Thursday, October 31, 2013

A slow-burning crisis

When a Blue Mountains landlord allegedly told his agent last week to increase the rent because ‘there will be a lot of people who’ve lost their homes looking for temporary accommodation', Premier Barry O'Farrell stepped forward and slammed the 'bastard'.

Said the Premier:

“This sort of low act will not be tolerated and I warn people even thinking about it that the NSW Government [will] come after you.
“Anyone seeking to cash in on this crisis is a heartless grub. Just don’t do it.
“Not only will they named and shamed, they’ll face a fine of up to $220,000 or $1.1 million for corporations.
“We will have no hesitation in going after these people and I know Minister for Fair Trading Anthony Roberts has ordered his inspectors to be on the ground in the bush fire zones on the lookout for this behaviour.
“Whether you’re a landlord, tradesman, or retailer – don’t try it on because it won’t be worth it.

It appears to us that the Premier and the Fair Minister are contemplating the use of the Australian Consumer Law's 'unconscionable conduct' provisions. We're not aware of any previous instances of these provisions being used against landlords exploiting a crisis like the recent bushfires, and we applaud the NSW State Government for taking this line of response. We've no doubt that most other persons in the community would support it too.

The bushfires are a particular kind of crisis. As a housing crisis, the fires have removed two hundred dwellings from the stock of housing, but there's more to it than just that. They've instantly turned settled lives upside down. They were genuinely, physically frightening. For those of us not in the midst of the fires, they were still an inescapable presence: you couldn't look out of window, or take a breath outside, without of thinking of what was happening in the mountains, or in the fires up and down the coast. The fires also drew a magnificent, courageous effort from hundreds of professional and volunteer firefighters, and a generous response from the wider community too.

For many years, we've been talking about another crisis relating to the supply of housing – the critical lack of rental housing affordable for people on low incomes. This is a different kind of crisis – a slow-burning crisis, so to speak – that has not sprung up in an instant, and is not so insistently noticeable to those outside it. But for those who are caught in it, it wrecks lives.

Some numbers, from the Rental Bond Board. In 2006, across New South Wales 131 929 private tenancies commenced at rents that were affordable to low-income households (ie the rent was not more than 30 per cent of the 40th percentile household income); in 2010, just 82 220 affordable tenancies commenced – almost 50 000 (or 38 per cent) fewer affordable tenancies than four years previously.

Across Sydney,  there were 36 472 (51 per cent) fewer affordable tenancies commenced in 2010 compared with 2006.

In the Blue Mountains, 775 (42 per cent) fewer affordable tenancies were commenced.  

This loss of affordable rental opportunities is a big part of the reason why 65 per cent of low-income renters in New South Wales are in housing stress (ie paying more than 30 per cent of their incomes in rent) and 28 per cent are in housing crisis (ie paying more than 50 per cent). To pay these rents, many skip meals, or go without medical or dental care, or things like school excursions for their children.

Then there are the families who don't get into even unaffordable rental housing. For the human face of this aspect of the loss of affordable rental opportunities, watch this documentary, shot in the Blue Mountains for the ABC's Four Corners program in 2009. 'Last Chance Motel' records the ceaseless stress of lives spent shuttling between real estate agencies, Housing NSW offices, and temporary motel rooms. It is tough viewing – but it absolutely deserves your time.

We've discussed the causes of this problem previously: speculation in housing, encouraged by tax breaks for capital gains and negative gearing, has distorted the rental market, as landlords have brought high-value/high-rent stock into the rental sector, and allowed low-value/low-rent stock to drop out of it. Such low-rent stock as has remained in rental has become scarcer, and landlords are charging more for it.

We're not saying that governments should whack these landlords with unconscionable conduct prosecutions too. Rather, the challenge is to apply some of the emotional response we've all felt to the crisis of the bushfires – the concern and compassion, and some of the righteous anger too – to tackling our slow-burning housing affordability crisis, before it does very much more damage. 


  1. As a mountains resident, thanks for this. Note also, once "damaged" houses are inspected for structural integrity, some of these will be demolished too, meaning closer to 300 houses will go. Note also that of the 200-300, all but about a dozen are in a narrow band of streets, which, although in 3 towns, are all very close together. So this small area will lose maybe 50% of its housing.

  2. Hi Nick

    Hope you got through the fires safe and sound. Thanks for that info on the lie of the land. We'll keep an eye out for developments, including through the Blue Mountains TAAS, and the Rent and Sales Report, and from residents like yourself. cheers, Chris M.


Please keep your comments PC - that is, polite and civilised. Comments may be removed at the discretion of the blog administrator; no correspondence will be entered into. Comments that are abusive of individual persons, or are sexist, racist or otherwise offensive will be removed, so don’t bother leaving them.

Note: Only a member of this blog may post a comment.