Capital city middle ring renewal needed: Property Council

To improve housing affordability the Property Council of Australia has suggested reform covering planning systems, infrastructure provision, and reforms to state and federal taxation arrangements in its submission to the House of Representatives Standing Committee on Economics.

#1 Zone more land for housing 

"Our capital cities need more inner city density, middle ring renewal, as well as new land releases. 

"Reforms should provide capacity within city strategies and local statutory plans to accommodate a growing population. Ensure clear citywide and local housing targets are in place, reported on and met. 

"Support planning strategies to place homes nearer to the opportunities and services within the community. Clearly acknowledge the importance of retirement living facilities, and facilitate their development." 

#2 Simpler planning, faster processes

"New developments are hampered by complex building rules and slow assessment processes that just force up base prices. 

"The cost of compliance with multiple layers of planning development legislation and regulation is now a significant component of the cost of housing. 

"These include, but are not limited to the Building Code of Australia, various state planning instruments, local council planning requirements, specific design guidelines for apartments and other targeted instruments. 

"In some instances the requirements of a single measure in one of these instruments can add $10,000 per dwelling in additional costs."

#3 Tax the production of new housing less 

"The production of housing is a highly taxed activity. Stamp duties, land taxes, GST and large development levies can make up as much as 26% of the total cost of a finished house, and up to 21% of the total cost of a finished apartment. To make housing more affordable we need to tax the production of housing less. 

"Property in Australia is taxed right throughout the supply chain, from land acquisition, to building, to market transactions, all of which are passed through to the end consumer. 

"Treasury’s own analysis highlights how damaging stamp duty is, with a 73 per cent loss of economic livelihood for every dollar taxed. 

"On that basis, we believe it is time for the Commonwealth to lead reform on the abolition of stamp duty, a reform that would act as a catalyst for stronger economic growth and activity. 

"Foreign investment provides valuable capital for new housing development and should not be the subject of punitive charges that act as a tariff on capital flows, as the government is proposing with its excessive fees for foreign investment applications. 

"The Henry Tax Review acknowledged that any changes to the tax treatment of investment properties should only be implemented after other housing supply constraints are resolved. 

"The most commonly discussed alternative to the current arrangements is to quarantine net losses to the investment property – that is, investors are still able to get deductions up to the rental income and carry forward any excess loss against future income (including capital gains). 

"Any wholesale removal of negative gearing or the CGT discount that discriminates against property would significantly harm investment, diminish rental supply and ensure that in the short to medium term, rents and property prices will increase. 

"The key to making homes more affordable is to increase the supply of new housing stock to better meet demand, and any move to restrict the current tax arrangements would be disastrous, particularly for rental supply." 

#4 Link housing and jobs 

"Strategic delivery of new road and rail links will bring more housing closer to jobs, which in turn improves people’s lives, opens up economic opportunities and deepens labour markets for business. 

"Land use planning, including that for housing, should be done in partnership with infrastructure planning and economic development policies. 

"Infrastructure provision has not kept pace with growth, particularly in our larger cities, and the result is long commute times, lack of employment opportunities within a reasonable proximity to housing development, increased pressure on services in certain areas, and a general decline in living standards for a growing proportion of the population."

"The provision of infrastructure that links housing to employment and improves the economic productivity of our cities will bring benefits not only for the economy, but to housing affordability and accessibility for more Australians."

#5 Incentivise reform 

"The Federal Government should consider kick-starting reform to bolster housing affordability by reaching a new competition agreement with the states, with incentive payments for achieving best practice planning reform. 

"Reform should recognise that comprehensive planning reform would deliver significant productivity dividends to the economy. This would in turn boost tax revenues, which can be used to fund reform incentives. 

"Take the form of a written agreement between the commonwealth and the states and territories, whereby the federal government agrees to provide incentive payments on the achievement of specific planning reform objectives and outcomes."

In the submission to the House of Representatives Standing Committee on Economics, the Property Council of Australia also said that there is opportunities for reform on matters like unlocking home equity for seniors, community housing strategy, the National Rental Affordability Scheme (NRAS), the National Disability Insurance Scheme and national data supply repository.