8. Rents
This section outlines the process for setting rents under the Scheme.
8.1 Setting Rent Levels
Rents for dwellings under the Scheme must be at least 20 per cent below the market rents for equivalent dwellings in the location. They may be set at lower levels if, for example, providers wish to achieve greater improvements in affordability and/or to obtain the tax concessions available to charities that require rents to be set below specified levels.
8.2 Determining Market Rents
Managers will be required to comply with a prescribed method for determining the market rate of rent.
An independent valuation of the market rent will be required for each dwelling when it becomes available for rental under the Scheme. It will be adjusted annually by further independent valuations or, for no more than three consecutive years, in accordance with a relevant index designated for the purpose.
Valuation of market rents must be based on the conditions in which dwellings will be rented. For example, dwellings that will be rented fully or partially furnished must be valued for market rate of rent when it is furnished. A written valuation from the valuer must be obtained and retained by the tenancy manager. Evidence of independent valuations and rental records must be available to FaHCSIA upon request. Market rents will not have to be re-valued when there is a change in a dwelling’s tenants, owners or managers.
Valuations must be conducted by valuers who are registered in the relevant State or Territory and are subject to a Code of Conduct and professional practice standards of the Australian Property Institute. They must not own or have a commercial relationship with the registered owner or manager of the dwelling in question or a recipient of a Commonwealth or State benefit in relation to it.
Question 6 - The aim of the Scheme is to provide affordable rental accommodation at 20% below market rents. Do these provisions strike a balance between the need for administrative simplicity and the need to ensure benefits of the Scheme are passed on to tenants?
8.3 Australian Taxation Office Rent Benchmarks
Non-profit organisations with charitable status are able to treat supplies of residential accommodation as GST free if they rent the dwelling below 75 per cent of the market value of the supply or the cost of providing the accommodation. The Australian Taxation Office (ATO) publishes market rent benchmarks to assist charities to self-assess their eligibility for this concession.
These benchmarks are provided simply as examples of housing costs for capital cities to provide guidance to charities. They are not accurate or robust enough to be suitable for determining market rents under this Scheme.