John Minns on what we really need from candidates this election
17th October is rapidly approaching and along with it the 2020 ACT election.
Each electoral cycle we wait for our local politicians to propose more innovative solutions in Canberra housing, and very often we are disappointed that little is being proposed that makes any meaningful change to important issues.
Instead of a rag tag list of election promises comprising knee jerk reactions and recycling of discredited policies, Canberra needs to see a coherent strategy and framework to support all industry stakeholders including homebuyers, tenants and investors.
So this election, here is a list of what we would love to see promised and delivered in the next four years.
A focus on housing supply and affordability.
Lack of suitable, affordable accommodation is keeping Canberra vacancy rates historically low resulting in some of the highest rents in the country. Expensive land, coupled with infill disincentives, are further restricting affordable supply of homes for sale.
There are some positive proposals to increase social and community housing. Unfortunately, the economics mean that on their own these will not alleviate the current challenges in delivering quality and affordable home ownership and rental options.
Arguments have been proposed by some candidates and parties that:
- owners of investment properties are driven by greed and driven to disrespect tenants’ rights
- rental property standards should be regulated at a higher level than those required for live-in owners
- and that forcing owners to increase asking rents on an annual basis is somehow in the interests of tenants already dealing with high weekly cost of living.
None of these make sense.
What we are looking for is a government that will:
- Increase competition and supply in the ACT land market to ensure market forces rather than government subsidies do the hard work in driving affordability.
- Re-visit the Lease Variation Charge on residential redevelopment, which currently penalises homeowners for subdividing blocks to create multiple dwellings. Get the settings right here and instead of a tax that raises little revenue for the ACT, we could incentivise increased supply of in-demand townhouses across Canberra, improve affordability and increase the effectiveness and efficiency of existing local infrastructure such as roads, shops and schools.
- Encourage private investors to meet the shortfall in government housing by encouraging property investment, as the government cannot meet all of the housing needs of Canberra. Which leads me to my next point.
Ensure Property is an attractive investment option
The most expensive housing policies for the ACT are those that inhibit investment in housing. Prohibitive levels of rates and land tax, currently higher for investors than owner-occupiers, discourage investment in property. Reduced demand leads to lack of rental supply. Low supply drives up rents and reduces affordability. We need to break this cycle.
Similarly, setting unrealistic standards for rental properties that are not required for any other home, such as minimum energy efficiency rating, removal of owners rights, or interfering with the competitive market for rental pricing, are reactive solutions which fail to address the real problem of supply and affordability.
- Ensure investment in ACT housing is equally attractive to other jurisdictions around Australia ensuring we are an attractive investment destination. Get the settings right for costs of ownership and intelligent regulation of standards and we will increase demand from mum and dad investors, whose motivations vary and often skew to long-term growth rather than short-term high income. This will be real action toward increasing supply of affordable rental options.
- Build to rent, where apartment buildings etc. are built to be rented out by the developer rather than sold, will become a real option in provision of rental accommodation and we support increased initiatives in this area. It is important to recognise that even in mature build-to-rent markets such as London, this only provides single digit percentage of accommodation and that the drivers for these types of landlords are low vacancy and high income. A vibrant mum-and-dad investor market alongside multi-national investors will be critical to future affordability.
More consultation with the industry – no, really
True consultation with industry and all stakeholders has been absent for some time and is leading to poorly informed decisions about the fundamental accommodation needs of Canberrans, particularly around affordability.
Reactive decisions made to cater for vocal special interest groups are no way to run such an important sector of the economy as accommodation and housing. Through rates, land tax, stamp duty and other government charges the government receives much of the revenue that keeps our city operational and a great place to live.
It is therefore counter-intuitive to treat this sector as an afterthought in decision making.
- Let’s deal with housing supply and affordability through collaboration not confrontation
- The real estate industry welcomes collaborative round table discussions with all stakeholders including government, housing associations, owners, tenants, agents, and lobby groups to find great solutions.
- Talk to the industry about outcomes and we will avoid recent experiences of policy on the run achieving the opposite of its intentions. Decisions that impact the lives of homeowners and residents should not be combative and we are looking for politicians prepared to find win-win solutions ahead of political point-scoring.
That’s my list. If the next ACT Government can commit to those simple ideas, we will go a long way to improving opportunities for all Canberrans.
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