Renters could save money on household energy costs and secure stronger lease protections under small tweaks to some of Australia’s most controversial taxes, academics say.  

New RMIT University research has proposed limiting negative gearing and capital gains tax benefits to landlords who provide energy efficient homes and renter-friendly lease conditions.  

The proposed reforms would create national rental standards linked to these tax benefits that policy experts say would incentivise landlords to improve living conditions for tenants. 

It comes as renters – who make up one in three people living in Australia – have faced costly rent hikes and record-low availability of rental homes nationwide in recent years. 

The national weekly median rent has increased by 48% to $620 since the start of the pandemic, according to PropTrack.  

Professor Jago Dodson said tax breaks were a "good carrot" for property investors to make things better for their tenants. 

"There's an opportunity to use negative gearing and capital gains tax to make things better for renters, without relying on negotiation with the states," he said. 

Renters have been facing historically low levels of available rental homes right across the country. Picture: Adam Yip

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"It doesn't require dramatic reform, just some tweaks to our tax laws. 

"According to our proposal, investors would still get their tax benefits but only if they make positive changes for renters." 

The suggested improvements include expanding the seven-star energy rating, which currently requires new homes to offer better heating, cooling and insulation, to established rental homes. 

They could also include minimum lease periods and rent increase limits, among other standards.  

Dr Liam Davies from the RMIT Centre for Urban Research said the federal government could deliver these improvements quicker and easier by cutting out state and territory governments, which currently set rental rules.   

“Being an opt-in scheme, it will free up money that can be reinvested into areas such as public housing,” he said.  

PropTrack senior economist Paul Ryan said it was a good idea, but he had questions about delivering such a change.  

“Someone would have to assess these standards,” he said.  

Landlords would need to provide energy efficient heating and cooling to access tax benefits under the RMIT University proposal. Picture: Getty

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“There are state-based standards for rental properties already and it’s up to renters to complain when something doesn’t meet standards. 

“Whereas all three million rental properties in Australia would need an assessment to see whether they meet the requirements to be fit for purpose.” 

The tax reform proposal comes as negative gearing and capital gains tax discounts make waves in Canberra, with the Greens demanding tax changes from the federal government.  

The Greens want the federal government to phase out negative gearing and the capital gains tax discount for property investors, among other demands, in exchange for its support on two important housing schemes. 

However, the federal government doesn’t want to wind back negative gearing or the capital gains tax discount after it tried to run on those issues during previous elections that it lost.  

The national weekly median rent has increased by 48% to $620 since the start of the pandemic. Picture: Getty

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The federal government tried to force a vote on its Help to Buy shared equity scheme in the Senate on Tuesday, but the vote was postponed by the Coalition, Greens and other crossbenchers until November.  

The Help to Buy proposal is a shared equity scheme designed to help homebuyers get into the property market, where the government helps buyers purchase a property in exchange for a stake in their home.  

Federal housing minister Clare O’Neil said it was disappointing that the Liberals, Greens and One Nation blocked the housing bill that would help 40,000 low- and middle-income Australians buy their own home. 

Federal housing minister Clare O'Neil has called on the Greens and other Senate crossbenchers to pass the government's Help to Buy shared equity scheme. Picture: NewsWire/Martin Ollman

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“The Greens took a shared equity scheme to the 2022 election, that’s exactly what this is,” she said.  

“This bill is not the silver bullet to Australia’s housing crisis, because there isn’t a silver bullet.

"Help to Buy is an important piece of the puzzle that would change the lives of 40,000 Australians and their families.” 

But Australian Greens housing spokesperson Max Chandler-Mather said they were ready to negotiate with the government on capping rent increases, a mass investment in public housing and phasing out negative gearing and the capital gains discount. 

Federal Greens housing spokesperson Max Chandler-Mather said the government was running out of time to negotiate. Photo by Tracey Nearmy/Getty Images

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“Labor has two months to start negotiating on a plan that will actually help the millions of people being smashed by this devastating housing crisis, rather than trying to ram through a bill that will make the crisis worse,” he said.  

“The Greens don’t expect to get everything in negotiations, but right now Labor has offered literally nothing for the millions of people getting smashed by this housing crisis. 

“This government is running out of time to negotiate on housing - but the Greens have given them a two-month lifeline to get things back on track.” 

The Coalition opposes the Help to Buy scheme and wants to give homebuyers early access to a part of their superannuation to use to buy a home instead.