Finally a breath of fresh air has been blown upon the housing affordability issue. The ACT government has acted upon its long history of innovative financing by proposing a system of leasing land. Income earners below $75,000 will be able to lease the land at 2% p.a of its’ unimproved value.
The immense benefits from such a move are summarised by Tom Skotnicki from the Canberra Times in this key article:
“A family with a household income below $75,000 could rent a $90,000 block for $35 a week, compared with the $165 a week that borrowing $90,000 for the land component would cost in a typical mortgage.”
With land accounting for the majority of all mortgages, paying just 21% of the comparative cost for the land component will help give low income households a fair go.
Better yet, this policy will ensure the people share in the higher value the community place on living in that neighbourhood. The yearly rental calculation will take into account this judgement.
In time we hope that this scheme will be expanded to include all households in the ACT. We must do all that we can to assist this positive development.
An editorial has just been placed on the leasehold system proposed by Canberra Times editor at large Jack Waterford.