A new Federal Government means a potential new suite of policy reform across the Australian property sector. Below we outline the "big ticket items" from Labor’s election campaign and what opportunities they could create, if legislated, for property investors and developers.
The "Housing Australia Future Fund"
The newly elected Labor Government promised during its campaign to deliver the Housing Australia Future Fund (the HAFF). The HAFF's proposed creation is via a $10 billion low interest loan, invested by the Government which has promised to utilise the return on investment for the purpose of building social and affordable housing properties around Australia. The Government has predicted 30,000 new social and affordable housing properties will be built in the fund's first five years. This, however, would depend on the rate of return on the Government’s $10 billion investment.
The Government has promised that $200 million from the first 5 years of returns will be allocated to repair, maintenance and improvement of housing in remote and Indigenous communities. Overall, the preliminary information released to date does not detail the areas where the new social and affordable housing will be concentrated. However, there are clearly opportunities for residential developers, working with the community groups in cities, regional and remote communities to benefit from the delivery of these promised projects. If the predicted goal is achieved, it is projected that the construction industry will see an injection of over 20,000 fulltime jobs.
Whether the targets set by the Government are achievable having regard to escalating construction costs remains to be seen but, for developers tapped into the residential market, the HAFF offers potential benefits to both the community and the construction industry.
The "Help to Buy" scheme
Labor also promised during its campaign to implement a new "Help to Buy" scheme from July 2022. It is proposed that the Scheme will reduce the initial out-of-pocket cost of buying a home for low to middle income earners, provided they satisfy the eligibility criteria. The Scheme is based on provision of a contribution from the Federal Government of up to 40% of the purchase price of a new home and up to 30% for existing homes, with prices capped based on region (for example, $650,000 in Brisbane, $550,000 in Perth and $950,000 in Sydney). The Government will then own the relevant proportion of the home.
Based on the information the Government has provided to date, there are no requirements to make repayments to the Government for its equity share, although it is anticipated that homeowners will be entitled to buy down the interest owned by the Government over time. The Government will also recover the balance of its contribution, plus a proportional share in the capital gain once the house is sold.
It is not clear, however, whether there will be priority issues with financiers in the event of a decrease in value or a sale below the original purchase price.
This new form of property ownership is an interesting development and will certainly be one to watch as more information becomes available. It is also important that more specific details in relation to the position regarding mortgagee default scenarios and decreases in value are provided by the Government, which is expected as part of the next Budget.
Powering Australia Plan – Renewables Targets
The Labor Government proposes to turn Australia into a "renewable energy superpower" under its Powering Australia Plan. Under the Plan, Labor is targeting a 43% emissions reduction by 2030, with the intention to set Australia on a course towards net-zero emissions by 2050.
To reach this 43% target, the Plan proposes to increase the share of renewable energy in the National Electricity Market to 82% by 2030 by installing 400 community batteries across the country and injecting $100 million into the development of 85 shared 'solar banks'. The Plan is set to operate predominately at the residential level by incentivising homeowners to purchase a share of a community-owned solar or battery project.
In the commercial sector, the related New Energy Skills Program plans to incentivise businesses to employ apprentices to perform renewables focused work such as rooftop solar installation and maintenance, large-scale renewable projects including emerging green hydrogen, energy efficiency upgrades to homes and businesses and renewable manufacturing.
These policies proposed during Labor’s campaign suggest we can likely expect a future increase in large-scale renewable energy projects and investment in this space.