By Simon Benson, State Political Editor
July 31, 2008 12:00am
SYDNEY property owners will be allowed to build small units or granny flats in their backyards and rent them out, exempt from capital gains tax, in a plan to ease Sydney's rental crisis.
Premier Morris Iemma will today flag a radical rewriting of NSW planning laws aimed at easing the western Sydney housing shortage and bringing up to 30,000 possible new low-priced rental homes onto the market.
It would also allow struggling Sydney mortgage owners to earn extra income without having to become property investors.
Are you suffering because of Sydney's rental crisis? Tell us in box below
Premier Morris Iemma will reveal the plans in his State of the Region address to western Sydney.
Planning Minister Frank Sartor has been given the green light to begin consulting with councils on changes to regulations to secondary dwelling approvals.
The policy will allow for small, self-contained homes - of up to 60 sq m in size - on the same lot of land as traditional homes.
It would apply to flats built over a garage, dividing a three-bedroom house internally into a two-bedroom main residence and a one-bedroom flat, or building a new structure in a back yard.
It is a departure from the dual occupancy sub-division laws - the new dwellings would remain on the same title as the existing home, and would not be able to be sold.
The Daily Telegraph has also been told Mr Iemma will take his plan to the next Council of Australian Government (COAG) meetings in Perth on October 2, to seek the necessary Federal Government exemptions from capital gains tax for the secondary dwellings.
A study by Landcom has identified 160,000 lots in Sydney that could be suitable for such development. It is estimated that with a 20 to 30 per cent take-up rate, between 30,000 new, low-cost affordable dwellings could be built in western Sydney alone.
A handful of councils, including Parramatta, have trialled the policy in higher density suburbs.
"Increasing the number of secondary dwellings across Sydney would provide more inexpensive rental accommodation, as well as being a source of rental income for working families," Mr Iemma said.
"It can allow working families who are buying their own home to gain an extra source of income - a great way to ease the pressure of rising petrol and grocery prices, and its also a good way for elderly people to afford to stay in their own homes.
"It's a low cost and effective way of providing new housing and targets one of the tightest rental markets - young singles or professional couples."
Sharon McClelland and her husband Bruce converted a loft over their garage in Parramatta last year to a three bedroom unit which they now rent to students.
"It provides us with an extra income," Ms McClelland said.
"And it offers affordable rent for the students.
"It was a whole heap of useless space we never used and it hasn't changed our lifestyle at all . . . it has made it better."
The policy comes as figures from the Australian Bureau of Statistics shows the construction of homes and units has fallen again over the past 12 months.
http://www.news.com.au/dailytelegraph/story/0,22049,24103166-5013110,00.html