Social welfare group Junction calls for tax cuts for developers to help create more affordable housing

A new push for tax cuts for developers and investors has come from a surprising source – and it could ease SA’s rental crisis.

Support for private SA developers and investors trying to provide affordable rental housing has come from a surprising source, the state’s biggest social welfare enterprise group Junction.

The non-government non-church body houses 4000 needy tenants in SA, but says developers and investors need taxes abolished to provide discount housing that the working poor could afford to rent, not just buy.

Chief executive officer Maria Palumbo has called on political parties to develop solutions to the home affordability crisis before the 2022 election, beginning with the Affordable Building To Rent model used internationally.

She said the current favoured “home purchase” system of one-off grants for individuals, as well as governments forcing developers to provide social housing to be sold in new developments, was not easing the strain in the rental market.

“Working people are being thrown out of rental housing in SA because property prices have gone up so much that mum and dad investors are selling all the houses to interstate investors,’’ she said.

“Rental properties have been cut in numbers and people are coming to us with nowhere to live.”

Junction chair Rob DiMonte and chief executive Maria Palumbo at Junction's Hackham Community Centre. Picture: Tom Huntley

Ms Palumbo said that instead, the new class of private investment “building to rent below market value” should attract the abolition of land tax, stamp duty, payroll tax, GST, FBT and access to government-owned land.

“There are levies upon levies upon levies on developers, and infrastructure demands on developments, and they no longer have the ability to pay them,” she said.

“They have to sell affordable housing properties to an eligible buyer who can then sell it for profit the next day.”

Ms Palumbo said the operation of community housing rental in SA was achieved on very low returns, but proved a large-scale private version of this was possible with tax breaks to contribute to returns for investors.

The Affordable Building To Rent system around the world allows ethical investors to band together to accept below-market rates, offset by lower taxes.

“There is capital out there now that wants to park itself into social, environmental, purposeful, ethical investment – a lot globally – and we have a housing crisis that government does not have a solution for,’’ Ms Palumbo said.

“There must be solutions to these social problems for the missing middle but it isn’t being done by the old charity donation or old government models,’’ she said.

“We need to move on. This is the in-between solution because there is nothing in the market in between owner-occupied homes and mum-and-dad investment rental at high-market rates.”