Affordable Rental: the missing part of the Canberra housing market

The other point I would like to make here is that land tax is killing affordable rent. My example is: I live in a 65 year old 2 bedroom house on an expensive block of land so my rates are really high. I have looked into building a granny flat in the backyard and rent it out to not only provide inner city affordable housing for someone but to help me offset the high rates and provide a bit of pocket money in my future retirement. However, I am then subject to land tax of nearly $10,000 per annum in addition to my $5,500 in rates. (That’s a total of nearly $300 per week). This additional tax burden makes the whole thing unfeasible. These high rates and taxes are killing any incentive to provide affordable housing options by people like me who would happily do so if it made financial sense. The ACT Government needs to reduce taxes on housing.

Land tax needs to be based on the rent received, not the value of the land, so as not to discourage cheaper rents.

The old hostel system was good as an alternative to renting a whole house (I lived for a time in a couple of examples), at least for people without children, especially younger people starting out on lower incomes. Pity it doesn’t exist now. I think some hostels, such as the old Hotel Acton, might have had some accommodation for families too.

From a small time investors point of view it is difficult to make a property, especially a house with land, in the ACT pay for itself, never mind make a profit mainly due the extraordinarily high land tax and rate bills. I pay $9,000 per annum or 36% of the rent received in taxes – (rates, land tax and water charges) of a house I rent out. The Government needs to encourage more investors by lowering taxes and therefore increase available properties (Particularity houses with land that would suit families). This will increase supply and reduce rents. Simple!

Rather than specially earmarking land for affordable housing, what about progressive taxation given rental incomes. The ACT can’t modify federal tax benefits for negative gearing, but we can make territory taxes on properties scale to the income derived from that property.

To increase interest in affordable housing, the ACT might consider a scheme similar to Defence Housing Association, where properties selected by the ACT are released for sale to investors with low guaranteed returns, with the ACT serving as property manager.

We could also update housing standards to ensure that houses built in Canberra are affordable to live in (so no large unshaded windows facing North, for example).

The rate of aparment construction in Canberra is helping ensure that apartment prices are kept reasonably low. As an example I bought my apartment in Holt for $350k ten years ago and it is still worth $350k, with similar property around Canberra selling for $345k in Watson through to $800k in Turner.

“Clever design” must not make housing less affordable to live in. Building a house out of expanded polystyrene foam might reduce the cost of construction, but it drastically increases the maintenance cost and flammability.

Requiring all homes built in Canberra to meet minimum standards such as external doors that seal, walls that are weather sealed and insulated, double glazing on all windows, and other features commonly found in similar climates such as Canada, will mean that the cost of the features comes down. Rather than $1000 per window for double glazing, the increased scale might bring prices closer to $300.

As for public housing, I’d suggest providing rental support to tenants rather than government owning properties directly.

The government cannot even get their own public housing stock to sufficient levels to help those who are homeless, so how can they be expected to lead the rest of the developer community to build enough housing stock for disadvantaged families? Census data just showed that Canberra’s population just exploded recently. What is that going to do to rental prices? Of course it is going to pressure them upwards, with more demand than availability. With all the construction going on with the tram corridor development, builders will be quite happy at charging significant prices for new housing and it will be difficult to find any builders who are struggling for work. This means you won’t get any cheap labour to reduce the costs of housing any time soon. The same goes for materials, which will be in high demand, so you won’t be able to save there either. Knock down rebuild options on older properties in the ACT are money makers, so it’d be hard to find any existing land that is affordable to purchase, whilst the micro-blocks being released in new suburbs are so overpriced, nobody can make it affordable for moderate income families.
Face it people, you can not live in Canberra unless you are earning nearly a six figure salary or you share your living costs with other people. Families can’t do this, so they are being forced to move interstate. Real estate agents also won’t consider a low income tenant because of the fact they will struggle to make the rent payments on time. While there is an abundance of wealthier candidates out there, the poor have little chance of getting a rental, as there will no doubt be someone else who can offer the landlord ten or twenty dollars a week more. The system sucks.