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Urban Taskforce | Media Releases
Rental schemes reinstatement welcome, but it still must be reformed
18 February 2011
The re-instatement of the first 50,000 of the 100,000 dwellings promised under the National Rental Affordability Scheme has been welcomed by the Urban Taskforce, but they say the scheme still is in need of urgent reform.
The Taskforces chief executive, Aaron Gadiel, said the federal scheme was an important part of the response to Australias housing crisis, but design flaws were stopping it from working properly.
"This scheme discriminates against cities with high land costs and high market rents, Mr Gadiel said.
Ironically, these are the very cities the scheme should be targeting.
Mr Gadiel said the scheme imposes rent control on participating landlords in return for an annual federal subsidy.
But the annual subsidy is the same flat $9,100 across Australia, he said.
Landlords in the more expensive cities are expected to give up more money under rent control, but they arent compensated with a higher federal grant.
The scheme works well when land is cheap and market rents are low.
But the scheme makes less sense in Sydney, Melbourne and Brisbane where land is more expensive and market rents are high.
If the scheme was working well, you would expect to see the new homes concentrated in the housing markets suffering the greatest levels of rental stress, he said.
According to the Australian Bureau of Statistics figures 46 per cent of low-income renter households are in rental stress in NSW, 36 per cent in Queensland and 34 per cent in Victoria.
On the other hand, a more modest 23 per cent of Tasmanian renters, and 26 per cent of South Australian renters, are under the same pressure.
Mr Gadiel said that, with these figures, you would expect to see NSW, Victoria and Queensland receive rent controlled dwellings in excess of their share of the population.
Yet the reverse is the case, he said.
Mr Gadiel said the federal governments website reports that there are now 4,582 rent controlled dwellings available from approved participants in the scheme.
NSW has received 30 per cent of the new homes so far, but has 32 per cent of Australias population, he said.
Queensland has received 17 per cent of the new homes so far, but has 20 per cent of Australias population.
Victoria has been received 21 per cent of the new homes so far, but has 25 per cent of Australias population.
Mr Gadiel said that rents in Sydney are 50 to 60 per cent higher than those in Adelaide and Hobart.
Tasmania, with its cheap rents and low property prices, has received 13 per cent of the new homes, but has only 2 per cent of Australias population, he said.
South Australia, with its cheap rents and low property prices, has received 10 per cent of the new homes, but has only 7 per cent of Australias population.
Mr Gadiel said the states with greatest rental pressure should be getting extra homes because of their affordability problems, but they are being short-changed by unfair rules.
The scheme works best in exactly the wrong places - cities with low rents, he said.
Without a significant re-design, this program will continue to put too much housing where it isnt needed and not enough where it is required.
The Urban Taskforce is a property development industry group, representing Australias most prominent property developers and equity financiers.