Melbourne City Council candidates have announced a ‘new’ policy plan of giving rate relief to developments that incorporate a minimum portion of affordable housing. On its own, that seems like a good idea. And the proposed rate relief will hopefully motivate the construction of new affordable housing. But the concept of rate exemptions for affordable housing is not ‘new’. And existing laws are being ignored.
Many councils are presently declining to give a rating exemption to affordable housing owned by registered housing providers – despite the fact that Victorian legislation appears to grant an exemption. There is no good reason for this position.
Section 154 of the Local Government Act 1989 deals with rate exemptions. It grants an exemption to land which is “used exclusively for charitable purposes”.
Clearly the provision of social and affordable housing is a charitable use of land. Every registered housing provider in Victoria is required to be a registered charity (most are tax-deductible Public Benevolent Institutions).
There is one category of housing that does not get the exemption under the Act – a house or flat on the land which is:
- used as a residence; and
- is exclusively occupied by persons including a person who must live there to carry out certain duties of employment.
Most ordinary people will read this as a ‘carve out’ for a dwelling where at least one of the occupants is required to live in the residence in order to carry out employment duties. Examples might include a house used for drug rehabilitation which includes a ‘lead tenant’ employee; a Specialist Disability Accommodation which includes a live-in carer. It seems anomalous to exclude these types of arrangements from the charitable exemption.
But the Act does not exclude social and affordable housing from a rate exemption. In fact, the Act gives a rate exemption to affordable housing. Many Councils are simply ignoring the Act. If Councils want to give a boost to affordable housing, they could grant the rate exemption and they could do it today.
Giving effect to existing laws by granting rate exemptions would free up millions of dollars in the housing sector, which could be used to generate more housing. Housing solves homelessness.