Slew of housing affordability measures announced

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The government is moving forward with a slew of initiatives aimed at improving housing affordability, two senior finance officials said on Thursday.

In a joint statement, Finance Minister Scott Morrison and Assistant Minister to the Treasurer said legislation was introduced to Parliament seeking to:
  • enable prospective first home buyers to save for a deposit inside superannuation through the First Home Super Saver Scheme (FHSSS)
  • allow older Australians to contribute the proceeds of the sale of their family home to superannuation
  • better target deductions relating to residential investment properties
  • boost the availability of rental accommodation in the market
First Home Super Saver Scheme

Morrison and Sukkar said the FHSSS legislation will enable prospective first home buyers contribute up to $30,000 (up to $15,000 a year within existing caps) into superannuation. They will be able to withdraw the contributions from 1 July 2018. These contributions, along with deemed earnings, can be withdrawn for a deposit with withdrawals taxed at a marginal tax rate less a 30% offset.

“For most people, the FHSSS will enable them to boost the savings they can put towards a deposit by 30 per cent compared with saving through a standard deposit account. This will give prospective first home buyers a significant step up at a time when saving for a deposit is becoming increasingly difficult for many people.”

Downsizing
The downsizing measure enables older Australians to contribute proceeds from the sale of their family home into their superannuation accounts. “Many older Australians will be attracted to take up this concession and in so doing vacate larger properties which no longer suit their needs.”

Australians 65 years old and above can contribute up to $300,000 into their sure if they sell a home they held for no less than 10 years. Both members of a couple can take advantage of this initiative.

Protecting Negative Gearing

The government is seeking to protect the integrity of the tax system by preventing residential property investors from taking holidays at the taxpayers’ expense. Travel costs for individual investors inspecting and maintaining residential investment properties will no longer be deductible.

“By limiting plant and equipment depreciation deductions the Government is cracking down on investment property abuse by removing the existing opportunities for capital items to be depreciated by multiple owners in excess of their actual value,” said the officials.

Vacancy levy

The government wants to implement an annual vacancy charge on foreign owners of residential real estate where property is not occupied or genuinely available on the rental market for at least six months in a 12 month period.

“The vacancy charge builds on the Government’s existing foreign investment regime to increase the number of houses available to live in. The charge provides a financial incentive for the foreign owner to make their property available on the rental market,” said Morrison and Sukkar.


Related stories:
Housing Affordability Declined In June
“Unusually High” Month For Apartment And Unit Commencements

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Comments
  • Steve says on 11/09/2017 03:31:45 PM

    I don't see how the APRA and ASIC lending changes which are making it harder for property investors is going to boost the availability of rental accommodation in the market or the changes to the depreciation of existing properties is going to make it more attractive for property investors?

  • Jetie says on 11/09/2017 06:24:29 PM

    I agree Steve. Curbing depreciation and travel deductions cannot possibly aid housing affordability. The truth is quite the contrary, as it reduces incentives for investors to own rental properties. The Treasurer and the Treasury servant are full of it.

  • Kirky says on 12/09/2017 02:43:03 PM

    Our politicians are so out of touch! how does cracking down on depreciation improve rental affordability.... it won't!! it will drive up rental prices and push investors away into other investments.... take a look at Bitcoin at the moment!
    As for foreign investors, most of them will up the price of the rent to deter people from renting the property or rent it on air bnb to their international friends and family, so thats not and effective strategy either!!!

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