The social advantage of the rental affordability scheme is that it enables low-to-moderate income renters the assistance to afford better premises alongside nonassisted property owners or renters. For instance, in a typical apartment block, the owner may set aside one or two apartments to apply for the scheme, which Plibersek says should avoid the possibility of establishing new urban ghettos. Not that renters who are eligible for the scheme are any more likely to be undesirable tenants and neighbours than anyone else, given the scheme’s generous terms.
For instance, a couple with three children can earn up to $98,695 a year, join the scheme, and continue to get assistance up to $123,000 a year in family income. For a single person with no children, the entry level for the scheme is $41,514 per year, which is not a long way below the average wage. Plibersek says that Australians have a “love affair” with residential property, notwithstanding historical lack of interest shown by institutional investors. “One in seven taxpayers owns an investment property,” she says. The long-term historical returns from residential property show resilience, despite the usual cycles, with low vacancy rates, strong population growth, continued high employment levels and general housing shortages.
“The residential rental market is a good medium-to-long-term investment, with potential for significant capital gains,” she says. “The recent extreme volatility of Australian real estate investment trusts (REITs) in comparison with direct property may see investors increase their direct property allocation and decrease their listed property allocation.” Last calendar year, house prices increased on a nationally weighted average by 13.6 per cent, while the rental component of the CPI increased 5.4 per cent.
Developers and investors participating in the scheme can select their own tenants, as with any landlord. However, in Queensland the tenants must be drawn from the One Social Housing Register maintained by the Queensland Government. Of 11,000 allocations made in the first two rounds of allocations, Victoria has had the most total dwelling sites under the scheme, with 3,023, then NSW with 2,545 and Queensland, 2,448.