Friday, October 19, 2012

Bonds for social housing tenancies?

A couple of days ago Greg Pearce, the NSW Minister for Finance and Services (he's in charge of government assets, including the bulk of housing that is managed by Housing NSW), made an announcement - he would like to start charging bonds to social housing tenants, among other strategies, to curb deliberate vandalism of social housing properties.


You can find a link to the Minister's press release from the Finance & Services website… or you can download the .pdf version from here.

Mr Pearce says that it will cost up to $12 million to repair vandalised public housing properties this year, and that's up from $5 million last year and $8 million the year before. He says that "there are hundreds of social housing properties across the state waiting to be refitted because previous tenants caused so much damage that they are not fit to live in".

Now, regular visitors to the Brown Couch may recall our recent discussion about the Parliamentary Q&A session between the Treasurer, acting on behalf of the Finance and Services Minister, and Mr Jamie Parker, the Member for Balmain. In this session it was revealed that the 2012-13 budget for repairs across NSW is $210.2 million for planned and responsive repairs, and $194.5 million to upgrade social housing properties. That's a total of $404.7 million being pumped into the repair, maintenance and upkeep of the government's mostly ageing housing portfolio in the current financial year. Clearly, this is an expensive business. $12 million, in the grand scheme of things, is not big bikkies.

That said, $12 million is still a whole lot of money. As the Minister suggests, it would be better if it could all be spent on building new homes. But we wonder how much of that $12 million can be directly attributed to the liabilities of tenants, taking into account their obligations under the Residential Tenancies Act 2010? How much of it is a result of other factors?

Let's have another look at that Q&A session

As we've already mentioned, in 2012-13 there is $210.2 million to be spent on planned and responsive repairs, and $194.5 million to be spent on upgrades of ageing stock - so there is clearly a lot of work to be done. But it was also revealed that in the 24 months before June 30th 2012 the government's contractors were called back to 39,142 jobs where further work was required. The majority of these recalls were at the contractors' own expense, which might indicate that the job was in fact not properly seen to the first time around.

We wonder how many incomplete repairs are not properly picked up on by HNSW or its contractors, with tenants incorrectly being charged for these repairs at the end of their tenancy? Our discussions with the Tenants Advice & Advocacy Services would suggest that this is not uncommon. On top of this, it is often reported to us that attempts are made by HNSW and its contractors to charge outgoing tenants for routine repairs and maintenance that they are not liable for, but that any good landlord should tend to between lettings of a property.

We can also note from the Q&A session that at the time it occurred - late July, early August 2012 - there were no properties that were unoccupied because they were not considered fit for habitation. Now, just a few short months later, there are apparently "hundreds across the state". We're just not sure what to make of this.

Regardless, it's pretty clear that there are some issues with the way the government's housing portfolio is being looked after. We're not convinced that fingers of blame should always be pointed at tenants, to whom only a fraction of the problem might actually be attributed even before we start to test any specific allegations of liability.

But back to the issue at hand: bonds for social housing tenants.

Interestingly, a large number of tenants who are housed by social housing landlords in New South Wales have already paid a bond. Many Community Housing providers already make use of the practice, although it is true that Housing NSW does not. We'd be prepared to bet that almost every one of those tenants has obtained their bond money through either a grant or a loan from Housing NSW. This is because, as the Minister himself has alluded to in this recent announcement, "in most cases, tenants are on such low incomes they can't afford it…"

Perhaps even more interestingly, the Minister suggests that bonds "would only be considered for high risk tenants who may have a history of damaging properties and who ask for a second chance". Currently, such tenants would be subject to the policy of 'categorising a former tenancy', that might see them subject to specific conditions in order to meet the social housing eligibility criteria a second time around. At a minimum, a 'less than satisfactory former tenant' (that is, someone who owes Housing NSW more than $500 from a previous tenancy) is eligible to go onto the waiting list, but their application will be suspended for a period of six months… which makes the application effectively useless if the need for housing is critical. So while we're not ready to sing the praises of social housing tenancy bonds in general, if they were to replace this system of 'categorising a former tenancy' (and applicants could borrow the money on interest free terms, and Housing NSW would take more care in assessing damage for which a tenant is liable at the end of a tenancy) we might start to be persuaded.

But in the meantime, we'll continue to remind Housing NSW and the Land & Housing Corporation of their own obligations when it comes to the repair and maintenance of the properties in which their tenants live.

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