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Shake up for rental scheme

The Australian      |     11 March 2014

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The government has flagged a shake-up of the National Rental Affordability Scheme in the wake of revelations the program has been manipulated to build student housing that is being let to wealthy foreign students.

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student accom

The minister for social security Kevin Andrews has moved to close a loophole that has seen international students become key beneficiaries of the flagship $4.5 billion Rudd-era social housing scheme, which had been aimed at providing affordable housing for low-income Australians.

The changes are likely to involve placing extra conditions on recipients of subsidies under the program, which pays the owners of units $10,350 a year if they agree to charge rent at 20 per cent below market rates.

Two developers behind an 823-bed NRAS development in Sydney have tapped more than $80 million in subsidies to construct a building to be filled largely by international students. Universities have snapped up thousands of NRAS incentives to build large blocks of studio accommodation that is often taken up by fee-paying international students, who are the lifeblood of many universities’ finances. It appears there are more than 1000 foreign students in NRAS properties.

The NRAS has also led to the growth of an industry of firms operating through internet sites that solicit interest from investors in NRAS-funded units, promoting more than $100,000 in cash and tax breaks over 10 years.

The Department of Social Services has launched an internal audit of the payments and compliance under the scheme, which has delivered more than 20,000 of a target of 50,000 units but has been criticised for its complexity and vulnerability to manipulation. The government’s figures reveal that two in five places under the NRAS have gone to students, in many cases from overseas.

Andrews says the NRAS was rushed in design and implementation under the former Labor and “includes numerous design flaws, ambiguous legal requirements and red tape.”

Carol Croche, executive director of the Community Housing Federation of Australia, agreed the scheme was rolled out at high speed amid the global financial crisis and some finetuning is needed but strongly supported retention of the scheme.

The private housing construction sector echoed the community sector’s comments calling for Andrews to amend the scheme but not to scrap it altogether.

“What the recent criticisms of the program highlights is the need for the federal government to refine NRAS — but to scrap NRAS altogether would be throwing the baby out with the bathwater,” said Nick Proud, executive director of the Residential Development Council.

See

One state closed rental loophole

 

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