Federal rental scheme is part of the solution … but more is required

24 July 2008

The Federal Governments new National Rental Affordability Scheme launched today is a great first step in easing the rental crisis, according to Aaron Gadiel, chief executive of the Urban Taskforce.

The Federal Governments scheme will fund tax incentives for investors to build up to 50,000 new affordable rental properties.


We particularly welcome new broader eligibility requirements for tenants, Mr Gadiel said.


The revised rules mean that up to 1.5 million households will be eligible to be tenants under the governments scheme.


Todays call for applications signals the start of an innovative scheme not seen in Australia before.


The shortage of new homes has forced rents up with an increase of 26 per cent across Sydney (Department of Housing Rent and Sales Reports March 2005 March 2008).


The supply of new homes in NSW is at the lowest levels ever according the Australian Bureau of Statistics revised March quarter building figures released earlier this month. Only 29,843 new homes were started in NSW in the 12 months to March 2008.


The construction of new homes in NSW has hit rock bottom, Mr Gadiel said.


Its the lowest figure ever recorded by the Australian Bureau of Statistics.


The Federal Government is right to elevate the current rental crisis to the national agenda.


This scheme will help developers provide housing choice to Sydney renters.


However, more work needs to be done on removing regulatory barriers that limit supply of new housing. Mr Gadiel said that while there had been some recent reforms in NSW, restrictive planning laws were contributing to the collapse in new housing.


Planning laws prevent the construction of new medium and high density housing in areas where it is most in demand, he said.


The laws dont allow enough medium and high density living near high frequency public transport.


Its also hard for developers to meet the demand for new homes in the outer suburbs of Sydney because of the high government charges.


Federal, State and local council levies on new homes in Western Sydney add up to $85,000 a residential lot. Its not enough to re-zone rural land for development, if infrastructure charges and the presence of small land holdings make development impossible.


Under the Federal Scheme, the Commonwealth will provide private investors with tax credits of $6,000 a year for ten years for new properties that are rented at 20 per cent below the prevailing market level. The initiative would mean, for example, that rent on a new average three bedroom unit would fall for $350 a week to $280 a week a $70 saving.


The Urban Taskforce is a property development industry group, representing Australias most prominent property developers and equity financiers.



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