspective, the reform is designed to improve security and reduce the fear of being asked to leave without explanation. That is understandable, particularly when rental availability is low.
From a landlord’s perspective, it may look like less flexibility in ending tenancies and a greater need for process and documentation.
In practice, many landlords already prioritise good tenants and long-term occupancy. These changes simply reinforce that approach offering reduced vacancy periods, lower reletting and marketing costs, greater consistency in rental income and potentially stronger tenant relationships.
The proposed reforms still allow landlords to terminate for specific reasons, but the key change is that discretion is reduced and compliance burden increases.
That does not make property investment impossible. But it does make professional management, strong documentation and careful tenant selection even more important.
The advantage shifts to informed investors
The investors who succeed over the long term are not those who rely on one tax setting or one market condition. They are the ones who understand the fundamentals and adapt early.
In this new environment, landlords should be asking:
- Does my property still stack up on its fundamentals?
- Is the yield sustainable after costs?
- Am I relying too heavily on tax benefits?
- Do I understand my rights and obligations under changing tenancy laws?
- Should I be considering new builds, commercial property or managed investment structures as part of my broader strategy?
For some investors, the answer may be to hold and optimise. For others, it may be to restructure. For new investors, it may mean being more selective about what and where they buy.
If anything, these changes create a clearer distinction between passive investors relying on favourable settings versus active investors making strategic decisions.
Going forward, successful landlords are likely to be those who understand their local market deeply, select assets with strong long-term demand, focus on sustainable yield and cash flow and work closely with experienced property managers.
Tax rules change. Regulations shift. Markets move. Property investment has always evolved but the core drivers haven’t changed – people still need housing, supply still takes time to deliver and quality assets in the right locations still perform.
For landlords who are prepared to adapt, stay informed and focus on fundamentals, this environment still offers opportunity.
In fact, as the market becomes more selective, the advantage increasingly sits with those who invest with clarity, discipline and a long-term view.
