What’s in the 2023 Budget for housing and homelessness?
15 May 2023
The 2023 Commonwealth Budget includes a number of items targeted at improving rental affordability for lower income renters; supporting lower income home buyers; increasing supply of social and affordable rental housing; and for people experiencing homelessness.
Increase in Commonwealth Rent Assistance
The maximum rates payable to households through Commonwealth Rent Assistance will rise by 15 per cent at a cost of $2.7 billion over 5 years from 2023. This increase is at a rate higher than the usual CPI increases applied every March and September.
Increases in social and affordable housing supply
The Government is increasing the National Housing Finance and Investment Corporation’s (NHFIC) liability cap by an additional $2 billion to $7.5 billion, to provide more low-cost loans through the Affordable Housing Bond Aggregator to Community Housing Providers. This is expected to support around 7,000 more new social and affordable dwellings.
The Government is also amending NHFIC’s Investment Mandate for it to take reasonable steps to allocate a minimum of 1,200 homes to be delivered in each state and territory within 5 years of the Housing Australia Future Fund commencing operation.
The Government has previously announced the Housing Australia Future Fund (HAFF) to boost the supply of, and better facilitate private investment into, social and affordable housing. The returns from the HAFF investment are expected to deliver 30,000 social and affordable homes over 5 years and provide funding of $330 million for acute housing needs.
Upgrades to social housing energy efficiency
The Household Energy Upgrades Fund will provide $300 million to cut energy bills by around one-third through funding energy performance upgrades for tenants in 60,000 social housing properties, in partnership with states and territories.
Targeting increases in Build-to-rent housing supply
The Government is offering new incentives to encourage investment in Build-to-rent housing supply by reducing the withholding tax rate for eligible fund payments from managed investment trusts from 30 to 15 per cent (for newly constructed build-to-rent developments) and by increasing the capital works tax deduction (depreciation) rate from 2.5 per cent to 4 per cent per year, thereby increasing the after-tax returns for newly constructed build-to-rent developments.
Supporting home ownership
The Government is expanding eligibility for the First Home Guarantee and Regional First Home Buyer Guarantee, which guarantees participating lenders for up to 15 per cent of the property purchase price, to any two borrowers jointly applying beyond spouse or de facto couples; to non-first home buyers who have not held a property interest in Australia within the previous 10 years; and eligible permanent residents. The Family Home Guarantee will be expanded to single legal guardians of dependents, in addition to natural and adoptive parents. In these programs the Australian Government guarantees the liabilities of the lender if a borrower defaults on their repayments.
Energy upgrades for existing homes
For existing home owners the Government is creating the Household Energy Upgrades Fund to support home upgrades that reduce energy usage. The Fund will inject $1.0 billion into the Clean Energy Finance Corporation to unlock more than 110,000 low-interest loans for energy-saving home upgrades, in partnership with private lenders.
The Government is also providing $36.7 million to modernise and expand energy efficiency standards, which includes expanding the Nationwide House Energy Rating Scheme to cover existing homes as well as new builds, to help Australians make the best choices regarding energy use of their homes.
Support for homeless Australians
The Government is providing an additional $67.5 million through the NHHA to help reduce homelessness in 2023–24. It is also providing providing $800,000 in funding to 2024 to state governments to trial social impact investments to help people at risk of homelessness.
Ongoing funding for National Housing and Homelessness Agreement
The current National Housing and Homelessness Agreement (NHHA) will provide over $1.7 billion to states and territories, with a further $187.5 million for Housing and essential services on Northern Territory Homelands; remote housing and people at risk of homelessness. The Government is committing to a one year extension for the NHHA to 30 June 2024 while negotiations are underway with states and territories.
The Government will provide Treasury $2.7 million to support delivery of priority housing measures. The Government is also enabling up to three additional members to be appointed to the National Housing Supply and Affordability Council to provide a greater breadth of policy expertise.
The Budget papers confirm the National Cabinet meeting in April 2023 committed that Planning Ministers, working with the Australian Local Government Association, will develop a proposal for National Cabinet in the next 6 months outlining reforms to increase housing supply and affordability.
The National Cabinet meeting in April also committed that Housing Ministers from State and Territory Governments will develop a proposal outlining ‘best practice’ reforms to strengthen renters’ rights across Australia.