The biggest election issue in regional Australia is the lack of affordable rental housing. In the past two years regional rents have increased by 20 per cent nationally compared to 14 per cent in the capital cities. One in three Australians rent, and housing is by far the biggest cost of living. The lack of housing is hurting families and business.
Renting plays a role in all our lives, but the political conversation is full of stories from the last century, NIMBY-ism and ignorance. Politicians know home ownership rates will never go back to what they were, but they keep dreaming.
Housing touches almost every aspect of the economy and our health and well-being but the Morrison government refuses to develop a national housing strategy. Labor, the Greens and some of the independents have recognised the need, and value, of increasing the amount of affordable rental housing. Some have announced good, long-term policies that include developing a national plan. The United Australia Party and One Nation have slogans but no policies.
It's only three years since the Banking Royal Commission warned against lending to anyone with less than a 20 per cent deposit. Despite this, the government has targeted 100,000 first home buyers with deposits of only 2-5 per cent, a move matched by the opposition in regional Australia.
It's bad economic policy and bad social policy. As interest rates rise and house prices falter, there is a very real risk that some of the single mothers and other buyers the government has helped with loans will be among the 300,000 expected to default and sell their homes for less than what they paid. The implications are horrendous.
Rather than contributing cash and increasing the risk, as Labor has also proposed with their Help to Buy policy, allowing affordable housing tenants to buy the homes they currently rent would provide better social and economic outcomes. By leveraging the equivalent cash amounts through the not-for-profit community housing sector, more affordable rental housing would be built.
In March, Treasurer Josh Frydenberg increased the liability cap of the National Housing Finance and Investment Corporation (NHFIC). This allows the government to issue bonds and lend the money it receives from private investors to not-for-profit community housing providers who then build more homes. Although a welcome announcement, many providers have already reached their borrowing capacity and it's unclear how many can take on more debt.
The government estimates these loans would support the construction of 10,000 new homes. Assuming that's correct, it could take at least 3-4 years before they're built. We can't wait that long, and another 650,000 affordable rental homes will be needed within 15 years.
Housing reform is a huge, complex problem demanding a national plan that's implemented with the states, territories and local councils.
Housing reform is a huge, complex problem demanding a national plan.
While a plan is being developed, the next federal government must implement proven, short-term solutions to stop the crisis from getting even worse. There are several options.
The first, and easiest, is a five- year extension of the National Rental Affordability Scheme. Launched in 2008, the NRAS pays a subsidy to landlords who build and rent homes to pensioners and others on low income who are at risk of eviction on full market rent.
Another option is to fund not-for-profit housing providers to buy or lease homes that the private sector has under construction. This already happens in NSW, and it has the added benefit of supporting the construction industry.
Finally, property owners could receive incentives to offer their properties for long-term affordable rent. Negative gearing isn't a big benefit for many landlords and only 8 per cent of home owners have two or more properties. The value of a scheme like this is uncertain but worthy of consideration.
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