National Rental Affordability Scheme -08 budget

[monster24]

Hi there,
I have heard that the government is offering annual incentives of up to $8,000 for each new dwelling that investors offer for rent at 20% below market.
Is that true ? I can't find any further information.

In case it is ...what are you thinking... I mean, if I rent our IP instead of $360 per week for $290 - but get a $8,000 rebate ...it could be well worth it.
My wife said, the problem clearly is that with a low rent you normally attract not the best tenants ....true. And would the government pay the rebate for investors at the end of financial year or maybe you can claim through our tax rebate on an ongoing scheme ???

Anyway ...thought is kind of interesting for investors ...not sure if feasible ..
Cheers
THomas

 

[DCI]

Rental Affordability Scheme

Yes I agree there is not to much information about this at the moment.
Though it seems one could be potentially better off with the offer, there are a few things to consider.
Firstly how easy is it to accurately calculate a 20% reduction from current market rental prices based on diffrent dwelling types/features/locations in the same suburb etc.
Secondly many investors depend greatly on rental income to help service already large mortgage repayments on a monthly basis. If this rebate is to be paid end of financial year, the incentive is diluted with investors having to upfront the shortfall to make up for the reduced rental income.
Third thing being the idea can effectively cause downward pressure on all rental properties as it subjects the rental market to a competitive purge of rebate rental property vs non rebate rental property. (Perhaps part of the Governments main plan
Negatively geared properties may suffer a lower loss adjustment for claimable allowances.
Regardless we can only see where this one is headed with time and perhaps a little Government revision.
We may even see further down the track implementation of this rebate becoming a discount deductable of CGT payable for those who are eligible.

 

[Rockstar]

http://www.fahcsia.gov.au/housing/nras/NRAS-discussion_paper.pdf

Happy reading, Ian

 

[Rockstar]

Also talked about here

 

[ffc1883_1996]

Extract from the Residex Newsletter - May 2008...

An initiative to reduce housing costs is the impressively named Housing Affordability Fund. This fund provides $500 million over five years to remove red tape and solve other administrative problems with providing new housing. It misses the point as the bottlenecks are at local government level, while the money will probably be spent by state and federal government bureaucrats on junkets and fact finding missions. Hopefully they will come up with something worthwhile after five years at the trough.

Is there anything for investors? There is an apparent carrot, offering incentives to investors who provide properties at reduced rents. This too, has a suitably impressive name, the National Rent Affordability Scheme. This scheme will provide incentives of up to $8,000 per annum for new dwellings which investors offer to lease at 20% below market rents. Now this sounds too good to be true, because if the full incentive is applied for example, Sydney houses with a median of $500 per week, the tenant saves $100 per week while the investor receives a rebate of $154 with a $54 per week net gain.

Of course, it is too good to be true! In reading the fine print you will discover that the scheme is co-funded by commonwealth, state and territory governments to encourage the construction of new dwellings by institutional investors which will be offered to people on Public Housing waiting lists at 20% below market rents. Really, this is nothing more than Public Housing masquerading as a national rental scheme and there is little to nothing in this for the average independent property investor - or for working families, for that matter.

 

[Rockstar]

Extract from the Residex Newsletter - May 2008...



Of course, it is too good to be true! In reading the fine print you will discover that the scheme is co-funded by commonwealth, state and territory governments to encourage the construction of new dwellings by institutional investors which will be offered to people on Public Housing waiting lists at 20% below market rents. Really, this is nothing more than Public Housing masquerading as a national rental scheme and there is little to nothing in this for the average independent property investor - or for working families, for that matter.

Yep like GR alludes to in the other thread. Getting excited over nothing and wasting our time thinking this could benefit most of us.

 

[DCI]

Yes I have just read the detail.
And unless you own a very large barn and can convert it into a new multiple dwelling you can pretty much forget it from a private investor point of view.

 

[Aaron Sice]

i'll bet it's not even $8000 cash back - my money is on it being an $8000 deduction so chances are you'll only see a third of it.

if there's one way where it works, and the other way where it doesn't, chances are it's latter.

 

[Peter_Tersteeg]

If the government want's to increase affordability, they need to address the shortage of supply and make it easier and quicker to build new dwellings. As long as demand is higher than supply, property prices will remain high.

Throwing money at the problem, no matter how it's structured, simply increases the amount the recipients can spend, it doesn't make the houses any cheaper.

The irony is that this and other schemes actually decrease housing affordability overall.

 

[Andrew_A]

If the government want's to increase affordability, they need to address the shortage of supply and make it easier and quicker to build new dwellings. As long as demand is higher than supply, property prices will remain high.

Throwing money at the problem, no matter how it's structured, simply increases the amount the recipients can spend, it doesn't make the houses any cheaper.

The irony is that this and other schemes actually decrease housing affordability overall.

And I believe I heard a housing deposit scheme??

The idea being you start a savings account for a home deposit and the government will give you a kick along and some tax benefits, another wonderful scheme for anyone betting on continued growth in housing prices I would have thought.

Can't remember whether that was the federal or the state govt here in QLD, pretty dumb idea whatever I thought.

 

[Bon]

Secondly many investors depend greatly on rental income to help service already large mortgage repayments on a monthly basis. If this rebate is to be paid end of financial year, the incentive is diluted with investors having to upfront the shortfall to make up for the reduced rental income.

That was my first thought. Got to consider the time value of money and all.

 

[asdf]

SBS Insight ran a debate a couple of months ago and brought together a couple of the main players - insto investors and commercial developers. Neither of which were willing to play. They kept saying we'll look at the numbers. No one in their right commercial mind will commit to such a loss making disaster. This is what happens when dumb ars* bureaucratic theorists come up with Alice in Fairyland ideas.

Property fund investors love yield with modest capital growth. Try selling them residential cra* which will have a cap in prices due to re-stricted rental growth plus it will be built in the middle of whoop whoop where no one in their right mind would want to live, further depressing cap growth. Then rather than getting a nice fat yield, they will have to discount their returns by PM fees, rates, insurances, land taxes, broken door handles, the list goes on. Trying to compete with CPs and IIPs. Good luck!

 

[WinstonWolfe]

And I believe I heard a housing deposit scheme??

The idea being you start a savings account for a home deposit and the government will give you a kick along and some tax benefits, another wonderful scheme for anyone betting on continued growth in housing prices I would have thought.

Can't remember whether that was the federal or the state govt here in QLD, pretty dumb idea whatever I thought.

http://www.alp.org.au/media/1107/mshou040.php
yeah it is another joke. any advantage of the first home savings account is overwhelmed by property price inflation. throw growth due to limited supply on top, and those few k of extra savings will just bid property prices up......

Labor show that they still just don't get it. ....this is what happens when people outsource their responsibilities to others with a God complex and think they can save the universe.

Reminds me of the pathetic Chinese President telling the crying young girl who'd just lost her family and home in the earthquake, "don't worry, the government is going to look after you". yeah sure, you and the Chinese Army.....In this poor girl's moment of agony and despair, the President shows the world how emotionally underdeveloped and self deluded he is.

Beware of people with God complexes.
Dare I say Rudd and Swan have the same paternalist streak as the Chinese President.