Federal Treasurer’s affordable housing initiatives a positive move: Chris Johnson
GUEST OBSERVER
The Federal Treasurer, Scott Morrison’s, draft legislation to assist with housing affordability for Australians is a positive move.
The key initiative is to enable investors to obtain a 60% capital gains discount for investment in affordable rental housing.
This will encourage Managed Investment Trusts (MITs) to invest in affordable housing as a quality investment product with a positive rate of return.
The Treasurer has restricted MITs to only acquiring affordable housing and therefore eliminating investment in general residential property. The Urban Taskforce believes this is a good policy to encourage additional investment in affordable housing.
Affordable housing and housing affordability are complex issues. There are many more initiatives required by various levels of government to make a serious impact on housing affordability. Importantly these initiatives must have to provide sufficient incentives to the private sector development industry to generate enough take-up to make a real impact on the provision of more affordable housing.
The Urban Taskforce has proposed a modification to the NSW State Environmental Planning Policy for Affordable Rental Housing 2009 that could lead to a large supply of affordable housing.
The current SEPP does not have sufficient incentive for private developers to take up the provision of affordable homes. What is needed is a 20% floor space uplift to provide 20% of a housing project as affordable homes over a 10 year period.
We estimate that this could add 40,000 affordable rental dwellings over a 10 year period.
Initiatives that provide incentives to invest in, or develop, affordable housing will ensure a long-term, sustainable supply of affordable housing. Mechanisms that deter investment – such as affordable housing levies, taxes, or mandatory targets, only increase the cost of housing production and deter supply.
The Urban Taskforce is willing to work proactively with all levels of government on mechanisms to encourage supply and investment.
CHRIS JOHNSON is chief executive officer of property development industry group Urban Taskforce and can be contacted here.
