Low income NRAS incentives wasted on university student housing: Grace Mutual
Unclear, complex and poorly drafted regulations and laws had hurt the National Rental Affordability Scheme, according to the first public submission to the 2014 Senate inquiry into housing affordability.
Poor co-ordination between government departments had undermined property investor confidence, with the submission claiming "thousands"of property investors initial tax returns had been rejected by the ATO due to the NRAS complexity.?
The submission by Andrew Tyndale, a director of Grace Mutual, suggested the NRAS regulations were unduly complex. Grace Mutual Limited is a not-for-profit entity utlising wholesale funding in the social sector, in particular the financing thus far of more than 1,000 houses under NRAS.
Despite the flaws since its 2008 introduction, NRAS had resulted in significant numbers of affordable dwellings being constructed, Andrew Tyndale said.
"Regardless of criticisms of NRAS, it has resulted in the construction of at least 20,000 new affordable rental dwellings, directly positively impacting 30,000 tenants, building capacity and assets within the Community housing Sector, and creating or preserving thousands of jobs in home construction."
He added NRAS had brought affordable housing to the awareness of the general public suspicious of social housing.
"With the majority of built NRAS dwellings being sold to private investors, this has created widespread awareness of the need, the difference from social housing and the NRAS solution."
The submission noted the NRAS regulations were unduly complex, in particular the interpretation on capping of rental increases at original rental rate plus NRAS indexation for the full 10 years.
"This significantly disadvantages landlords who put in social tenants first, as they will not be able to increase rent, even if an essential worker becomes the tenant later.
"Many CHPs (community housing providers) bowed to State pressure and put social tenants into NRAS dwellings in the early days.
"Another example is the rejection of thousands of investor tax returns by the ATO, due to the complexity around the State’s NANE income and associated deductions.?
"Having two complex tax-related incentives (State & Commonwealth) increased the complexity and cost of documentation and legal services, and raised the barriers to institutional involvement, as did linking the incentives to the NRAS Rent."
'This poor coordination between government departments undermined investor confidence.
"This occurred from the very beginning where the ATO took a hard line stance on introducing investors to benefit from NRAS, despite this being one of the foundational objectives of the program."
The submission claimed too many NRAS incentives were being wasted on university student housing.
"Large numbers of NRAS incentives (at least 4,000) were awarded for the construction of student housing.
"There appears little evidence that this has any positive impact on the middle to low-income families that were the target of the original policy."
The scheme was hoped to generate the supply of 50,000 new dwellings between July 2008 and June 2012, and the option for 50,000 more to be built subject to market demand from 2012.
