Public housing rent increases

We've noted here a couple of times that the recession has knocked off rent increases this year. For some public housing tenants, however, rents are going up – by a lot.

(Senior Client Service Officer, Vlad Tepes)

The tenants affected are those who are on one of Housing NSW's concessional rent rebate rates. (For Brown Couch readers who are not up on public housing rents: most public housing tenants pay rents that are rebated to 25 per cent of their household income, but there are some types of tenants, some types of household members, and some types of income to which lower 'concessional' rates apply.) These persons are:

• pensioners on the 18 per cent rate. Their rent rebate rate will increase to 19 per cent this October, and a further one per cent each year thereafter, until they're on the 25 per cent rate.
  
• 18-20 year-old household members on the 12.5 per cent rate. Their rate will increase to 13.75 per cent this October, and increase again to 15 per cent next year.
• 21-24 year-old household members on the 20 per cent rate. Their rate will increase to 22.5 per cent this October, and increase again to 25 per cent next year.

Now, Housing NSW will say that these are increases of only one, 1.25 and 2.5 per cent. But that's if you measure rent increases relative to income, which no-one really ever does. Most people measure rent increases relative to what the rent used to be, so here's what these rent increases really look like:

• 18 per cent pensioners: up 5.6 per cent this year
  
• 18-20 year olds: up 10 per cent this year
  
• 21-24 year olds: up 12.5 per cent this year.

Ouch.

To anticipate another objection: even after the increases, these people will still be paying afforable rents. Actually, I wonder about the 'affordability' of the 25 per cent rate. I don't think there's any great science behind it, and there's been other benchmarks. Until a few years ago, public housing's general rate was 20 per cent, and another, older rule of thumb was that a workingman's rent should be no more than one-sixth of his income. Research by Prof Terry Burke suggests that the 25 per cent benchmark of affordability is, for some low-income households, too high.

It's not good enough for Housing NSW to justify these steep rent increases by saying well, that's what we're getting out of the rest of our tenants. Housing NSW should instead go back and look at the budgets of its clientele and see if they really can afford these rents.