Labor’s Super Tax Will Hit Renters Harder Than You Think!

Despite Labor’s claim that this policy will only affect about 80,000 people, new modelling shows more than 5.4 million Australians under 35 will be impacted by the time they retire. That includes everyday workers, tradespeople, and professionals who may one day cross that arbitrary threshold, which isn’t even being indexed to inflation.

But what does this have to do with renters? More than you think.

Why Superannuation Impacts the Rental Market

Many investment properties in Australia, especially those held long term are owned by self-managed superannuation funds (SMSFs). These funds often provide affordable, long-term rental housing and are considered more stable landlords compared to short-term investors.

Under Labor’s policy, a new 15% tax will be imposed on unrealised gains meaning property owners will be taxed on estimated paper profits, not actual sales. This creates major problems for property owners within SMSFs who hold residential property as part of their retirement planning.

Landlords Will Be Forced to Sell

To avoid breaching the $3 million threshold (which doesn’t adjust for inflation), many SMSF trustees may offload rental properties prematurely. Why? Because they’ll be taxed on growth that hasn’t yet been realised, potentially in the hundreds of thousands each year simply for holding the property.

This sell-off of rental stock will:

• Shrink the pool of available long-term rental properties

• Lead to less choice and more competition for renters

• Drive up rents, particularly in capital cities and regional centres

In short, renters will be the collateral damage of a tax that was never supposed to affect them.

Reduced Incentive to Invest in Housing

By discouraging long-term property investment in superannuation, this policy may make residential property a less attractive asset class for investors overall. With less investment comes lower supply, and lower supply in a high-demand rental market inevitably means higher rents.

Property developers, who rely on capital from investors and SMSFs to fund build-to-rent projects and affordable housing developments, could find funding harder to secure. That means fewer new rental homes being built, right when Australia needs them most.

Young Renters Pay Twice

This policy is doubly unfair to young Australians. Not only will many of them face rent hikes as a result of reduced supply, they’re also the very people who will be hit by the tax later in life even if they’re just starting their careers now.

Wilson Asset Management found that:

• A 27-year-old on a $90,000 salary with no super today will surpass the cap by retirement.

• A 34-year-old with $180,000 in super now will also cross it by 2058.

• Even a 19-year-old earning just $54,000 would end up with $3.49 million by 2071, triggering the tax.

So young renters will feel the pain now through rising rents—and again in retirement when their savings are penalised.

The Inflation Trap

Because the $3 million cap isn’t being indexed to inflation, its real value will decrease over time. What seems like a “high net worth” target today will eventually capture middle-income Australians who simply contribute consistently to their super over their working lives.

In housing terms, what happens when property prices rise (as they tend to over decades), and those values push a super balance above the threshold—even if the person never sells? That’s right: they’ll be taxed on growth they haven’t seen a dollar of.

This will make property a riskier investment, reduce the rental housing supply, and tilt the market even more against renters.

A Policy That Hurts the People It Pretends to Protect

The Albanese Government has framed this policy as a way to “make the system fairer.” But what’s fair about driving up rents and discouraging investment in rental housing?

Renters especially young Australians already locked out of home ownership are being left behind. They need more housing, more options, and more investor confidence in the rental market.

This policy does the opposite.

Final Word

Labor’s super tax is a classic example of unintended consequences. On paper, it targets the rich. In practice, it threatens to crush rental supply, push rents higher, and punish the very Australians it claims to protect both now and in the decades ahead.

If you rent, this policy isn’t just about retirement tax. It’s about your home, your future, and your chance to one day stop renting. It deserves urgent reconsideration before Australia’s housing crisis gets even worse.