An agreement between the state and territory governments could see rental and community housing become more affordable and readily available, but changes to negative gearing remain off the table.
Treasurer Scott Morrison has signed off on the agreement that will see the development of a new financing model, which it is hoped will encourage the building of more community housing, making rental of such properties more affordable and accessible. By grouping together finance requests, the states and territory can help investors access lower interest rates, making investment in affordable and community housing more likely and sustainable.
“One of the challenges that is faced by those developing affordable housing is access to longer-term, affordable finance,” Mr Morrison said.
“The access to capital is a critical issue for that sector and this would involve the states and Commonwealth working together to act as a bond aggregator to put finance into those developments.”
The model was developed as a result of recommendations from an affordable housing working group. The group also recommended the consideration of changes to zoning and planning rules, taxation and other concessions to improve housing affordability and supply.
Homelessness Australia chairwoman Jenny Smith welcomed the agreement, saying, “The sorts of devices being discussed to stimulate housing investment at the low end of the market are all the sorts of things we need.”
Calls to wind back negative gearing were reiterated by some states, however, Mr Morrison said that this would be given no further consideration. “It is the Government’s view that the mum and dad investors, who actually provide the capital for the nation’s rental housing stock, if we were to withdraw that, then that has the only outcome of increasing rents,” Mr Morrison said.
William Harnisch, Chief Executive of Master Builders Australia, welcomed Mr Morrison’s stance, saying, “Negative gearing provides rental properties in regional and rural towns, where those workers who are mobile, and want to move around, have affordable accommodation.
“You can’t fix housing affordability if you don’t talk about it, yes some ideas will be contested, but it’s important that those matters do get raised and properly contested.”
However, Jenny Smith said that negative gearing needed to be revisited, given that it was not used to increase housing supply. “Ninety-three per cent of them are purchasing existing properties, they are not adding to the supply of housing which is part of the solution,” Ms Smith said.
“They are literally competing with first home buyers which means first home buyers are renting down, they are renting the properties that those on the lowest income need to be able to rent to put a roof over their heads.”
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With 15 per cent of those over 65 living in rented accommodation at any given time, there is definitely a need to not only increase the supply of affordable housing, but also to address the retirement income shortfall for those who do not own their homes.
As YourLifeChoices has commented before, those who do not own their own home and are dependent on an Age Pension or are living on a limited income, have very little chance of escaping poverty in retirement. Paying rent, be it to a private landlord or a housing association, makes living on a full single Age Pension of $22,800 per year impossible, even if Rent Allowance is also being received.
And ask anyone ‘fortunate’ enough to be living in government-subsidised accommodation what happens when the Age Pension is increased – that’s right – their rent in increased also. There is opportunity for a little financial breathing space to get ahead.
It’s the inability to access affordable housing that currently sees one-third of age pensioners living below the poverty line. It’s also the single biggest factor contributing to the rapid growth in the number of women over 55 experiencing homelessness.
According to Homelessness Australia, 18,740 over 55s received help from specialist homelessness services in 2015. Research by the organisation also found that 64 per cent of older people living on the street are at risk of death within five years.
Funding for such services that help the homeless are provided via a $115 million partnership agreement between the Commonwealth and states and territories, with the current agreement set to expire mid next year. Mr Morrison says the Government will make an announcement on the next agreement when it is in a position to do so.
This is little comfort to those who do not know where they will be sleeping tonight.
So, while anything that can be done to improve access to affordable housing should be welcomed, there is a far more urgent need to address the issue of older Australians who simply can’t afford to put a roof over their heads.
What do you think? When policy is discussed and agreed, is the reality of how people are suffering and struggling overlooked? Should those who do not own their own home be paid a higher rate of Age Pension? Do you struggle to manage to pay rent and other living costs?