New national scheme is a great first step

03 March 2008

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

The Federal Government scheme will fund tax incentives for investors to build up to 100,000 new affordable rental properties.


We particularly welcome the commitment to an extra 50,000 properties, above the Labor Partys pre-election policy of 50,000 new affordable rental properties, Mr Gadiel said.


According to the NSW Department of Housings most recent Rent and Sales Report No. 81, median rents have dramatically risen by 15 per cent in the outer ring suburbs.


Over the year, median rents for two bedroom units shot up by 14 per cent in the middle ring suburbs.


Rents for one bedroom units have shot up by 22 per cent in Canterbury and 17 per cent in Mosman, Mr Gadiel said.


Two bedroom units in Auburn are now out of the reach of many long-term locals with a 26 per cent increase and Marrickvilles had a 25 per cent increase.


The National Rental Affordability Scheme is the kind of innovative scheme that the property development industry has been seeking for many years, Mr Gadiel said.


Under the 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.


Were also backing Federal plans to invest up to $30 million to streamline and move online the approval of development applications.


The Federal and NSW Government should consider removing regulatory barriers that are impacting on the supply of new housing.


Design rules introduced in 2002 which are unique to NSW can add up to $48,000 in construction costs for each apartment, Mr Gadiel said.


The supply of new apartments in key outer and middle ring suburbs of Sydney has been hit hard by these requirements. Apartment construction across NSW has fallen by 40 per cent since these rules were introduced.


More flexibility in design rules would give home buyers more choice.


More apartments on the market would also put downward pressure on the current escalating rents.


The NSW development industrys annual turnover is $35 billion and employs 180,000 people, accounting for six percent of the States total employment. It is the fifth largest contributor to the State economy.

Media Enquires:
Aaron Gadiel,
Chief Executive Officer,
Phone: 0417 477 904 or (02) 9238 3955

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