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Libs back Greens’ tax break plan for landlords who charge below-market rents

By Ian Bushnell 31 July 2018 20
Affordable housing

Canberra has the equal highest house rents in the country.

Landlords who rented their homes at below-market rates would be eligible for a discount on the land tax they paid, under an ACT Greens proposal to improve rental affordability in the Territory that also has support in the Canberra Liberals.

ACT Greens MLA Caroline Le Couteur will introduce a motion in the Legislative Assembly this week, with the proposal based on landlords letting their properties at 75 per cent or less of market rates.

Canberra Liberals housing spokesperson Mark Parton said he had been working on a similar proposal and the motion was likely to gain support from the Opposition, with amendments that would not detract from the crux of the motion.

“You will see some cooperation and hopefully that might inspire Labor to come to the party knowing we are on a similar page and knowing if they don’t do something they’ll look pretty silly,” Mr Parton said.

He welcomed the Greens proposal but said the Greens had voted to increase land tax which was clearly an imposition and adding to housing unaffordability.

“Is there a rental crisis in the ACT? Yes there is, and in terms of individuals and individual families if you’re in a situation where you can’t pay the rent it’s a crisis for you,” Mr Parton said.

Ms Le Couteur said the Government was failing to deal with the issue of soaring rents and the Greens proposal encouraged socially responsible landlords to play a part in solving the affordability problem in the ACT.

“Renting out properties below market rates is a great opportunity for people who are prepared to go part of the way to help their fellow Canberrans,” she said.

Canberra now has the equal highest rents for houses in Australia, and the second highest rent for units, according to recent data from Domain.

The latest Domain Rental Report showed that the median weekly rent for a house in Canberra was $550, and the new median unit rental price $450.

Ms Le Couteur said leveraging existing private investment in property was the cheapest way to boost housing affordability in the Territory.

“Offering a land tax discount to these landlords would be an incentive and a reward for doing something concrete, and quite significant, to address the ACT’s housing affordability problem,” she said.

Ms Le Couteur said community housing providers already worked with landlords who were willing to offer their investment properties as affordable rentals, with the Migrant and Refugee Settlement Services (MARSS) doing this in the ACT, Homeground Real Estate in Melbourne, and Bridge Housing in Sydney.

Ms Le Couteur said Anglicare’s 2018 rental affordability snapshot showed there were not any houses available that people relying on a Centrelink payment like Newstart, Youth Allowance or the Disability Support Pension could afford to rent.

Only 2.4 per cent of properties were affordable for families on two minimum wage incomes.

“Even after receiving Commonwealth Rent Assistance, the ACT has the highest proportion of people in the private rental market who are still in rental stress according to the 2018 Report on Government Services,” she said.

“This is the reality of life for many Canberrans, but landlords aren’t necessarily the bad guys. With a little encouragement, the ACT’s landlords could be a significant piece of the puzzle as we work toward ensuring all Canberrans have a place to call home.”

Real Estate Institute ACT Chief Executive Officer Michelle Tynan said more details were needed but the principle of government providing tax offsets in order to deliver affordable housing – as was done federally through the National Rental Affordability Scheme – was something that the Institute would agree with.

“For example, it is unclear how many affordable properties would actually be provided to families on low incomes or whether it would just be a reshuffle of properties that are already on the lower end of the rental scale,” she said.

“We would also need to know why properties would need to be managed by a community housing provider instead of giving owners the choice of who they select to manage their property. But we are certainly open to discussing the proposal further and look forward to receiving more information.”


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Libs back Greens’ tax break plan for landlords who charge below-market rents
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Lucy Baker 11:02 pm 03 Aug 18

Doesn’t Shane Rattenbury have a conflict of interest here? Despite the Greens policy being against negative gearing, he admitted to purchasing two apartments in the light rail corridor and negatively gearing them. He was quoted as saying he might rent them at low rent to disadvantaged tenants.

Angela Poole 8:00 pm 03 Aug 18

How about just scraping land tax in the ACT!

    Julie Macklin 8:04 pm 03 Aug 18

    What would you suggest for replacing this income?

    Angela Poole 8:28 pm 03 Aug 18

    Julie Macklin nothing! No other state to my knowledge charges land tax for renting out a residential property and those that do, such as NSW have a threshold of when it starts to kick in. So, essentially you have to own multiple investment properties before it bites you.

    Perhaps consider kicking the land tax on rental properties where the unimproved land value is at the threshold of those renting in those lower rental brackets.

    The idea is to bring liquidity into the market. Those that move interstate for short stints or overseas contracts, may just decide that renting their property is worth the risk.

    Julie Macklin 9:44 pm 03 Aug 18

    I do think the land tax could be improved, such as increase it for high rental properties and decrease it for low rental properties. Basically base it on actual rental income, no matter where the property is, and not on land value. But to do away with it completely that would reduce our local income stream for Canberra. Other places might have lower rates, but they have designed their income around this and must get this income from somewhere else. If locally land tax was suddenly stopped that revenue would have to be found elsewhere.

Deborah Mesman 10:57 am 03 Aug 18

I like this idea. Anything where we think outside the box. Affordability and availability are issues that affect the whole community not just the people who rent.

Lynne Meredith 9:12 am 03 Aug 18

The only winner in that would be government!

No ein for the landlord, the incentive would not equal the loss of rent nor be indexed to market rent.

The tenant would have a marginal deduction in rent tempered with increased utilities.

Canberra has the most expensive power out of all the capital cities - due mostly to solar farms that need to be paid for!

The greens are only looking to line their own pockets, why not simply pay the tenant (or landlord on behalf of the tenant) a subsidy for rent, indexed to their income. And subsidise people wanting to purchase a home and taking them out of the rental market?

Scheherazade Roberts 8:08 am 03 Aug 18

Just to put it in context, my quarterly land tax and rates are equivalent to about three weeks rent. It is probably higher in many parts of Canberra. I think this is an outrageous impost on landlords and renters.

Scheherazade Roberts 7:56 am 03 Aug 18

Land tax on my tiny 1970s townhouse is a very high proportion of my expenditure and of course it ends up being reflected in the rent I have to charge (because occupancy rates are so high in Canberra). I would welcome any proposal that reduced land tax. And if it benefits renters, that is a great outcome.

bj_ACT 4:52 pm 02 Aug 18

It’s worth checking some of the data available on Allhomes rental info and property research which lists the cadastre level details with annual rates and land tax info.

Why a small 3 bedroom basic rental around $400+ a week on a big block in Tuggeranong should pay twice the rates and land tax of a $800 a week Inner city unit rental, highlights just one of the flaws in the current system.

This drives up the rental costs for poorer tenants in the outer suburbs and encourages investors to greater tax incentives and negative gearing benefits in new inner city apartments. It’s lose lose for less wealthy renters and owners of basic properties.

Maya123 3:34 pm 01 Aug 18

If land tax were based on rental, that would assist too. At present there is no incentive to rent out cheap places, as you pay the same land tax for a house with cheap rent, as for a place with high rent. Two houses side by side; one a huge five bedroom, two storey MacMansion, and the other a tiny two bedroom house. Both pay the same land tax, even though the big house might get two or three times the rental income of the other. So, the smaller house with lower rent is not economical, and it ceases to be a rental, leaving only the higher rental property. This multiplied through the city, leads to higher rents.

Garfield 1:31 pm 01 Aug 18

And in breaking news I’ve heard the Greens have backed away from their own plan and voted with Labor.

    Mark Parton MLA 4:24 pm 01 Aug 18

    You are correct Garfield. The Greens informally agreed to support my amendments, which only strengthened Ms Le Couteur’s original motion. Instead they sided with Labor to trash their own motion. My amendments called upon the government to ACTUALLY DO SOMETHING and implement the land tax rebate. The watered down version calls upon the government to keep on sitting on it’s hands and to consider a land tax rebate. We could have got this done.

Glen Hourigan 12:53 pm 01 Aug 18

That's just going drive rent's up again where people can't afford it anymore .

    Sue Ellen 7:29 am 03 Aug 18

    Not sure of your logic. They are taking about an incentive to landlords to reduce rents. It's a win win for landlords and tennants. If enough people did it, it would go some way to addressing affordable housing. Atm the combined cost of rates, land tax and higher interest rates for investment properties is forcing landlords to increase rent.

Linda Gillespie 7:12 pm 31 Jul 18

Fantastic idea!

PJPentony 5:24 pm 31 Jul 18

Great to see Mark Parton and the liberals not playing politics on this one. If it solves the problem it’s good for all of Canberra. I do wonder wether a discount in land tax is enough of an incentive to cut rents by 25% but it’s good to start a conversation about reducing fees and charges to create cheaper rental properties. Last year I lived in the UK where general rates are paid by the resident not the owner. With this system the local council can reduce rates for those in need making their housing costs lower. If residents paid the rates and the government could discount rates for those in need and discount land tax for those reducing rental prices, I think we would get closer to affordable housing. But that’s a lot of ifs

    Jim9 11:27 am 01 Aug 18

    A move to a system like the UK would need very clear safeguards to ensure that the saving made by landlords isn’t just pocketed by them, through clear requirements for a reduction in rent to occur in line with the reduced impost on landlords. Obvious potential for a bit of gouging if not cleverly managed.

johnny 1:38 pm 31 Jul 18

Here’s a thought, when an investor can buy elsewhere and get a better return as they are exempt from paying land tax up to a threshold (NSW is approx $600-650k for the ULV) then they are likely to choose one of two options:
a. Buy the property that gives a better return elsewhere
b. Buy the property with the higher land tax cost, an increase the rent marginally to recover the land tax costs.
By giving land tax exemptions, possibly only for one property not multiple, it reduces a landlords costs by thousands and every $520 is equivalent to $10 a week rent, so $2080 saved on land tax could be a potential $40 a week less in rent, without any loss to the landlord!
Rather than vilifying investors, entice them in, if every second property were available to rent, and there was only enough renters to fill half of them then rents would plummet… until Governments stop raising the costs of owning an IP they will never stop rents going up!!!!

    chewy14 8:57 am 01 Aug 18

    Except for the fact that landlords can’t simply arbitrarily lift rents.

    You think investors will shop around for better returns but renters won’t do the exact same thing looking for lower rents?

    Landlords aren’t a charity and neither should the government be. If the federal government stopped “enticing” investors into property through generous tax treatments, then both property prices and rents wouldn’t be so expensive in the first place.

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