Tuesday, March 11, 2014

NRAS: the baby in the bathwater

The National Rental Affordability Scheme (NRAS) is in the news, with The Australian reporting that about 4 000 units constructed under the scheme are being let to university students.

Some perspective: in its five years of operation, NRAS has subsidised the construction of about 14 500 dwellings, with another 24 000 dwellings in progress. In return for the NRAS subsidy, these dwellings are let at a discount to market rents (80 per cent) for 10 years. They must also be let to persons or households whose income is below certain thresholds; these are set higher than the thresholds for social housing, but we know of one community housing provider who reports that 15 per cent of its NRAS tenants had previously been homeless.

So, NRAS has delivered new construction and reduced rents – which is a lot more than can be said of the tax subsidy for negative gearing, or for capital gains tax.

There's actually an affordable housing baby in the NRAS bathwater! Would the Government throw it out, while its other tax settings do nothing but encourage speculation and make housing unaffordable?

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