Home ownership may be limited to the top tax bracket: Compass Housing Services
Compass Housing Services, a community-housing group currently managing 3,500 properties housing 5,700 tenants in NSW, as well as another 850 properties in Queensland, stated in its submission to the House of Representatives Standing Committee on Economics Inquiry into Home Ownership in Australia, that home ownership will soon only be available for those in the top tax bracket.
"In the case of Sydney, where already stretched prices have increased by 33% in the last three years alone and the median house prices is fast approaching the million dollar mark, it would be fair to say we are already there.
"The percentage of Australians aged 25-34 who own their homes (either outright or with a mortgage) has dropped by 17% over the last 25 years. The 35-44 year age bracket has also seen a big fall with just 62% now counting themselves as home owners compared with more than 75% in the early 1980s."
Another change has been the amount of debt households are taking on in order to buy a property.
"Between 1987 and 2013, Australia’s household debt per person has increased from under $20,000 per person to almost $80,000 per person with more than three quarters of that debt tied up in the domestic property market, an increase of 50% since 1990.
"A lack of affordability for first home buyers can place additional strain on the rental market which in turn can increase demand on social housing or homelessness services.
"To plug the affordability gap between social housing and the private rental market, most states offer alternative, less intensive forms of housing assistance. In most states, low-income households struggling to pull together the bond for a rental property can access interest free loans from the state government.
"It is estimated around 20% of all households in Queensland’s rental market rely one of these loans in order to secure their tenancy."
Tax Policy Impact
"The Australian Council of Social Service has reported more than half of geared investors are in the top 10% of the income scale and 30% earn more than half a million dollars a year.
"Similarly, the Australia Institute has reported that 55% of the benefits from capital gains tax (CGT) discounts and negative gearing flow to the top 10% of income earners while households in the lower half of the income range receive only about 20 per cent of negative gearing benefits and less than 8% of capital gains benefits.
"If this data is correct, it would seem that while advantageous to certain sections of the community, the current tax treatments have played a major role in concentrating home ownership in the hands of fewer Australians."
Compass Housing Services believes that the lack of affordability is partially a consequence of "well- intentioned tax concessions" and the current tax policies favour investors over first home buyers.
"Data from the Australian Bureau of Statistics indicates less than 10 per cent of home loans to investors are used to construct new housing with the overwhelming majority simply used to purchase established dwellings.
"Compass urges that a due and proper independent assessment of the current tax system that enables access to benefits to more younger Australians, while boosting supply of new dwellings should be conducted and the government respond accordingly.
"Compass recommends the reintroduction of a revamped National Rental Affordability Scheme with more stringent controls on eligibility to ensure the benefits flow to those for whom they’re intended.
"Compass recommends the committee consider legislative options to encourage greater superannuation industry investment in new residential property or affordable housing schemes.
Compass Housing Services named three key benefits of greater outsourcing of social housing provision.
Additional human services and tenant development opportunities
"Would allow community housing providers like Compass to help the movement of some social housing tenants into the private rental sector and home ownership, thereby releasing old social housing stock for redevelopment or sale with monies raised reinvested in the provision of greater numbers of new and more appropriate dwellings."
Stock transfer
"Secondly, following UK experience, we know that significant stock transfer creates the opportunity for organisations to become major agents in housing supply. As capacity and confidence develops, a wider range of human and support services emerge to support tenants.
"Additionally, favourable borrowing conditions for social housing, not-for-profit organisations encourage entry into direct building of social housing as well as the supply of local infrastructure including schools and medical facilities."
Innovative funding arrangements for community-housing providers
"Finally, community-housing providers are able to enter innovative funding arrangements with private sector partners, often through the creation of special purpose vehicles (SPVs).
"SPVs can bring important capital sources to the social housing market and involve major home building agents within a framework in which the community provider manages tenancies and provides human services and tenant support systems."
