Page 1993 - Week 06 - Wednesday, 25 June 2008
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The scheme will initially only be open to households eligible for the discount rental rate. Households on this rate will pay annual rent calculated as two per cent of the unimproved value of their land. This rate will involve strict eligibility criteria around income, ownership and residency, Later, subject to an evaluation, it will be open to all households, investors and builders at the standard rate.
To protect households from unforeseen rent rises, annual increases in rent will be capped at the level of ACT wages growth. This ensures that any sharp increases in land values do not impact significantly on household budgets. If a household’s income falls for any reason, they will be able to change to the discounted rate and pay a lower level of rent. If the value of their block of land falls, the amount of rent paid by households will also fall. However, if the block of land appreciates, the household’s rental increases will be modest, as they will be capped. This scheme has been designed to be flexible and to respond to changes in participants’ circumstances.
Remembering that households in this scheme have a Crown lease and that they are paying a mortgage, this is the only scheme of its kind which adjusts housing costs according to changes in personal circumstances and the market conditions. Contrary to the suggestions by the opposition, the scheme actually reduces the potential for housing stress for households in homeownership. Because this scheme is the first of its kind in Australia, and ACT households have not had the opportunity to rent land before, the government is requiring all households interested in the scheme to attend an information session run by the Canberra Institute of Technology.
I am advised that the first information session was held on Tuesday night—last night—at the CIT. The first session was a resounding success, with the session fully booked, even before the legislation has been passed, and there are many more names on the waiting list for the second session. These sessions will continue to play an important role in outlining the details of the scheme and help people to decide whether the land rent scheme is the right option for them.
Land rent will only be available on a new single residential block of land released by the Land Development Agency. Contrary to suggestions, it is not the government or the LDA which would nominate the blocks available for land rent; the household will make that choice as to whether it wants to rent the block of land or pay out the lease. Any eligible household wishing to enter the scheme will be able to do so. Again, contrary to suggestions, the number of blocks available for land rent is not capped. The annual estimate of 120 is just that—an estimate. The government, of course, will be delighted if there are more people exercising this choice, and will support it. Along with the affordable house and land packages, it is another measure in the affordable housing action plan; it provides choice and options to households entering the housing market.
On the one hand, the government’s policy will directly help those struggling to enter the housing market. It will initially provide a benefit to those households on incomes under $75,000. On the other hand, the Liberal Party’s “no stamp duty” policy provides the most help to those households who could otherwise enter the housing market, on incomes above $160,000. The introduction of this unique scheme is another step towards more affordable housing. The scheme will add another housing alternative for households to choose in achieving their goal of homeownership.
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