Friday, March 20, 2015

NSW Greens on housing and tenancy

With the NSW State election just over a week away, let's look at the parties' policies for housing and tenancy. We'll start with The Greens.

The Greens propose investing $4.5 billion in new social housing and affordable housing, as part of a $20 billion program for investment in new infrastructure. This program would be financed by borrowing and additional tax revenue, including from the reintroduction of Vendor Duty.

In its previous incarnation (2004-2006), Vendor Duty was a tax payable on sale of a property (excluding principal place of residence, family farms and new dwellings not previously occupied) where the value had increased by 12 per cent or more since the previous purchase. Vendor duty was levied at 2.25 per cent of the value at sale, with discounts for properties close to the 12 per cent threshold.

We say: the social housing sector has been on starvation rations for two decades, and badly needs a boost in funding to grow again, so The Greens' proposal for a $4.5 billion investment in the sector is very welcome indeed.

The State Government has a strong capacity for repaying debt, so the proposal to borrow to fund investment is generally sound.

And we don't mind Vendor Duty. It is a bit like stamp duty, except it is not payable by owner-occupiers; this addresses one of the problems with stamp duty, which is that it effectively fines owner-occupiers for moving house. However, if you want a stable revenue stream, as well as improved affordability through the continuous discouragement of speculative property hoarding, encouragement of land being put to its most productive allowable use, a broad-based land tax is best.

The Greens have stated their commitment to a range of housing principles, including affordability and security of tenure, and have put forward in the election campaign some specific proposals for tenancy law reform. In particular, The Greens propose to:
  •     Limit excessive rent increases by allowing no more than one rent increase a year
  •     Cap rent increases at no more than CPI (which is on average 2-3% per annum) and
  •     Increase security of tenure through an end to "no grounds" evictions.

We say: absolutely, put an end to 'no-grounds' terminations by landlords. 'No grounds' termination notices give cover to terminations for bad reasons, such as retaliation or discrimination, and make all tenants insecure. The law should prescribe instead a set of reasonable grounds for termination. This wouldn't present a problem for most landlords, and would give all tenants more peace of mind and security.

As for rent increases: yes, rent increases should be limited to once per year. Under current New South Wales law, there is no limit as to the frequency of rent increases, unlike most other Australian States and Territories, which have managed to provide for reasonable limits. A limit as to frequency would not actually be a big deal for the majority of landlords who don't increase rents more than once or twice a year, but it would help deal with retaliatory rent increases (eg you ask for a minor repair, then comes a rent increase notice as a not-so-subtle way of telling you not to ask again) and give all tenants more peace of mind.

We understand the appeal of limiting rent increases to CPI, but wouldn't go as far as calling for a hard cap: we propose instead that where a proposed increase is above CPI, the landlord should bear the onus of proving that it is not excessive.

Overall: well done to The Greens on a sound set of proposals for housing and tenancy policy.

(We might add: well done to them too for getting their policies and principles generally into the public domain through their website. Other parties take note.)

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