This is the first of two final reports that aims to address the following research question: What is the impact on supply and affordability from implementation of the Henry Review recommendations in relation to negative gearing, land tax and stamp duty?

There are two main recommendations from the Henry Review on tax reform, which have a direct bearing on supply and affordability in the private rental housing system.

1. Stamp duties on conveyance are to be abolished and replaced by a broad based land tax, which is levied according to a progressive rate structure applied to the value of land per square metre.
2. A savings income discount (SID) of 40 per cent will apply to the net rental income (including capital gains) from most non-business assets other than shares.

This report considers the impacts of the SID on housing supply and affordability in the private rental market.