Monday, September 9, 2013

Public housing market rent increases

Housing NSW is increasing the market rents for public housing tenancies. Usually this happens without a lot of public controversy, but this year it is in the news, following some comments from Family and Community Services Minister Pru Goward, and some puzzling interpretations by the papers. We'll try to clarify what's going on.


First, here's the basics of how rents work in public housing. Every public housing tenancy has a 'market rent', which approximates what the premises would go for on the private rental market, considering the location, size and amenity of the premises. The market rent is the rent on the face of the tenancy agreement, as increased from time to time by Housing NSW.

Most public housing tenants actually pay less than the market rent, because they are eligible for a low-income rental rebate, which reduces the rent they actually pay to 25-30 per cent of the tenant's household income. This is often called the 'rebated rent'.

Of the minority who pay the market rent, some would be ineligible for a rental rebate because their income is not low enough; others would be eligible for a rental rebate, but in their particular case the market rent is lower than the rebated rent, so they pay the market rent.

As we said, Housing NSW reviews and, in most cases, increases its market rents every year, to reflect increases in the market. This year, as it does every few years, Housing NSW has sent valuers out to do thorough valuations of certain benchmark properties, and on the basis of these valuations Housing NSW works out what it thinks should be the market rent for each of its properties throughout the State.

We understand that Housing NSW has instructed the valuers to do their valuations on the basis of the size, amenity, location and other factors pertaining to the premises, and that they should not apply any general discounts for the premises being public housing. Of course, in many cases public housing premises are physically different (eg no balconies; distinctively designed blocks; located on estates) from private rental dwellings of similar size in the same area, so the market rent may be justifiably lower for the public housing dwelling.

So far so clear. Yesterday, Minister Goward is reported to have stated that market rents will be increased so that:

public housing tenants currently ineligible for a subsidy, but who can afford it, will be paying the fair market rent for their property, rather than a discounted rate.

This may give the impression that there has previously been a deliberate policy of charging 'discounted rate' market rents and that a significant change has taken place. On the contrary, we understand that the only change to take place is the instruction to the valuers that in the practice of their art they should not do blanket discounts to come up with a market rent for public housing premises, but instead consider all the relevant factors and get to the market rent that way.

The news.com.au article confuses things further, by naming 'suburbs being targeted' by Housing NSW for rent increases. No suburbs are being targeted; market rents throughout the State are being reviewed and increased, and in some places the increases will be larger than in others.

Meanwhile, the Herald confuses things utterly, by reporting the issue under the headline 'Rents to soar as housing discounts get means-tested'. This is wrong: there's no 'discount' that's now getting means-tested. And to the extent that it conflates discounts with rental rebates and gives the impression that rental rebates have until now not been means-tested, it is wrong too.

At the end of it all, what public housing tenants need to know is this:
  • If you pay a rebated rent, the market rent increase will not affect you directly, because it does not affect the amount of rebated rent you pay. 
  • If you pay market rent, apply again to Housing NSW for a rental rebate and see if you're eligible. If you are, you'll pay that amount, if it's less than the increased market rent.
  • If your market rent increase strikes you as excessive, you can apply to the Consumer, Trader and Tenancy Tribunal for an order setting aside the increase, and fixing the rent at an appropriate amount. The Tribunal will consider the general market level of rents, the state of repair, the amenities provided, and any other relevant matter (but not affordability), in determining whether the increase is excessive.  Talk to your local Tenants Advice and Advocacy Service for advice on making an application.

UPDATE: see our post discussing the Minister's media release.

6 comments:

  1. How can NSW Housing justify putting the rents up when they hardly do any maintenance. They will only repair something if it a safety issue....it doesn't matter if the place is falling down around your ears!!!! You can't even get them to replace fly screens....they don't do that anymore!!!

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    1. Gayl you are so right - the govt. (State) has reduced/cut the maintenance budget by over a third. The fact that most of the Housing stock is over 40-50 years old means that most of that stock is in a shocking state of disrepair.Peeling ceilings, mould caused by ancient and broken roof tiles- cracks caused by land slip in the exterior and interior walls etc. etc. The fact that a tenant might be disabled makes no difference to housing's complete indifference.

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  2. I had an inspection from the RTC group last Friday. The place I'm in was built roughly in the 70s' and as you can imagine not much work has been done to it. Not long after I moved in (last December) the bathroom vanity door fell off due to rotting. I sent a photo and letter to the Minister, who never replies anyway, but was told by a Coffs Harbour manager that they will not replace it. Now one of the drawer fronts has fallen off as well and it's just getting worse. The kitchen laminex is breaking and swollen due to wetness....but these aren't safety issues!! The concrete at the back and side of my place was black and covered in green moss....I had to get it cleaned as I was slipping on it whenever it got wet...now that is a safety issue!!! The laundry floor is dirty sticky concrete but no covering will be put down!!
    I could go on and on but I'm sure you get what I'm talking about.
    Don't get me wrong...I appreciate having a roof over my head and I do the maintenance when I can, it's just a shame that NSW Housing don't look after their properties!

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  3. Thank goodness for the TU & the Brown Couch to help us make sense of this policy-by-media-release on the fly!

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  4. I live in houso in Waterloo and the current market rent for my 2 bed flat is 375p/w which I know is far from the actual market rent of a 2 bed property in the inner city (think 450 upwards).
    But they've got to consider that the people renting privately in the inner city a) dont generally have goomies sitting outside their building swearing all night and it travelling clearly up to the 16th floor, junkies setting off the fire alarms a few times a week, and of course the maintenance issues and b) that the people renting privately can hardly afford their own rents- plenty of people are paying 70% of their wages on rent.
    Why should public housing tenants be expected to do the same for far worse conditions.

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  5. I dont understand why public housing has to increase the market rent every year. The house is the same from 15yrs ago. When I firsts moved in, the walls were not painted and the carpets are old and now wearing out. Had those inspection maintenance people several times take notes of repairs and I am still waiting. I pay the market rent. I feel its a total rip off for charging market rent each year. Should be reviewed 10yrs not yearly. To assume the value of the land and surrounding its the same unreal. My wages haven't increased by much only 2%. I think this needs to be stoped and its not humane. I would say they are like theifs. History repeating like mid evil days where they come to take from you. I am very angry and going to dispute it. And also have to put up with all the abuse in my street..I am now mentally disrupted and traumatized and no longer be able to get employed the way I conduct myself...Its really ashame this department should be encouraging people in low income to try to get them on their feet not the opposite.

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