REIA: Proposed plan for private investors to help with government social housing

By the resi financial blog team, 23 August 2013

Private investment for social housing proposed

The Real Estate Institute of Australia (REIA) has said that property investors in Australia are an untapped resource for rental housing when it comes to accommodating for those looking into social housing, with the government unable to keep up with the demand.

President of the REIA Peter Bushby said in a statement released August 21 that government social housing is unsustainable, with demand exceeding supply in some regions by as much as 30 per cent.

He went on to say that there is no assistance for housing tenants with good records and stable incomes to make the transition into the private rental market and while the National Rental Affordability Scheme uses private sector funding, it excludes small investors who could provide a helping hand.

"We’ve proposed that investors could buy a new or existing property for rental purposes which would be subject to broad guidelines provided by the appropriate state government agency/department regarding location, size, number of bedrooms and value," said Mr Bushby.

The owner of the property could then approach the agency with property details and a valuation of the property to become listed as a transitional house. A tenant would then be selected and a real estate agent would manage the property.

"Governments would need to guarantee the rental payment for the term of the arrangement and depending on the extent of the rental subsidy, may need to consider other assistance to the owner to achieve the equivalent net yield if the property was rented in the private market," said Mr Bushby.

This solution could help lighten the strain on the government's social housing programs, by opening up smaller scale investors as part of the system - providing homes for transitional use in exchange for incentives such as a rental subsidy.

This could provide further incentive for anyone looking into taking out the cheapest fixed rate home loan possible for property investment purposes.

Categories: Property Investment