HOW APRA HELPED CAUSE HOMELESSNESS

…and how it can be part of the solution today.

Imagine you are on a battlefield in war…you are holding an anti-tank weapon and you see an enemy tank advancing. You use what you have to protect your country and shoot the tank and successfully hit. Great. You turn to your mates expecting congratulations only to discover the BBDA (back blast danger area) was not clear and they were standing in it. In this case, shooting the target would literally kill the people you were trying to protect because it was not done correctly.

Between 2014 and 2019 the Australian Prudential Regulation Authority (APRA) implemented a range of changes, initially focused on a concern around an ‘investor fuelled property boom’. The application of macroprudential policies such as increasing deposit amounts, restricting the amount of investment loans and interest-only loans available and putting other limitations on banks and borrowers made it much more difficult for investors to enter the market. Similarly, last year APRA announced a change to tighten lending standards in a move to tackle high debt home loans and house price inflation. It adjusted the interest rate buffer (the measure by which banks assess a person’s ability to repay their loan while factoring in future rate rises) and increased it to 3%, up from 2.5%. This has a big impact on investors as it once again makes it more difficult to borrow money and provide more housing.

Let’s take a moment to think about what the impact of fewer investors means for the property market. Who lives in investment properties? Renters. Are we currently experiencing a rental crisis on the Sunshine Coast (and across many regions of Australia)? Yes. Then why are we making it HARDER for investors to be a part of the solution? Hmm…

To us, it seems APRA shot its anti-tank weapon in an attempt to address some ‘concerns’ without looking behind to see if the BBDA is clear first.

Every shot at an investor is a shot at a tenant.

Every attack on a property investor is an attack on a tenant.

Without property investors, we don’t have tenants.

So what can be done?

We recently launched the H.E.U.S Initiative (Home for Everyone Under the Sun) to address the rental, housing and homelessness crisis. It is a complex issue that needs a multi-faceted approach to really see sustainable change. One area of this solution is acknowledging how residential property investors and developers are VITAL to supply. They need to be supported to invest further in social and affordable housing.

Constraints need to be lifted, and laws changed to make it easier for them to provide more supply. We believe this can be done through the following:

• Residential property investors should not have any additional financing constraints – loan-to-value ratios, lending products and interest rates should be the same as or better than owner-occupiers
• Assessment rates (interest rate buffers) should be relaxed in line with increasing interest rates
• There should be clear and unchanging policy settings for Residential Property Investors
• Tax benefits should be increased, with particular benefits to those providing social and affordable housing (eg. an increase in capital gains tax discounts)
• Land tax be discounted for 5 years for new supply, and no land tax be applied for 5 years for those providing social and affordable housing
• Land tax on properties in other states (double dipping) be removed
• Stamp duty for residential property investors should be the same as or better than owner-occupiers with a discount for those providing social and affordable housing
• Local Council Rates for residential property investors should be the same as or better than owner-occupiers with a discount for those providing social and affordable housing
• Development costs and taxes should be discounted for the next 5 years, with additional discounts for those developers providing social and affordable housing

To read more about the full solution visit https://www.heus.com.au/

If you are also passionate about change and see the importance of investors in this volatile property market show your support now and be part of the movement by registering your details on the website. Every name counts.