Property investors received a boost this week with Prime Minister Kevin Rudd's announcement of significant expansions to the proposed National Rental Affordability Scheme.
The scheme will fund tax incentives for investors to build up to 100,000 new affordable rental properties - effectively doubling the government's pre-election promise of 50,000 new affordable rental properties - with the government planning to invest up to $30m to streamline the DA approval process.
Under the scheme, investors will be able to access tax credits valued at $6,000 pa for 10 years, for new properties that are rented at 20% below the prevailing market level.
The states and territories have also agreed to provide $2,000 per home, either through cash payments or in kind, such as via the provision of cut-price land or concessions on stamp duty.
The initiative will mean that the rent of a new property with a market rent of $400 per week will be reduced to $320 per week - saving the tenant $80 per week.
If the original target of 50,000 is reached by 2011-12 and if market demand by both renters and investors is strong, the program will expand to allow the construction of 100,000 properties from 2012 onwards.
Rudd said the National Rental Affordability Scheme is aimed at creating a new "asset class" of affordable rental properties, because there is currently very little investment from institutional investors in residential property in Australia.
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