Tuesday, April 30, 2013

The rent is too damn high - but why?

Keen followers of rental related reporting will have noticed some pretty dire headlines over the last couple of days. The ABC screams "Mission impossible for low income renters", the Sydney Morning Herald yells "Poor priced out of Sydney rental market", while The Australian exclaims "Dearth of housing for the poor".

Why is my rent going up again?

Some regional papers have jumped in, too, with reports from Broken Hill, GoulburnAlbury, YassPort Macquarie and Newcastle that high rents have made headlines locally.

The Daily Telegraph offers a slightly more subdued "Anglicare rental affordability report shows welfare recipient struggle to find housing", which gives us a clue as to what all this is about - Anglicare Australia has just released it's Rental Affordability Snapshot for 2013. The news is not good.

We wont go into the headline findings - they've been covered pretty well by the papers. Suffice to say that if you're on a low income - like a Centrelink payment, or a wage from a part-time job - your chances of finding something decent to rent in the private rental market are pretty slim. Well, almost non-existent, actually. This is not just in Sydney, it's across New South Wales, and it's across the country.

For keen followers of rental related reporting this should come as no great surprise, even if it does fly a little in the face of current reporting conventions. We already know the rent is too damn high. It's kind of nice to think that others are getting this message - at least for a day or two - thanks to the work of Anglicare Australia. But it's a shame that the conversation tends to stop there. Who is asking the next question: why is the rent so high? And what happens to those of us who can't afford it?

As it happens, we were in attendance at the recent Shelter NSW conference "Hot Topics in Housing Policy", where one Emilio Ferrer of Sphere delivered a presentation called "The Private Rental Market - Affordability and Homelessness". Ferrer observes a correlation between rising rates of people seeking to access homelessness services, and rising rents in the private rental market. He says that these rises are not the product of economic indicators such as GDP, unemployment or wage growth. Nor are they the result of a decline in the availability of social housing properties. Instead, he says, they are the result of chronic underinvestment in housing supply by the private sector, which has resulted in a consistently low vacancy rate over several years.

"The effect of this on tenants," he suggests, "is that it's a landlord's market. Some tenants are priced out of the market, and some tenants are selected out of the market". By this he means that it becomes easier for landlords to pick and choose tenants, because when vacancies are low, competition is high, and the pool of applicants for an affordable property will be much larger. Applications from those with lower incomes will be some of the first to hit the culling room floor.

You can find the slides from Ferrer's presentation (as well as others from the conference) here. We think he's pretty much on the money. As we've alluded to before, current policies that are said to encourage private investment in rental housing just aren't producing enough new stock. According to Ferrer's data, it doesn't even come close - in order to get back on track we'd need to build about twice the number of new dwellings than were built in 2011/12, every year, for the next twelve years.

But there's something else to consider here. Not every tenant who finds their options limited by what they can afford ends up homeless. As we said in this previous post:
In the real world, of course, people do consider the affordability of housing when they decide whether to leave the parental home, or the share house, and form a household of their own, and demand some housing – owner-occupied or rented – of their own. And some of those already out there in the housing market might look again at its affordability, and decide to withdraw, back to the spare rooms of parents and friends.
It's a curious balance. The answer is not just to "build more homes", but to build more homes that people can afford. This will call for a range of policy solutions - indeed, we should be looking at an entire national housing strategy - and as Anglicare's Andrew Yule has said following the release of the Rental Affordability Snapshot yesterday: let's not let this fall off the agenda.

11 comments:

  1. Maybe it is time for renters to organise. Rent strike anyone?

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    1. Hi Anonymous,

      In all good conscience, we can't recommend a rent strike. While it is true that the mass withholding of monies from landlords (and, perhaps, mortgagees while we're at it?) would generate some interesting social and economic responses, the reality for tenants is that it would end in eviction and, sometimes, homelessness. While some people may be able to wear these consequences for the sake of their politics, others may not.

      On the other hand, getting a little bit organised is exactly what we need to do. It's interesting to look at past examples of organisation and activism around renting - from the solidarity amongst unemployed workers picketing their neighbours' evictions during the depression, to community opposition to the sell-off of or demolition of large tracts of public housing, and the relatively recent establishment of the Tenants Union in New South Wales.

      But, over the years, our place in the world has changed. We've gone from being more or less an activist lead organisation to being a Community Legal Centre with expertise in law and policy as it relates to tenants. This has resulted in some fairly critical changes in the way we operate, and the way we engage with tenants. Now our primary focus is to assist tenants to understand their rights, and through doing this we are able to speak with authority on how renting laws and policies operate, and how they should be changed.

      There are clearly many issues that cannot be resolved with a legal challenge alone. The more of us who work together to critically engage with our system, which rewards speculation in property at the expense of those who live in it, the better our opportunities to challenge it will become.

      Cheers,
      N.C.

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  2. Of course, another way of looking at it is from the demand side. Rather than saying the problem is "the result of chronic underinvestment in housing supply by the private sector", one could say it is because the fact that Australia's population is growing by about 1000 people per day - all people who have to find somewhere to live! No wonder we have a housing affordability crisis. Higher demand = higher prices. We need a stable population now! www.populationparty.org.au

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    1. Either way you draw the distinction, Anonymous, the problem is that the private market is not building enough dwellings for the people who choose to make Australia their home. Population growth is not our concern - there should be more than enough to go around. It's just that the resources we have available are not so wisely spent. You might like to check out some of our other posts about the 'real housing supply problem'.
      Cheers,
      N.C.

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  3. Why is population growth not our concern, when it is affecting our quality of life, in this case through pushing up the cost of rents and real estate generally? The population growth policies of this Federal Labor government and the previous Liberal one are unsustainable. The private market can't keep up with the demand for housing, and in any event, land is finite. We live in a democracy and we can vote for change - i.e. by voting for the Stable Population Party at the federal election. A stable population will improve housing affordability.

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    1. We believe we've addressed such questions in a number of posts about housing affordability and housing supply, including those I referred to earlier.
      We understand that not everyone will share these views.
      None-the-less, we express them with confidence, knowing that we have considered a wide range and variety of information before arriving at any conclusion.
      We hope our contributions to such discussions remain relevant no matter what the prevailing ideology of the day.
      As you say, people will make their own enquiries, and, when given the opportunity, will exercise their democratic function according to their own views and conclusions.
      Cheers,
      N.C.

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  4. and then as the land value increases because of demand so does the landtax and it never goes down,,I paid $6000 this year and getting $340/wk rent,avg in my area 400-600,I just raised it $30 because I had to,,then with rates/water,theres not much left,,yes,,I'm a so called greedy landlord

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    1. With your rent well below the market like that, it sounds like you're not as greedy as some... But it begs the question - why do it? Capital gains, or warm fuzzy feelings?

      Thanks for your comment, Anonymous. It's always good to hear from 'the other side'.

      Cheers,
      N.C.

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  5. cheers NC,,so it looks like to me the market is governed by what landlords get charged by the state OSR and overinflated land valuations,,it sucks and makes the landlord take the brunt,,,yes NC,,warm fuzzy feelings lol,,family inheritance and long memories

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  6. Our society is not a debating chamber, but a power struggle between different groups and classes with competing and opposing interests. The landlords are raising the rent because they have the power to do so pure and simple. The complex where I live in for example is run by numerous landlords, all in association with each other, and come every 6 months they raise the rent another ten dollars, not because anything's different, but because they can. They won’t be swayed by argument, because from such a position of solidarity and strength (between landlords as a class) all arguments can be safely ignored. And anyway - we shouldn't have to rely on the good nature of a landlord to ensure a stable place to live in. Unionism used to be about association - ie tenants and workers getting together directly to form solidarity networks which can impose their own decisions. It scares me that the official 'Tenants Union' is purely representational - pretty much a lobby group/Service/NGO far removed from the collective self-organisation of tenants. Don't get me wrong - we need people who can remind us of the few rights we have and help us navigate the confusing world of the Law, but it's not unionism and it encourages people to approach these issues as individuals through the disempowering legal system - nearly always weighted in favour of those in power.

    The legacy of rights and social gains which we enjoy today weren’t granted as gifts from above or because we asked nicely through reports and funding proposals— they were won and forced upon the system through popular struggle and have to be maintained through struggle. Now that we're weak - they want to take away everything we've won in the past: The tenants rights sector, public services, support for LGBT communities, the right to strike, abortion rights, schools, the health of our communities and environment…This goes way beyond housing - If we don’t get organised we basically give those in power a blank cheque to do as they wish. There's no point talking about a rent strike or anything of the sort since we have no power as tenants as it is. We need to re-learn basic nuts and bolts organising and begin to form the types of unions that will really serve to express and encourage solidarity between tenants and workers -- start talking to your neighbours and get something going!

    For some useful info on how to start organising around housing see the following:

    How to build a solidarity network:
    http://libcom.org/files/seasol-pamphlet-expanded-A4.pdf

    Picture the Homeless:
    http://www.picturethehomeless.org/

    The City is Ours (Melbourne):
    http://melbournecio.org/

    Brisbane Squatters Handbook:
    http://www.zinelibrary.info/files/squattershandbook.pdf

    Ontario Coalition Against Poverty Direct Action Casework Manual:
    http://ocap.ca/node/322

    Seattle Solidarity Network: An example of tenant/worker power:
    http://www.seasol.net

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    1. Dear Anonymous,

      Thanks for your very interesting comment… a most thought provoking contribution. If what you say were so - that our society is not a debating chamber but, purely and simply, a series of power struggles between the classes - then there would little point in offering this brief response… I like to think it's more than that, and I recall that famous scene in Ken Loach's 'Land & Freedom' as my motivation for saying so (http://www.youtube.com/watch?v=njWMkZYazCM)

      It is fair to say that a preoccupation with rights and remedies-at-law can come at the expense of solidarity and self-conscious organisation - I've all but said as much in an earlier comment. But let's be cautious not to overly romanticise the idea of what 'unionism used to be'… Unions have always walked a fine line between the organised association of working people and the controlled management of class struggle within a particular set of political principles. Sure, there are examples of more radical unions (or interventions into unions by organised groups of radical workers) that have enjoyed relative organisational success at one time or another - such as the Central Organisation of Workers of Sweden - but these have been examples of collective organisation, rather than mere unionism. And never have they resulted in 'solidarity networks which can impose their own decisions' - at least, not the sort of decisions that would result in the erosion of class inequality in any lasting kind of way, such as how and when the rent might go up.

      Perhaps this is a semantic distinction, but it's one that your comment invites. And it leaves us with a question about how and why we want to organise.

      Rights and social gains might be won and lost on the basis of our commitment to 'struggle', but we need to be careful not to define this word too narrowly. People struggle in a range of ways and at a range of levels within the economic and political spectrum - and whether we like it or not we tend to take the path of least resistance. The struggle for tenants rights is about holding mean spirited landlords to account, but it is also about understanding the influence of economics, politics and history on the development of our national preference for one tenure over all others…

      Not long after we published this post, we published an article by Dr Robert Mowbray called "Tenant activism: the emergence of the Tenants Union of NSW", which goes some way to clarifying what I mean: http://tunswblog.blogspot.com.au/2013/06/tenant-activism-emergence-of-tenants.html.

      One thing a union - or a lobby group, or a service, or an NGO, or whatever - can do is to accept its limitations as 'organiser', and its strength as 'representative', of that class of people to whom it appeals for relevance. Speaking on behalf of, or in the interests of, class x or y or z, loses a great deal of meaning without some level of organised engagement and input around what's being said.

      As to how that occurs...? Perhaps, as your comment suggests, that's best left to those that are directly affected.

      We're certainly listening.

      Cheers,
      N.C.

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