Housing for students at big city campuses is a perennial problem for internationals and locals who live away from home, which the government could make worse through new legislation.

The bill is designed to tighten tax collections from international property investors and has the certainly-not-intended-to appeal-to-populists title, “Treasury Laws Amendment (Making Sure Foreign Investors Pay Their Fair Share of Tax in Australia and Other Measures).”

The bill doubles the tax withholding rate for Management Investment Trusts to 30 per cent, and this applies to foreign superannuation funds. The problem is that this will capture investors in purpose-built student accommodation, creating a risk that the big international industry specialists will reduce construction commitments. These will not be picked up by local investors such as superannuation funds, which are said to prefer assets in industries they are familiar with.

The industry proposes an amendment for purpose-built student accommodation to be treated as “commercial residential premise” and thus liable to the existing 15 per cent withholding rate. The Purpose-Built Student Accommodation Industry submission to a Senate inquiry says there are plans in place to increase beds by a third, to 63 000 by 2021, which should not be put at risk.

“It is a very important market sector to promote and to incentivise to attract additional capital. Otherwise as supply is constrained, rental prices will go up and there will be a natural limit placed on the number of international students that can be accommodated, thus impacting the offering to those students, PBSA warns.”

There is also a domestic political aspect to the issue – the industry estimates that some 30 per cent of beds in student accommodation are used by Australian residents.