Media Statement - 13th August 2007
A Rudd Labor Government will establish a National Rental
Affordability Scheme that will help create 50,000 new affordable rental
properties across Australia.
Federal Labor’s National Rental Affordability Scheme, costing $603
million over its first five years, will use tax incentives and
financial support to provide rental housing to low and middle income
families at 20 per cent below market rents.
Within five years, Federal Labor’s Scheme will reduce the amount of
rent 50,000 Australian families pay by 20 per cent – helping them meet
rising cost of living pressures and save to buy their own home.
Federal Labor’s National Rental Affordability Scheme will offer
institutional investors annual tax incentives and financial support
every year for a period of ten years. The two key elements of Labor’s
National Rental Affordability Scheme are:
1. An annual $6000 Commonwealth tax incentive to investors who construct new affordable rental accommodation.
2. At least $2000 per year in direct or in kind financial support from State Governments for investors who access the tax incentives.
The Rental Tax Incentive
Under a Rudd Labor Government, a Rental Tax Incentive will be available
to institutional investors – like superannuation funds - who build new
homes or units and rent them to low and middle income households at 20
per cent below the market rate of equivalent properties in the area.
The Rental Tax Incentive will leverage a significant level of private
investment in low cost rental accommodation – a much needed lifeline
for young families saving a deposit for their first home.
Investors will receive a $6000 Commonwealth Rental Tax Incentive per
dwelling (house or apartment) per year for up to 10 years, provided
they rent it to households who meet an income test, and charge rent at
20 per cent below the market rate for the area.
The Rental Tax Incentive will be allocated through a competitive process.
Financial Support
Forming part of the new National Affordable Housing Agreement, recently
announced by Labor, the Rental Tax Incentive will only be allocated
through States that agree to provide direct or in-kind financial
support. This financial support will be worth at least $2000 per
dwelling per year for ten years.
This support could be provided in a variety of ways. For instance,
State and Territory Government assistance could be provided through:
- reduced stamp duty or infrastructure charges;
- fast-tracked development approvals (thus lowering holding costs); or
- tenancy management services for the new properties.
National Rental Affordability Scheme
Labor’s National Rental Affordability Scheme will bring the public,
private and community sectors together to tackle Australia’s affordable
housing problems:
- a Rudd Labor Government will provide tax incentives to investors prepared to invest in this asset class;
- institutional investors will provide the finance for construction of affordable rental accommodation projects; and
- State and Territory Governments will enhance the appeal of the tax incentives to investors, by managing tenancy services on their behalf or through other forms of commercially valuable assistance.
Federal Labor’s plan will help ease the rental stress being experienced across the country by delivering estimated rental savings of:
- $50 per week for a tenant paying market rent of $250 per week;
- $70 per week for a tenant paying market rent of $350 per week; and
- $90 per week for a tenant paying market rent of $450 per week.
Tenants in the newly constructed rental housing will continue to receive Commonwealth Rental Assistance - with Labor’s plan reducing their rent even further. To be eligible for a property delivered under Federal Labor’s National Rental Affordability Scheme, families must be receiving at least the base rate of Family Tax Benefit A and the maximum rate of Commonwealth Rent Assistance.
Aged pensioners and other income support recipients receiving the
maximum amount of Commonwealth Rent Assistance will also be eligible
for rental housing under this Scheme. To qualify, all tenants must also
have been paying at least 30 per cent of gross household income on rent
for at least one year.
Federal Labor’s National Rental Affordability Scheme will be
administered by the Commonwealth. Around 150,000 new dwellings are
constructed in Australia every year - a proportion of which are built
for rental purposes. Labor’s plan won’t solve all rental affordability
problems, but it will go some way to easing the financial pressures
facing some families who rent.
Federal Labor will continue to consult the housing and finance sectors
in the weeks and months ahead to establish implementation details.
Federal Labor’s National Rental Affordability Scheme builds on similar
successful schemes in other countries, including the United States, and
was one of the options canvassed recently at the National Housing
Affordability Summit.