Wednesday, November 27, 2013

Three ways to pay, and locked out twice...

We've been watching a bit of shift, of late, in the way house price movements are being reported. There's a growing concern that first home buyers are disappearing as house prices heat up, the booming housing market is leaving first home buyers behind, and that a housing crisis has locked out Generation Rent. There's the usual guff about how first home buyers just need to temper their expectations and save up for longer, and even a suggestion today that housing is as affordable as it's been in a decade - although that last article does at least acknowledge that it is investors, and not first home buyers, who are currently jumping in.

It's an interesting dynamic out there. Despite the emerging sense that first home buyers are mostly all goners, houses continue to change hands, and prices continue to climb. Landlords don't seem to be in short supply, and of course nobody who is selling a house can be heard to complain about the price. But this leaves us in a situation where landlords are locking tenants out of home ownership.

They're billing us for it, too.

There are three ways that they do this. The first is pretty obvious - they charge rent. And as the rent is adjusted, always upwards, to increase the cash-flow or maximise a yield, it makes it just that little bit harder for tenants to put a few dollars aside for a deposit to buy.

The second is pretty obvious, too, and it works in a couple of different ways. Chances are, your landlord has purchased your home in order to sell it down the track, at a higher price than that which they paid for it, because that's how speculation works. In order to do this, they'd like for you to aspire to buy it  - or at least one just like it, so that there is a bit of competition for it when they do decide to sell. And when they sell, your aspiration to buy helps them command a higher price; and if you do manage to buy a house one day - whether it's the one you're renting, or one just like it - you might be expected to pay more than your landlord did. You contribute to their capital gain. Sure, it's not like you're handing them the money directly. You might be hanging onto it, saving for that deposit instead, which just keeps getting away from you as house prices continue to rise. We must concede, of course, that you might have decided to stick with renting after all. If that's the case then you're probably not contributing to your landlord's capital gain. In all likelihood it's other landlords who are doing that, while you continue to fork out the rent.

The third way is a little less obvious - but we've talked about it so often on the Brown Couch that we really need not go through it in too much detail again: the tax system. Your landlord might be negatively geared, and they'll definitely be counting on discounts to capital gains tax when they sell. Neither of these things help to reduce the rent or the deposit burden over time - in fact, they actively increase them... Not only that, but they also mean that governments miss out on a whole lot of tax revenue, that they could be collecting to spend for everyone's benefit. That's kind of like landlords taking a little bit out of everybody's annual tax-return, and sticking it under their mattress.

It's bad news for would-be first home buyers, because it locks them out of that certain level of security that home-ownership is seen to provide... and they're locked out again when it comes to their residential tenancy agreements. That, of course, applies to all tenants - not just those who aspire to buy - because landlords are lawfully entitled to end tenancies in New South Wales without any reason.

Let's not forget that our current laws have taken a step backwards in this regard. Prior to 2010 a tenant could argue, in the Tribunal if it came down to it, that a termination with no reason should not be allowed if that was appropriate in the circumstances of the case. This was the result of a 1997 Supreme Court case, known as the Swain decision, where the meaning of the words "in the circumstances of the case" were considered. These words appeared at the relevant section of the old Residential Tenancies Act 1987, but they do not so appear in the current Residential Tenancies Act 2010. Their removal was deliberate and intentional: it was done at the request of landlords and real estate agents. The Real Estate Institute of NSW are only too happy to take credit for this on their website.

Tenants should not accept this. Laws can be changed. And if landlords are to continue to keep would-be home-owners out of the market - requiring them to rent for longer and at higher and higher costs - then the very least they can do is get out of the way of stronger legislative protections for those who make it worth their while.

Tuesday, November 26, 2013

Asbestos awareness

November is Asbestos Awareness Month.

(The Blue Lamington Drive raise funds for the Asbestos Diseases Research Institute.)

Asbestos is a fibrous mineral with remarkable physical properties – but inhaling the fibres can cause  disability and death (from asbestosis and cancer).
Prior to 1987, asbestos was used in a great variety of building products, and used so much that one in three Australian homes still contain it... somewhere. Fibro walls, roofs and fences are what most people think of when they think asbestos, but it's also in brick and weatherboard houses, in the eaves, around the pipes, and under the tiles and floor coverings.
Products containing bonded asbestos that are in sound condition are usually safe if left undisturbed. It is when a bonded asbestos product becomes degraded – particularly if it is reduced to powder, through drilling or abrasion – or if the asbestos is in a loose fibrous form, that asbestos fibres can be inhaled and presents a real hazard. 
So the standard advice in relation to asbestos products is
  • If you don't know whether something contains asbestos, assume it does; and
  • Don't cut it! Don't drill it! Don't drop it! Don't sand it! Don't saw it! Don't scrape it! Don't scrub it! Don't dismantle it! Don't tip it! Don't waterblast it! Don't demolish it! And whatever you do... Don't dump it!
As a tenant, you're not likely to be charging around doing renovations and disturbing asbestos yourself, but you should still be asbestos-aware. 
  • Report to your landlord any damage to things at the premises, particularly where they contain asbestos. 
  • Direct your landlord to NSW WorkCover's asbestos resources page for information on dealing with asbestos safely and legally. 
  • Read the TenantsNSW factsheet for more information about your own options. 

Tuesday, November 19, 2013

Congratulations, NSW tenants

Thanks to a small amount of the interest earned by the government's investment of your bond money, Tenants Advice and Advocacy Services will continue to operate in New South Wales.

The loss of the Parks and Village Service and the Older Persons Tenants Service will hurt these services, as it will hurt the tenants and park residents who have directly or indirectly relied upon their expertise over the years. But the continuation of Fair Trading's Tenants Advice and Advocacy Program - and the TAASs that it funds - gives cause for a momentary cheer.

There's been no increase in the funds available to the program, so TAASs will still be delivering their services at a cost of just three cents a day to each tenant household in NSW. It's money well spent. Despite the tight budgets within which they operate, TAASs do great work. They are local, they're on the ground, and they make a difference in the communities they serve.

Not long ago we held our annual TAAPstar awards ceremony, where we acknowledge the good work that the TAASs do. These awards are hotly contested. The many nominations always inspire us, and remind us of the ever present need for the work that Tenants' Advocates do. Here are some examples:

- New England and Western TAAS assisted a tenant who had arrears in the thousands - the tenant’s mother had been diagnosed with leukaemia and hospitalised in Newcastle. The tenant’s regular trips to Newcastle had left her unable to afford the rent. She was issued with a termination notice, and the landlord had applied to the Tribunal to enforce it. The tenant agreed to vacate the property, but she couldn't afford to pay the arrears in a lump sum. With the support of an Advocate in conciliation, the tenant negotiated with the real estate agent who agreed to a repayment plan of $30 per week.

- South Western NSW TAAS heard from a number of tenants who were being charged by the local Community Housing Provider (CHP) for repairs at the end of their tenancy, including costs that they did not believe they were responsible for. The CHP was adding an 'admin fee' to the bill, which was based on a percentage of the costs claimed. An Advocate represented these tenants at the Tribunal, and the Tribunal did not allow this admin fee at any of the hearings attended. The Advocate wrote to the CHP explaining why they should not charge this fee. The CHP’s solicitor wrote to the TAAS, stating why they believed they could charge this fee. Then with assistance from the Tenants' Union, the Advocate wrote to the Registrar of Community Housing, who engaged with the CHP about whether it was valid to claim this admin fee. As a result of these enquiries, the CHP is no longer adding an admin fee to claims for costs of end-of-tenancy repairs.

- Inner West TAAS was approached by two tenants who had been living in their property for over twenty years. They had recently made a complaint to the landlord about ongoing building works in the unit block. In reply, the landlord issued a hefty rent increase and a no grounds notice of termination. With assistance from the TAAS, they applied to the Tribunal for an order that the termination notice was 'retaliatory'. The landlord withdrew the termination notice, but pressed on with the rent increase. The TAAS assisted in obtaining summonses for the tenancy agreements of every other unit in the block. Those agreements showed what the tenants had suspected – that they were being singled out for a grossly excessive rent increase. The matter went to final hearing and the Tribunal did not allow the rent increase.

The ongoing funding of Tenants Advice and Advocacy Services means that examples like these will continue every day, in every part of New South Wales, for years to come. Congratulations, tenants. It's money well spent.

Friday, November 15, 2013

Boarding house residents in the Tribunal

The first applications by residents under the Boarding Houses Act 2012 have started showing up in the Consumer, Trader and Tenancy Tribunal – and the signs are that the Act's occupancy principles are indeed a welcome measure of justice for residents.

In one case, a former resident (we'll call her 'F') sought the return of her security deposit – the proprietor had kept the lot because F had moved out early. F had initially gotten an order from the Tribunal for its return under the Residential Tenancies Act, but the proprietor got a stay on that order, on the ground that this had been a lodging agreement, so the Act did not apply.

So, with the help of a TAAS advocate, F made out an application under the Boarding Houses Act, arguing that keeping all of the deposit was a penalty – and penalties are prohibited by occupancy principle 3. F and the proprietor came to a mutually acceptable settlement.

In another case, a resident ('G') used occupancy principle 8 – which, amongst other things, limits security deposits to two weeks' occupancy fee – to get a refund of a $100 'key deposit'. This additional impost – sometimes called 'key money' – is an old lurk, long-outlawed in relation to residential tenancies. Now, in G's case, the Tribunal has determined that security for the keys is covered by the two weeks' security deposit, and requiring any additional amounts breaches the limit in OP 8. Order for the refund of the key deposit.

There's nothing extreme about these cases: just good, fair results.

Wednesday, November 13, 2013

Happy St Homobonus's Day

Today, 13 November, is the feast day of St Homobonus, the patron saint of small business, so let's raise our glasses to all those small business owners who are tenants.*

The Brown Couch is full of admiration for those enterprising souls who have used their creditworthiness not to buy an over-priced house, but instead to fund the development of a big idea into a business that actually produces something new and valuable.

Faced of the certainty that rent must be paid, and the widespread opinion that the way to wealth is to buy and sell houses, taking on the uncertain prospects of a small business takes courage, and we take our hats off to the tenants who are doing it.

And so we make a St Homobonus's Day wish: for trade-exposed tenant-entrepreneurs, here's hoping that the high cost of dealing in the Australian currency goes down; and for everyone, here's hoping that land values are made to shoulder more of the tax burden that currently falls on enterprise and labour.

* And we've only just recovered from celebrating St Hubertus's Day.

Monday, November 11, 2013

International students and housing survey

The Tenants' Union of NSW is conducting a survey of international students and their experiences of housing in Australia. Please spread the word – and the link to the survey!


Are you an international student?

Are you happy in your housing?

Do you know your rights? 

We want to hear about your experiences with housing in Australia. 
Your participation will help us better understand and provide support and advocacy for international students on housing issues.

Complete this short survey about housing and go into the draw to win a $50 gift card.

About us: The Tenants' Union of NSW is the peak non-government organisation representing the interests of tenants and other renters in New South Wales, Australia.

Thursday, November 7, 2013

'Housing as a human right': ATSI Social Justice Commissioner Mick Gooda

We were honored to have the Aboriginal and Torres Strait Islander Social Justice Commissioner, Mick Gooda, speak to tenant advocates at our recent network meeting.

Here's the text of his speech, 'Housing as a Human Right'.


It is with respect and gratitude that I acknowledge that we sit today on the lands of the Awabakal and Worimi peoples.

My people are the Gangulu from the Dawson Valley in Central Queensland. On behalf of my Elders I also pay tribute to your Elders, both past and present, for their continued struggle for their country and their culture.

Thank you for the opportunity to speak with you today. The work that you do assisting tenants is challenging. You are often dealing with a range of complex needs that span beyond tenancy law. Your advocacy is crucial for a group of people who often some of the most marginalised in our community.
Today I would like to extend the way you may view your work and some of the tools available to you. The Tenants Union is part of a long tradition of fighting for housing justice, as I understand, going all the way back to 1910. What I want to add to this robust tradition is a human rights approach.

In my mind, all of you here today are human rights workers. Your work helps individuals realise their rights everyday, in particular the right to adequate housing. I will explain further and introduce you to the Declaration on the Rights of Indigenous Peoples as a tool to guide your engagement with Aboriginal and Torres Strait Islander communities.

I will also speak briefly about the campaign for constitutional recognition for Aboriginal and Torres Strait Islander people - one of my key areas of advocacy.

But firstly, let me start by giving you an outline of this position that I currently occupy, the Aboriginal and Torres Strait Social Justice Commissioner, and a snapshot of my agenda.
2013 marks the 20th year since this position came into being as a result of the Native Title Act, the Royal Commission into Aboriginal Deaths in Custody and a HREOC Inquiry into racial hatred. Previous Social Justice Commissioners are Professor Mick Dodson, Dr Bill Jonas, Dr Tom Calma and Ms Zita Antonios.

The Social Justice Commissioner role has some statutory duties. I’m required to provide to the Australian Parliament an annual Social Justice Report and I also provide a report on Native Title. I’m also required to:
  • review the impact of laws and policies with regard to Aboriginal and Torres Strait Islander peoples
  • promote an Indigenous perspective on issues and 
  • monitor the enjoyment and exercise of human rights of Aboriginal and Torres Strait Islander Australians.
But in a real sense, I’m handed these general directions and it’s up to me to sort out my priorities in terms of how I do what the legislation requires of me.

As Social Justice Commissioner I have only six staff, so I quickly realised that it would be unrealistic to pick even one of the myriad of challenges facing Aboriginal and Torres Strait Islander peoples - housing, health, education to name a few and expect to fix it by January 2015.

I believe that fixing these issues will require the intergenerational commitment of the whole nation.

After listening and accepting the reality of the limitations of this position compared to the enormity of the task confronting us, at the centre of my priorities is the belief that we need to firstly develop stronger and deeper relationships between Aboriginal and Torres Strait Islander peoples and the rest of the Australia.

Secondly, we need to develop stronger and deeper relationships between Aboriginal and Torres Strait Islander peoples and all levels of government.

Thirdly, we need to develop stronger and deeper relationships between ourselves as Aboriginal and Torres Strait Islander peoples

I believe human rights are one of the most powerful tools to help build good relationships.

Let me be honest, I have worked in Indigenous affairs for all of my professional life and when I was approached about this position as Commissioner I was hesitant at first because I didn’t see myself as a human rights activist. But as one of my closest colleagues pointed out, you can’t work in Indigenous affairs without being a human rights activist. Working on Indigenous issues means that you are working with human rights day in and day out.

One of the main challenges I face as Social Justice Commissioner – and the Australian Human Rights Commission faces more generally – is communicating to the Australian public what ‘human rights’ mean in practice. Human rights are not just abstract concepts that exist in documents such as treaties, conventions and declarations alone.

Human rights provide governments with a set of minimum legal standards which must apply equally to all people. A human rights framework provides parameters – universally agreed parameters – for a society to foster dignity and equality of all citizens. And equality means substantive equality – equality in outcomes, not just in writing.

Fortunately, most Australians are lucky enough to take human rights for granted. But for those rights to be realised by Aboriginal and Torres Strait Islander people, additional support and focus is often required.

So what does this mean in your daily work?

You may not be as familiar with the United Nations Declaration on the Rights of Indigenous Peoples.

The Declaration was adopted by the General Assembly of the United Nations in 2007 and is the foundation document in human rights for all Indigenous peoples.

The Declaration contains a number of key principles underpinning the rights it protects. Those key principles can be summarised as:
  • First, self-determination
  • Second, participation in decision-making and free, prior and informed consent
  • Third, respect for and protection of culture
  • Fourth, non-discrimination and equality.
The Declaration also contains specific guidance around housing. Article 21 provides that Indigenous peoples have the right, without discrimination, to the improvement of their economic and social conditions, including housing.

Article 23 of the Declaration states that Indigenous peoples have the right to determine and develop priorities and strategies for exercising their right to development. In particular, Indigenous peoples have the right to be actively involved in developing and determining health, housing and other economic

I am sure you are all familiar with the human right to adequate housing. The right to an adequate standard of living, including housing, is found in Article 25 of the Universal Declaration of Human Rights. Article 11 of the International Covenant on Economic, Social and Cultural Rights, to which Australia is a party, recognises the right to adequate housing and commits state parties to take appropriate steps to ensure the realisation of this right and social programmes affecting them and, as far as possible, to administer such programmes through their own institutions.

I think these Articles are very important because they acknowledge two areas of concern in terms of Aboriginal housing.

Firstly, the impact of discrimination in housing. I am thinking, for instance, of the work that you do assisting with people who have faced racism in terms of tenancy.

Secondly, the Declaration recongises the importance of Aboriginal and Torres Strait Islander people’s being involved in the decisions around housing, especially through Aboriginal housing organisations. Aboriginal and Torres Strait Islander housing organisations can be an important model of self determination. That is, putting our communities in control of the decisions that affect them.

The Declaration is also clear about the role of government in the progressive realisation of rights, such as the right to adequate housing. We all know the Aboriginal housing stock is often run down and inadequate in both remote, rural and urban areas. Governments have a responsibility to improve this situation.

So, once again, how can you use the Declaration in your work?

I think if you keep coming back to those four principles I just mentioned- self- determination, participation in decision-making and free, prior and informed consent, respect for and protection of culture and non-discrimination and equality you get a good idea about the what this means in practice.

I challenge people from all walks of life to apply these four principles to the work they do with Aboriginal and Torres Strait Islander people.

It might be as simple as making sure Aboriginal and Torres Strait Islander people are involved in your decision making and actively consulted about your services. It might be seriously considering some of the cultural barriers that make accessing your service challenging for Aboriginal and Torres Strait Islander people and then developing a plan to address this. It might be thinking of a way you can celebrate the vibrancy and resilience of Aboriginal and Torres Strait Islander culture in your community.

These are just ideas, ultimately, what I am saying is that putting the Declaration into practice is not a program of work, nor is it a tokenistic checklist. It is an approach. It requires attitudinal shift, self reflection and the willingness to actively listen and engage with Aboriginal and Torres Strait Islander peoples.

At the big picture level, another way to advocate for Aboriginal and Torres Strait Islander is through the campaign for recognition of Aboriginal and Torres Strait Islander people in the Australia Constitution.

A referendum to include Aboriginal and Torres Strait Islander peoples in the Constitution is an opportunity to redefine our national identity based on recognition, respect and inclusion and to change the role of government in Aboriginal and Torres Strait Islander peoples’ lives.

A successful referendum will encourage reconciliation among all Australians and can enable practical improvements to the lives of Aboriginal and Torres Strait Islander peoples. Reforming the Constitution will also provide an opportunity for all Australians to acknowledge and be proud of our histories and cultures that existed – and continue to exist – before the Constitution was written.

In February we witnessed a historic step toward a referendum when the Aboriginal and Torres Strait Islander Peoples Recognition Act 2013 (Act of Recognition) was passed unanimously through Federal Parliament. The Act of Recognition provides acknowledgement of Aboriginal and Torres Strait Islander peoples’ unique place as Australia’s first peoples. It also prescribes that a review will be commenced considering proposals for constitutional change, their likely levels of support in the community and likelihood of success. This report must be completed by 27 September 2014 and tabled in parliament within 15 sitting days.

The Act of Recognition is a welcome development but it is only a first step. I urge the Government to build on the work of the Expert Panel on Constitutional Recognition of Aboriginal and Torres Strait Islander peoples (Expert Panel). The recommendations acknowledge the need to couple recognition of Aboriginal and Torres Strait Islander peoples as Australia’s first peoples with reforms to address the provisions of the Constitution which permit, enable or anticipate racial discrimination.

The success of constitutional reform lies in the hand of every day Australians and the ability to organisations like yours to join this campaign. A public education campaign is being run by Reconciliation Australia.

At the moment, before we know what the referendum question will be, the aim is to try and build popular support and momentum across the community.

If anyone here is looking for resources to do your own bit of community education and campaigning, ANTaR has put together some very useful material on their website and I highly recommend you take a look. The You Me Unity website was established by the Expert Panel specifically as a tool for engaging the public on constitutional recognition. It continues on as a space for this public conversation and also hosts useful educational material. Recognise also have a very informative and engaging website.

There is a long way to go on constitutional reform. But I believe in the innate decency of the Australian people to walk with us on this next important stage of our national journey towards reconciliation.

I want to finish by saying your work helping people secure their housing helps meet some of our most fundamental human rights. I thank you for your work and your time today.

Tuesday, November 5, 2013

Where's the value in the Australian housing system?

The TU sends N.C. away to the Australian National Housing Conference, figuring that he'll be inspired by Australia's pre-eminent housing policy thinkers, and he comes back more cynical than when he started out! Curse you, Australian housing system!

Well, it has been a tough year for housing policy. Scarcely a word on housing from the two major parties at the election, and no dedicated Minister for Housing in the new Federal Government. A series of interest rate cuts that might have helped finance productive investment have instead stimulated speculators to just throw money at houses (Sydney prices are up by more than 11 per cent for the year, with half of all finance approvals going to landlords). Meanwhile, Prime Minister and de facto Housing Minister Tony Abbott observes:
if there’s a strong market for flats and for houses, that’s a good thing, not a bad thing. Don’t forget... that if housing prices go up, sure that makes it harder to get into the market, but it also means that everyone who is in the market has a more valuable asset.

Let's get back to basics. This 'more valuable asset': where's the added value? It's the same house, producing the same amount of housing services – shelter – as it did before. 

What are most people going to do with their more valuable asset? Live in it. Some might sell it, but then only go and buy another more valuable asset to live in. Some of those who have more valuable assets than they can live in might sell and spend the proceeds on consumption. Some might double-down their bet and buy another more expensive valuable asset. And those who own a more valuable asset suitable for development – and thereby actually produce more housing – might hang onto their valuable asset and see where these increases in value take them without actually doing anything productive.  

'More value' would be the building of a better mouse trap, or a bionic eye, or a new dwelling, or producing a new or better service – something new or better that adds to the utility and comfort of human beings. 

What we've got now is little more than the swapping about of title certificates, lubricated by debt; meanwhile, there's a bit less of the productive investment that might have produced things capable of paying down our debts, and rather more inequality of access to the product of housing assets, shelter.

If inspiration was needed, perhaps we should have sent N.C. to the Tenants Advice and Advocacy Program meeting after all. 

As well as the usual practical stuff (seminars on the rules of evidence, file management best practice, the Aboriginal Housing Office's 'Build and Grow' Strategy, etc), TAAS advocates heard a cracking speech given by Aboriginal and Torres Strait Islander Social Justice Commissioner, Mick Gooda, on housing as a human right. TAAS advocates are human rights workers, said Commissioner Gooda, and he urged them to keep using the law, education and community engagement to advance housing justice. 

We also farewelled sadly the Older Persons Tenancy Service and the Park and Village Service, which were cut by NSW Fair Trading in the present funding round of the Tenants Advice and Advocacy Program. There was, however, some consolation in reflecting on the contributions that each of these services have made to justice for individual tenants, law reform for tenants generally, and the immense store of skill and knowledge in the TAAS network.

TAASs solve housing problems and keep people housed – and, by extension, help their participation in work and education, and in family and community life. They provide a truly valuable service.

A new way home? The National Housing Conference 2013

Last week, while many of my colleagues in the Tenants Advice and Advocacy Program were gathering for their annual Regional Network Meeting in Newcastle, I hopped on a plane to check out the 8th National Housing Conference in Adelaide.

The National Housing Conference is convened by the Australian Housing and Urban Research Institute and is generally considered the prominent meeting of minds on all things housing in Australia. Representatives from numerous Australian governments, universities and other academic institutions, finance corporations, community organisations and housing providers gather for several days to hear of and discuss the latest developments in housing related research and policy.

These are my thoughts based on the sessions I attended and, to be fair, the prejudices of my position. I'm interested to hear from others who might have a different take on the conference. I'm also interested to hear from others who were not at the conference - I'm sure there are countless doers and thinkers within the housing realm who were not in attendance.


I approached the conference with equal measures of skepticism and pessimism, knowing that there are a great number of challenges faced by housing policy workers across Australia, and probably always will be. Of course, these challenges pale into insignificance when compared to the standard daily experience of low income 'consumers of housing' - those for whom housing policies manifestly fail. But it is hard to shake the sense that if only 'someone' could talk this or that department into acting on the right advice, even just once, then we could take a step towards a better, fairer housing system...

My interest is in how current housing related research and thinking might be of benefit to tenants, and particularly to tenants in the private rental market. That is, after all, where the bulk of people on low incomes turn for their housing. For that matter, it's increasingly where many people on moderate or high incomes turn for theirs, too. But the more I looked for signs of recognition that the driving force behind our housing crisis is a series of assumptions - that we must deliver financial independence to the relatively well-off by offering incentives to acquire assets that perpetually increase in value - the harder it became to imagine holistic housing policies ever seeing the light of day in this country. All I got were the usual platitudes - how can we arrest the decline of home ownership in Australia? If we can't do this, how can we build more social housing? How can we get 'markets' to take care of the lot, so that we don't have to dip into consolidated revenues? Because it's pretty clear that our governments do not want to pay for housing. (A recurring theme of the conference - occasionally a good suggestion or question came from the floor, where it was met with the usual response: "the political will is not there...")

Perhaps I'm being too hard on the conference... perhaps I should just accept that housing is expensive, and will remain so while ever so much of our economic growth is reliant on its value going up and up and up. The only landlords represented at this conference came from the not-for-profit housing sector; and these 'social' landlords seem to believe they have just as much of an interest in rising asset values as any other speculative investor. The more they're worth on paper, the more cheaply they can buy their next batch of money, the more they can invest in 'affordable housing'.

Maybe that's okay if it means more properties can be rented out to more people down the track at affordable rates, if only we can get our policy settings right in the meantime? Or maybe that's just the kind of paradox that's got housing policy in such a tangle from the start. If that's what we're prepared to accept, then we end up in a very difficult place indeed: the only way that we can deliver affordable housing is to rely on housing becoming more expensive.

But it's not surprising that amateur 'mum and dad' investors were nowhere to be seen. Perhaps it seems naive to even mention this - after all, they're not exactly an organised cohort and their 'consumption' of housing is not really consumption at all - they merely park money there, hoping that it will multiply and expand. Any interest they might have in housing policy is likely to be an afterthought - something to worry about if the market doesn't deliver the kinds of returns they might have been hoping for. Amateur landlords are unlikely to bring much of use to a conference about housing.

The irony is that we need them to. If we're looking for market based solutions to a housing affordability crisis then we need to take a closer look at what the markets are doing. It's no good to simply discuss what we'd like our markets to look like, if only we could... I don't know... if only we could talk this or that department into acting on the right advice. We need to bring these players to the table, to engage with them, to hear from them and learn from them as much as to try to convince them that the part they play in our housing system carries just a hint of social responsibility.

... because right now our markets are not delivering affordable housing. They are delivering wealth to those who are able to buy in. And those who take this option on that basis - and let's face it, that's pretty much every property owner there ever is, was and will be - are making it ever more difficult for others to even consider the option a valid one. This applies to social housing landlords who want to use their growing wealth for social good, as much as it applies to slumlords, amateurs and everyone in between.

The good news is that markets are delivering expensive homes to tenants just as much as they are to owner occupiers. It's just that they do so on very different terms. If we are prepared to accept that this is simply the way of all things, then so be it. But if that's how it is then let's put some thought into what it means for the interests of tenants, and what we might come to expect...

... and if we're not prepared to accept that, how do we build the case for change, given neither governments nor markets are ready to deliver?

Monday, November 4, 2013

Strata reform: early signs

Some early signs of the NSW State Government's new strata laws are reported today in the SMH, including new model by-laws that allow pets, and 'encouragement for tenants' participation in apartment block affairs.'

Without any further detail, it is difficult to say anything definite about these prospective reforms, except that they look to be heading mostly in the right direction.

In particular, a more liberal approach to pets would be welcomed by many people living in strata. We think a model by-law that allows pet-ownership is a good start, but more is needed to really secure people's freedom of choice in the matter. Strata legislation should prohibit and invalidate by-laws that restrict the keeping of pets without regard to the circumstances of each case.

Also, our residential tenancy laws should be reformed too, to prevent landlords from imposing their own unreasonable restrictions on pet-ownership.

As for tenant participation in strata governance, we think this would be done most appropriately by distinguishing by-laws about the conduct of residents from the other affairs of owners corporations, and giving tenants a say – and a vote – on them. 'Conduct by-laws' would include by-laws relating to keeping pets, smoking, playing music and making noise, and the use of common areas and facilities. Giving all strata residents a say in these matters is not only fair; it may also mean more effective governance.

Sunday, November 3, 2013

Public housing 'moderate income' rent rates clarified... with maths!

Brown Couch reader and mathematician, 'H', issues a quiet 'ahem' following our recent discussion of Housing NSW's 'moderate income' rent rates and their punishing marginal effect. (Just in time for today, the feast day of St Hubertus of Liege, patron saint of mathematics).

(St Hubertus ponders public housing rent policies) 

We said that the moderate income rates (25-30 per cent, on a sliding scale, applied to all income) could be expressed as a marginal rent rate of 50 per cent; that is, 50 cents in each additional dollar earned in the moderate income range goes to Housing NSW in additional rent. Says H:

It's true to say that the average marginal rent rate over the moderate income range is 50 per cent. But there's not a constant marginal rent rate for all the range; the marginal rate varies by up to five per cent either side of the average. The marginal rate at the bottom of the 'moderate income' range is 45 per cent; at the top, it's 55 per cent.

H presents his proof in four pages of graphs and algebra, including a bit of differential calculus. He explains:

Below the moderate income range, the rent you pay increases as a function of the amount of your income increasing, and nothing more; on a graph, this a straightforward straightline function with a constant gradient (in other words, a constant marginal rate of increase). But in the moderate income range, the rent you pay increases as a function of both the amount of income increasing, and the rent rate increasing. That's two orders of increase; so the function is a quadratic, with no constant gradient.

Quite so! It is proven: the marginal rent rate in the moderate income range varies between 45 per cent and 55 percent, the average marginal rent rate being 50 per cent.

Adds H:

It might be nice if public housing rent rates could be presented as constant marginal rates, like the ATO's income tax rates. It would be nice because it would be clearer for everyone; but on the other hand, a system of marginal rates starting at 25 per cent, jumping up to 50 per cent, then down to 30 per cent is something that no policy maker in their right mind would purposely come up with.
Thank you, H, and happy St Hubertus's Day, one and all.