28 October 2009
Sydney renters are missing out on affordable housing because a federal scheme favours areas with cheap land and low rents, according to the Urban Taskforce.
The Federal Governments scheme gives an $8,700 annual 10 year subsidy for each home landlords rent out to low and middle income earners. Rents have to be discounted to be 20 per cent below the market rate.
The government subsidy is fixed even when the landlords costs are very high, Mr Gadiel said.
The scheme works when land is cheap and market rents are low.
But the scheme makes less sense in Sydney where land is more expensive and market rents are high.
Mr Gadiel said the federal government has announced funding for 10,500 new rental homes, with another 90,000 to go.
NSW has been allocated 23 per cent of the new homes so far, but has 32 per cent of Australias population.
On the other hand, Tasmania, with its cheap rents and low property prices, has been given 9 per cent of the new homes, but has only 2 per cent of Australias population.
NSW should be getting extra homes because of its affordability problems, but the state has been short-changed by unfair rules.
Mr Gadiel said that Sydney rents are 63 per cent higher than Hobart, and house prices are 55 per cent higher.
The governments subsidy gives an investor who wants to provide affordable housing in Hobart one-and-a-half-times the return, when compared to an investor providing affordable housing in Sydney.
Mr Gadiel said the Federal Government was reviewing the scheme and he hoped these problems could be fixed.
The scheme needs to be changed so that the subsidy is greater where land is more expensive and rents are higher.
Sydney renters have had a tough time of it.
The scheme offers real hope we just need to see some changes so that it works in Australias most expensive city.
The Urban Taskforce is a property development industry group, representing Australias most prominent property developers and equity financiers.
For every $1 million in construction expenditure, 27 jobs are created throughout the broader economy. The construction activity made possible by property developers contributes $78 billion to the national economy each year and creates 849,000 direct jobs.
