Major initiatives include higher financial aid for renters with low income, strategies to enhance the availability of rental properties, and policies aimed at promoting the development of social and affordable rental housing. These measures will be particularly beneficial for the one-third of households that rent, who are typically younger Australians with lower incomes, less wealth, and smaller savings reserves than home-owners.
Commonwealth Rent Assistance increases
The Australian government has increased the maximum rates of Commonwealth Rent Assistance by 15% to help low-income renters. This assistance is already available to those receiving pensions and benefits such as JobSeeker, Family Tax Benefit, and Parenting Payment.
The increase will result in an additional $15.73 to $31.76 per fortnight for renters.
New tax break for build-to-rent sector
The Housing Accord aims to build one million new homes over five years from 2024, with a focus on incentivising an increase in rental housing supply through the build-to-rent sector. This involves constructing properties specifically for renting out, often with long-term leases and professional management. The budget includes tax cuts and depreciation rate increases for eligible new build-to-rent projects, with a predicted increase of 150,000 new rental properties over the next decade.
What’s ahead for the rental market?
Rent growth is expected to continue this year, especially in Sydney, Melbourne, Brisbane, Adelaide, and Perth due to tight rental supply. However, Hobart and Canberra have seen an increase in rental listings, leading to lower vacancy rates. Demand for rentals in inner-city areas remains high, but supply shortages are expected to persist. To address the housing shortage, it is important to focus on building more homes, but there are no incentives for investors in the budget.
Social and affordable housing
The government has allocated an extra $2 billion to reduce the cost of constructing social and affordable housing. This will increase the liability cap of the National Housing Finance and Investment Corporation from $5.5 billion to $7.5 billion, allowing the Corporation to provide lower cost loans to community housing providers for more social and affordable rental homes. While this funding will help provide stable housing for those in need, social housing is an expensive solution. The additional funding is expected to support around 7,000 new dwellings, but rental assistance increases would be a better targeted measure.
The Australian government has expanded eligibility criteria for the First Home Guarantee and Regional First Home Buyer Guarantee schemes to include:
and other family members in the classification of a “couple”
The schemes will also be available to non first-home buyers who haven’t owned property in Australia in the past 10 years, including permanent residents.
The Family Home Guarantee will be available to eligible borrowers who are single legal guardians of children, such as:
Single natural and adoptive parents
These changes build on last year’s increase in the number of places available. The expanded Home Guarantee Scheme aims to tackle the deposit burden for first-home buyers, allowing an eligible applicant to buy with just a 5% deposit, with the government guaranteeing the remaining 15%.