Government proposals to overhaul tax settings for property investors at a time of global economic turmoil could drive a 30 per cent spike in rents over the next two years, a major real estate boss has warned.

It comes as Treasurer Jim Chalmers has been reported to be exploring tweaks to capital gains tax discounts and negative gearing in the upcoming May federal budget.

The changes would likely remove some of the generous support offered to property investors, most notably a discount on the amount of capital gains tax charged on those selling rental homes.

Nathan Birch, the head of property management firm Blink, which manages close to 7,000 rentals across the country, said the timing of such tax changes could be catastrophic for tenants.

He explained that removing the support would result in a swift reduction in rental supply as marginal investors cashed out of the market ahead of any changes.

This would be problematic for the rental market given still elevated levels of migration, which would mean more tenants competing over fewer properties. The result would be increases in rents, Mr Birch said.

“These changes will scare a lot of investors into selling,” he said, noting that many landlords were already considering selling up due to the tense economic environment.

“It’s poor timing … it would be a massive shock to the market and the average tenant would struggle,” he said.

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