The Australian Government today formally established a significantly expanded National Rental Affordability Scheme.
The National Rental Affordability 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 of the number of affordable rental properties to be built under the scheme reflects the severity of the housing affordability problem in Australia.
This measure is one of a range of policies the Australian Government is implementing to assist Australian families under financial pressure.
It was also announced today that the Government will invest up to $30 million to streamline and move online, the approval of Development Applications.
100,000 new affordable rental properties
The National Rental Affordability Scheme is an innovative policy initiative to create a new ‘asset class' of affordable rental properties, because there is currently very little investment from institutional investors in residential property in Australia.
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.
States and Territories have agreed to provide $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 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.
It was announced in Brisbane today that if the previous target of 50,000 is reached by 2011-12, the program will expand if market demand by both renters and investors is strong to allow for the construction of 100,000 properties from 2012 onwards.
Industry forecasts suggest that the deficiency of housing stock will not be eliminated by 2011-12.
Streamlined planning approvals
The Government will invest up to $30 million to roll-out nationally electronic development assessments (eDAs) and online tracking services to streamline planning approvals and cut the cost of new homes.
Currently, delays in planning approvals create ‘holding costs' such as interest and land taxes, which the housing industry says push up the price of new homes by tens of thousands of dollars.
Starting with high growth areas and then moving to all councils by the end of next year, the program will fund IT infrastructure, particularly software, so local governments can streamline their planning processes.
The implementation of this program will be discussed at the meeting of the Local Government & Planning Ministers' Council in Brisbane on March 27 this year.
The program will reduce costs and development times, thereby reducing the costs ultimately passed on to homebuyers. The effect will be to reduce the cost of new developments and individual building projects, thereby improving the affordability of housing.
This initiative will be implemented as part of the Housing Affordability Fund, which will invest $500 million over the next five years to reduce infrastructure charges and streamline planning approvals processes - to make it easier for working families to buy new homes.