$622.6 Million to Replenish Rental Property Stocks
The new National Rental Affordability Scheme will help create up to 50,000 new rental properties across Australia at a cost of $622.6 million over the first four years.
Rising rents are putting working families under increasing financial pressure. The Government will increase the supply of affordable rental housing and reduce rental costs for low-to-moderate income households.
Large-scale investment and innovative delivery of affordable housing will be encouraged by the scheme.
This measure delivers on the Rudd Government’s election commitment and aims to provide up to 50,000 incentives in the first four years. If demand from renters and investors remains strong, a further 50,000 homes will be available from 2012.
The scheme will offer institutional investors and other eligible bodies annual tax incentives or a grant every year for a period of up to 10 years. Incentives will be indexed to the rental component of CPI.
The two key elements are:
- An annual $6,000 Commonwealth tax credit or grant to construct new affordable rental properties and rent them at 80 per cent of prevailing market rents.
- States and territories will also contribute $2,000 for each credit or grant and may increase this contribution if they choose. State and Territory government assistance could be provided through a direct payment, or in-kind through reduced stamp duty, infrastructure charges and fast-tracked development approvals.
The Council of Australian Governments (COAG) agreed to the scheme in March this year.
To be eligible for a property delivered under the National Rental Affordability Scheme, tenants will need to be low or moderate income earners, earning below defined income limits.
The scheme will be introduced in two phases with a two-year establishment phase from July 2008 involving 11,000 homes and an expansion phase from 2010-2012 involving 39,000 homes.
The Government released a technical discussion paper at the end of April this year, seeking submissions and comments on the proposed operation of the features.
Incentives will be determined through a competitive process.
The first expressions of interest (EOI) tender, planned for July, will focus on projects that can deliver new homes in 2008-09. A second EOI, planned for late 2008, will select projects that can deliver dwellings from 2010.