21 May 2008

Land Rent Scheme

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The Comrade as put out this media release blasting the Libs for
not wanting to back his Land Rent Scheme. From what I can gather his
Land Rent Scheme means that you pay for the house but only rent the
land, presumably from the government but I bet it will end up being from
developers. And while the idea might be to make things cheaper I can
see as soon as the government stops running the land rentals (which they
will) then the prices will start going up and up just like home rentals
now, which will in turn probably push up land and house package prices
as well.

So what happens if you can’t pay your rent, do they kick you and your
house off?

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Thanks george, much appreciated

georgesgenitals4:14 pm 17 Jun 10

Yes you can.

I am on a work visa till Nov- 2013, but will get a Permanent Resident status early next year, do i qualify for this Land Rent Scheme?
Also, my partner earns slightly more then 75,000 a year, but i am unemployed and earn nothing at all at the moment, can i apply for land rent ?

If your answer to both these questions is yes, then can i rant a land in Molonglo Valley ( http://www.molonglovalley.com.au/ )

caf I do think rates are a de-facto rent, reason being if they were based only on services provided all rates would be of the same value regardless where you lived.

Thumper: presumably the idea is that once your house-only-mortgage repayments have reduced sufficiently in real terms (given that they stay the same in nominal terms), you can afford to add the land to the mortgage.

Nope, you pay rates for the provision of municipal services (garbos, cops, etc.)

don’t we already rent the land? isn’t that why I pay rates for?

Deano wrote:

“…it does make homes more affordable, but it won’t do anything to improve the long term wealth of people this is targeted at.”

Hey – you are shifting the goalposts here. We were talking about making homes more affordable, not about “the long term wealth”. Sure, it’d be nice to have both, but they are separate issues and we can have one without the other.

spoonbill said :

Don’t we lease the land now – 99 year leases?

Yes but we pay the full rent upfront. When you sell your house you are effectively selling the remaining lease as well. If I remember correctly all 99 year leases were converted to perpetual leases a few years back. So the value of the remaining lease is effectively the same as the value of the land.

In the land rent scheme, rental payments would not go to paying off the land, but tenants could buy their land at any time for its unimproved capital value. Based on historical prices, you can expect land prices to nearly double every 10 years.

So yes, it does make homes more affordable, but it won’t do anything to improve the long term wealth of people this is targeted at.

I quite like this idea, it reduces up front costs for home buyers; making housing more affordable for those on lower incomes which is exactly the idea.

It makes a lot more sense than zeds plan which has to be one of the more mind numbingly dumb ideas i have heared; all zeds plan would seem to do is transfer money from the govt. to those selling houses, while those buying (who this scheme purports to help) are left out in the cold. and before anyone comments on how this is a good thing because it will mean more houses on the market, hence cheaper prices, actually think about it; people selling the homes they live in, will just create another buyer, (people have to live somewhere) so theres no gain there, and by my reckoning the only ‘new’ properties that will open up are those which were formally low profit rental properties (mostly those at the cheaper end of the market) which just shifts the problem from one group of people to another.

So at best zed’s plan is to make the wealthy richer, (and leave low income income home buyers in the cold) and at worst it’ll take away the homes of poor renters. Top work Zed.

When it comes to the policies put forwed by both parties concerning home affordabilty its a pretty clear victory to stanhope (and good on him for getting stuck into the libs for not backing him)

amarooresident3:28 pm 21 May 08

This is a good article on the nuts and bolts of the scheme.

http://canberra.yourguide.com.au/news/local/news/general/rent-a-block-govt-to-make-land-ownership-optional-for-homebuyers/357195.aspx

IF it works as described it adds another option for homebuyers.

Don’t we lease the land now – 99 year leases?

There’s a good reason land renting isn’t popular anywhere else. Land values increase over time whereas the value of buildings decrease. So the government gets to keep the profitable bit and you get the unprofitable bit.

Its an even worse idea for first home buyers. Whereas mortgage payments decrease in real terms over time and eventually cease, land rent payments continually increase with the increasing value of the land.

VYBerlinaV8_the_one_they_all_copy1:28 pm 21 May 08

Dangerous ground, especially in relation to the ongoing holding costs of the land (which will inevitably increase, whereas the mortgage repayment wouldn’t). Plus, demand will upset the market once a few such properties are ready to be passed on in the open market.

FFS – just increase supply of land. It’s going to take years to dig ourselves out of the supply hole anyway, the least we can do is solve the problem sensibly so in 5 years people have a bit more housing choice again.

Land value (i.e. rental price) would gradually increase while the house value will decrease. Poor investment for a “working family” to make in my opinion.

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