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  1. #1
    Join Date
    Apr 2004
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    Default Australia to Give Investors Tax Credits to Build Rental Houses

    http://www.bloomberg.com/apps/news?p...d=a49nbgeHb6SY

    ************************************************
    "Australia to Give Investors Tax Credits to Build Rental Houses"

    By Madelene Pearson

    March 3 (Bloomberg) -- Australia will give investors tax incentives to build up to 100,000 new rental properties, double the amount previously promised, to make housing more affordable.

    The Labor government will provide private investors with tax credits of A$6,000 ($5,599) a year for 10 years for new properties rented at 20 percent under the prevailing market level, Prime Minister Kevin Rudd said in an e-mailed statement.

    He made the announcement today in Brisbane.

    Rudd promised to set up a so-called National Rental Affordability Scheme and provide tax incentives for 50,000 new rental properties before winning power in November. Australian housing affordability deteriorated in the fourth quarter to the worst on record after the nation's central bank raised borrowing costs to an 11-year high.

    ``There is currently very little investment from institutional investors in residential property in Australia,'' Rudd said today. ``This doubling of the number of affordable rental properties to be built under the scheme reflects the severity of the housing affordability problem in Australia.''

    State and territory governments will give A$2,000 per home either through cash payments or in kind, such as concessions on stamp duty, Rudd's statement said. The initiative will cut the rent of a new average three bedroom unit costing A$350 a week by A$70, he said.

    To contact the reporter on this story: Madelene Pearson in Canberra on [email protected]

    *************************************************

    Can anyone see our great socialist leaders doing this in NZ?
    I can't work out how ring fencing losses and increasing building code red tape
    will produce cheaper houses...
    Last edited by PC; 04-03-2008 at 12:25 PM.
    The three most harmful addictions are heroin, carbohydrates and a monthly salary - Fred Wilson.

  2. #2
    Join Date
    May 2007
    Location
    Chch
    Posts
    773

    Default

    Quote Originally Posted by PC View Post
    State and territory governments will give A$2,000 per home either through cash payments or in kind, such as concessions on stamp duty, Rudd's statement said. The initiative will cut the rent of a new average three bedroom unit costing A$350 a week by A$70, he said.
    How does a reduction of $2000 in building costs cut the ongoing rent by 20%? Has every developer promised to do that? Are the developers even responsible for setting the rent? I wouldn't have thought so.....

  3. #3
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    Default

    A$5,599/52 = A$107 per week

    Normal rent say $400 pw less 20%
    reduces rent to $320pw.

    Investor would be $107 - $80 = $27 better off?
    Would you need other income to offset this against?
    The three most harmful addictions are heroin, carbohydrates and a monthly salary - Fred Wilson.

  4. #4
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    May 2007
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    Chch
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    Default

    Oops, missed the bit about tax credits above. Just picked up on a bit which on the face of it didn't make much sense to me....
    Eli

  5. #5
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    Default

    It strikes me as being a dirt cheap way of doing things compared
    to say giving Housing NZ billions to build 100,000 state houses and
    then mis-manage them.

    However - every time they mess around with the market like this - it's usually a disaster.
    Last edited by PC; 04-03-2008 at 01:33 PM.
    The three most harmful addictions are heroin, carbohydrates and a monthly salary - Fred Wilson.

  6. #6
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    Jun 2004
    Location
    Kapiti
    Posts
    626

    Default

    Massive building proposals like these, increase the construction costs to build, as demand for tradepeople & materials outstrips supply. End result existing & new property becomes more expensive. Bet Labour in NZ will try a similar stunt this year.

  7. #7
    Join Date
    Jan 2006
    Location
    Wellington
    Posts
    559

    Default

    In addition to the above Rent is a market lead figure not based on the cost. If the existing supply of houses goes for a certain rent then it is doubtful unless a lot of rental houses hit the market at once that the rent would drop his $70
    Doug

  8. #8
    Join Date
    Apr 2005
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    Wellington
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    1,584

    Default Cold water thrown on cheap housing plan

    Cold water thrown on cheap housing plan

    THE Federal Government's $6 billion program for affordable housing is under a cloud before it has even begun because investors and developers publicly backing it privately warn it is flawed and will not work.

    The plan to tackle the national housing crisis by offering an annual subsidy of $8000 a dwelling in tax credits in return for investors providing discounted rents has been deemed not enough for investors in Brisbane, Melbourne and Sydney.

    Although the Minister for Housing, Tanya Plibersek, remains confident she will be chasing away investors, property companies, superannuation funds and housing industry associations say the offer, made up of $6000 from the federal and $2000 from state governments, is far too low and will have to be increased or remodelled if it is to succeed.

    Lend Lease's spokesman on affordable housing, Guy Gibson, said other incentives such as access to public land or partial capital guarantees might have to be offered before investors are prepared to enter a risky and "emerging market".

    "We support the program but it's a very complex issue," he said. "Our work to date suggests there might need to be some other incentives. If the Government doesn't get the mix right then they probably won't get the scale of investment they are looking for to make this work."

    The executive director of the Property Council of Australia, Peter Verwer, said the subsidy would have to be topped up to attract investment in major cities where affordable housing had to be tackled. "Housing affordability has to be addressed in those cities," he said. "I think $8000 a year is well on the way but it might fall short in some of the more expensive cities and won't provide the incentive required unless governments, perhaps local government, can top up the amount.

    "We're overwhelmingly positive about this measure and it's now up to the private sector to come back to the government city by city and locale by locale. In some places there won't be a shortfall, in others there will be."

    Industry superannuation funds have similar concerns. John Sutton, the secretary of the Construction, Forestry, Mining and Energy Union and director of the industry fund CBUS, said there was not enough detail to make an investment decision.

    "It's early days and we'll just have to suck it and see, but the program may not exactly achieve everything the Government wants," said Mr Sutton, a longtime advocate for affordable housing.

    "I'm sure the Government is capable of making some adjustments. I don't think the detail has been put before the super funds yet but there is a willingness on our part if those mechanics can be ironed out."

    Ms Plibersek dismissed industry concerns and said the Government would not be increasing or remodelling its offer: "I'm confident that it does add up and I have spoken to plenty of institutional investors who say they're interested," she said.

    "I am sure private companies who are in the business of maximising their profits would prefer to have a larger government subsidy but the proof will be in the pudding. I have a queue of people from a cross-section of investors who are ready to proceed."

  9. #9
    Join Date
    Jan 2005
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    Auckland
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    Default

    If governments anywhere wish to increase the supply of houses the most effective thing they can do is reduce the red tape required to subdivide land and build. The laws of supply and demand are constant. More houses equals lower demand. Lower demand equals lower prices.
    Julian
    Gimme $20k. You will receive some well packaged generic advice that will put you on the road to riches beyond your wildest dreams ...yeah right!


 

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