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With rising mortgage interest rates and the cost of living on everyone’s mind, relief may be on the horizon. This month, the Victorian government announced plans for an affordable housing rental program aimed at closing the housing gap and easing rental stress.
As part of their $5.3 billion Big Housing Build, the scheme will provide an initial supply of 2,400 affordable rental units to metropolitan Melbourne and regional town centres. Special provisions have also been included for essential workers, such as nurses, police and teachers.
This scheme represents part of the Victorian Government’s broader commitment to improving access to modern, affordable, high quality and conveniently located housing in Victorian towns. This will be a welcome but much-needed relief to Australia’s current housing crisis. Let’s find out everything you need to know about the new scheme and how Victorians could access affordable housing in the future.
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How the Victorian Rental Scheme will work and who is eligible
The Victorian Rental Scheme will allow eligible low-to-moderate income Victorians, especially essential workers, to apply for fixed-term rental contracts of at least 2 years. Eligible households on Victoria’s Housing Registry will also have the opportunity to apply for any relevant rental property.
Rents in regional Victoria will be capped at median market rental prices under the scheme, with the same 30 per cent income protection cap as the capital.
The program will also encourage investors, such as pension funds, to make affordable rental properties available through construction or purchase.
Properties in the program will be managed by Homes Victoria, with a target of 2,400 rentals managed by specialist rental managers. How will the Victorian Rental Program work and who is eligible?
Who is eligible for the Victoria Affordable Rental Housing Program?
Applicants will be required to provide proof of income that meets the thresholds listed in the table below. Rents will be set based on location/number of bedrooms. In Melbourne, rental prices will be set at least 10% below the market average for that area, with an additional protection cap set at 30% of median household income. This way, applicants can rest assured that they will pay more affordable prices.
Eligible income thresholds:
|melbourne||Up to $62,860||Up to $94,300||Up to $132,030|
|Regional Victoria||Up to $45,820||Up to $68,730||Up to $96,220|
When will the diet start?
The Government of Victoria expects the first affordable rental properties to be available in Greater Victoria and Metropolitan Melbourne from the end of 2022. Specifically, they will be in:
- Ascot Valley
- Greater Geelong
Further properties will be added to the program over the 2023-25 period, with the majority available by 2025.
How to apply?
Once the program is operational, properties will be advertised online based on availability. The lists will contain information about the application process and the program.
For more information about the scheme, email [email protected]
Why a rental housing affordability program is desperately needed in Victoria
According to the Real Estate Institute of Victoria (REIV), the median sale price of a home in metropolitan Melbourne is currently $1.12 million. Meanwhile, prices in the Victoria area have become red hot, with a median increase of 27% last year alone (the highest growth rate since 2002). This deprives many Victorians of ownership, forcing them to become tenants instead.
In fact, according to the Victorian government, more Victorians than ever are tenants. This particularly applies to essential workers. More than a quarter of households surveyed on the private rental market devote more than 30% of their income to paying rent; it is one of the key indicators of rental stress.
Economic disruption from the pandemic and successive lockdowns have further driven up housing costs, making affordable housing one of the most pressing issues in Victoria (and greater Australia) this year. The new scheme aims to reduce rental stress by improving access to affordable housing for Victorians.
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