US Capital Eyeing Rented Apartment Market

Written by: Ned K. on 30 November 2024

(Above: Gladstone apartment block, South Melbourne  Photo: www.thegladstone.com.au)

On Thursday 28 November the federal Government's Housing Scheme and Build To Rent Scheme passed through the Senate with the last-minute support of The Greens. 

The two Bills became law in the same week that there were more media reports of examples of people having to live in over-crowded, unhygienic rented rooms within flats to avoid living on the streets. The room renting is called "hot bedding" which is sharing the same beds in over-crowded beds of up to 20 people per room and living rooms partitioned for more sleeping places. Sub-letting in large cities like Sydney is also common where there is no written lease, rent paid in cash, no return on bond deposits and no proof to fight evictions. In the same week, it was announced that Perth had overtaken Sydney as the most expensive city to rent with one-bedroom flats being rented for $550 per week.

Prime Minister Albanese was visibly relieved to see the housing and rent related Bills become law. Will they solve the affordable housing and rental crisis in Australia? Not likely. The fundamental reason the Bills will not solve the crisis is that the schemes arising from the Bills obey the private for-profit engine of capitalism.

Build To Rent Scheme

In this article, let's take a look at the Build To Rent Scheme. In a second article to follow, we'll have a look at the Government's new Housing Scheme. 

The Build To Rent Scheme opens the gates for imperialist capital investment in the housing apartment sector. This follows its presence in Australia in the overseas student accommodation market and in commercial and industrial property markets. The Scheme is called a "tax reform" because big overseas capital investors in apartment blocks will get the with-holding tax rate of 30% reduced to the same 15% rate that applies for commercial and industrial property.

At the same time, foreign capital investors in building apartment blocks will get a capital works tax reduction increase from 2.5% to 4%. This allows expenses to be depreciated over a 25-year period rather than the current 40 years. The only restriction on the foreign capital investors is that tenants must be what is called long Term Rental which means a minimum of three years with the same tenant. 

There are no conditions placed on the rent price of the apartments, so the Scheme's "carrots" offered to foreign capital do not guarantee that the rents will be "affordable". 

An example of the foreign capital "interest" in the apartment rental market is Greystar, from Charleston in South Carolina in the USA. Described as an "American juggernaut" by Real Commercial, Greystar has already built its first "built to rent" apartment towers in Gladstone Street in South Melbourne and called the three-tower apartment block Gladstone which has 700 units in all. 

Greystar has real estate investments in apartments valued at $US315 billion.

Greystar boss Bob Faith wants to "team up" with pension funds and other sources of finance capital to build more apartment towers and attract middle-income earners to occupy them as long-term renters. Greystar is also planning to enter the overseas student accommodation sector in Australia through a takeover of Singapore based GIC.

The Albanese Government and previous governments are well known for being tied in so many ways to US  imperialism. Now the apartment rental sector in Australia can be added to the list!

Affordable housing for working people, retired people, students, unemployed will only be possible to its fullest extent when Australian economy is owned by the people and all sectors of the economy run for people's needs, not profits.

Print Version - new window Email article

-----