Commonwealth Consolidated Acts

HOUSING ASSISTANCE ACT 1989 - THE SCHEDULE Cost rent principles

Clause 26

The following principles are to be used to determine real cost rents for rental housing. The principles are not to be applied to the costs of individual dwellings but rather to the total cost pool of the rental stock. In allocating the total cost pool to individual tenancies, a State will have regard to variation in housing standards and locations within the constraints of available administrative arrangements for assessing these variations.

Recovery of operating expenses

1.   The costs to be recovered in this respect are ordinarily listed in the rental accounts of State housing authorities as yearly expenditure items. These include:

(a)   administration;

(b)   rates;

(c)   insurance;

(d)   specific operating expenses associated with particular types of units;

(e)   annual maintenance;

(f)   yearly allowance for rent arrears and debts written off;

(g)   yearly allowance for vacancies;

(h)   leasing expenses related to land and dwellings;

(i)    operating expenses of community facilities; and

(j)    any other operating costs agreed between the Minister and a State Minister.

Interest Charges

2.   The costs to be recovered by the State include:

(a)   interest payable by a State on loan funds invested by it in rental housing; and

(b)   a notional amount of interest on all Commonwealth and State grants invested in rental housing from and including 1989-90. That notional amount of interest is to be calculated at a rate taken as equivalent to the assessed secondary market yields published by the Reserve Bank of Australia in periodical Statistical Bulletins for the last business day of June preceding the commencement of the year in which the grants are paid into the Rental Capital Account.

Depreciation

3.   An amount with respect to depreciation is to be included in costs to be recovered. To this end:

(a)   the depreciation rate is to reflect a life of between 40-75 years of the capital improvements on the land;

(b)   the value of capital improvement will be based on the estimated current capital improved value; and

(c)   the minimum annual depreciation rate will be not less than the rate resulting from a term of 75 years.

IN WITNESS WHEREOF etc