Consyl Publishing & Publicity Ltd

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Home > Our Publications > Australian Outlook> 2008> May

Cheaper rentals on way

THE Australian government has announced plans to formally establish a significantly expanded National Rental Affordability Scheme.
The scheme will fund tax incentives for investors to build up to 100,000 new affordable rental properties. The new target of 100,000 properties doubles the government's pre-election policy of 50,000 new affordable rental properties.
This doubling reflects the severity of the housing affordability problem in Australia.
"It is no exaggeration to say that in early 2008 housing affordability is the worst it has been in living memory," Prime Minister Kevin Rudd said.
"There are now 1.1 million low to middle income households spending more than 30 per cent of their income on housing.
"This is a stunning statistic. And it is a disturbing statistic."
Under the scheme, the Commonwealth will provide private investors with tax credits of AU$6,000 per year for 10 years for new properties that are rented at 20 per cent below the prevailing market level.
State and territory governments have agreed to provide AU$2,000 per home either through cash payments or in kind - such as via the provision of cut price land or concessions on stamp duty.
The aim is to cut rent on a new average three-bedroom unit to AU$280 per from the current AU$350 - a saving of AU$70.
Real Estate Institute of Australia (REIA) President Noel Dyett applauded the announcement, stating that the National Rental Affordability Scheme - in combination with other initiatives such a First Home Saver Accounts and the National Housing Affordability Fund - will assist in increasing supply, reducing development costs and providing support for both renters and first home buyers over the medium to long term. However, more immediate action is needed.
"The REIA calls on the Government to double the [First Home Owner Grant] to provide immediate support to first home buyers trying to get into the market," Mr Dyett said.
"With the First Home Owner Grant pegged at AU$7,000 for the past eight years despite house prices doubling in that period, it no longer provides the support required for first home buyers."