Unsettled - life in Australia's private rental market

Last year Choice, the National Association of Tenant Organisations* and National Shelter conducted a survey of Australian tenants. It asked questions about life in Australia's private rental market, like how easy it is to find a place to live and what it's like applying for a tenancy, what condition is your home in and how easy is it to get the landlord to follow through with repairs, how often do you move and why, and how much does it all cost?

Today the findings from this survey will be published in UNSETTLED - Life in Australia's Private Rental Market.

It makes for interesting reading. From the report:

Our survey indicates that for the increasing number of Australians who rent, housing is frequently poor quality, insecure and unaffordable. Many tenants feel they are not catered to when searching for a new home. Some face discrimination on a range of grounds. Rental properties are not always in an acceptable condition and landlords are not always responsive to requests for repairs and maintenance needs. Tenants can be reluctant to ask for repairs or complain about their housing, because they're concerned about eviction or a rent increase they can't afford.

Key findings include:

• 83% of renters in Australia have no fixed-term lease or are on a lease less than 12 months long
• 62% of people say they feel like they can’t ask for changes
• 50% of renters report experiencing discrimination when applying for a rental property
• 50% of renters worried about being listed on a residential tenancy database
• 20% renters experiencing leaking, flooding and issues with mould 
• 8% of renters are living in a property in need of urgent repairs

Sound familiar? Australia's housing system is doing a poor job for tenants in the private rental market. That accounts for about a third of the population, but tenants experiences rarely feature in discussions about national housing policy. These discussions need to focus on more than just affordability and whether or not we'll ever be able to buy - Australia needs to take a good look at just what we're getting when we pay the rent.

***

Discussing the report this morning, CHOICE CEO Alan Kirkland said:

For Australians who don't own a home, renting should be a secure and affordable option free of fear and discrimination. Unfortunately, the research reveals a significant power imbalance between tenants and landlords, leading to a culture of fear that means many renters stay silent when something goes wrong. 

It’s deeply concerning that common features of everyday life like having children, receiving a government payment or owning a pet can be major barriers for renters trying to find a home.

NATO spokesperson Ned Cutcher said:

All too often, we hear that people are reluctant to complain to agents or landlords because they’re worried about rent increases or eviction. This research shows that this fear is widespread with 50% of renters worried about being listed on a so-called “bad tenant database". 

When people do raise an issue with a property, landlords and agents can really drag their feet before they fix the problem with 21% of renters waiting over a week to get a response about an urgent repair request.

National Shelter's Executive Officer, Adrian Pisarski said:

Tenants are often the last group to be asked about the housing challenges Australia faces. This research has tenants talking about their experiences of the system in a way that’s not often considered in debates about housing. 

Renters face constant insecurity, 83% are without a fixed-term lease or are on a lease less than 12 months long.

As more Australians enter the rental market, we need a national plan to boost supply, especially for low income households, whilst also addressing security, rights and amenity.

Download the report here

*TUNSW is a member of the National Association of Tenant Organisations.

21st Century Bonds - part 3

If you haven't already heard about the Rental Bonds Online service, chances are you soon will.

Rental Bonds Online: coming to all new tenancy agreements?

That's because the NSW Government has just changed to the Residential Tenancies Act 2010 to make it more or less mandatory for your next landlord or their real estate agent to tell you about the service, which allows tenants to electronically transfer a rental bond payment directly to the Rental Bond Board. This is great, as it means you'll no longer have to hand over wads of cash, or go out of your way to get bank cheques or money orders in order to pay a bond. It also means landlords and agents won't even have to see your bond money at all - unless they become entitled to some of it at the end of your tenancy...

The Government has made this change because, to date, only a relatively small number of new tenancies have had a bond lodged via the online service. This is despite a high number of landlords and agents having registered to use it, suggesting that many are not telling tenants about it. Instead, they continue to take tenants' bond money to lodge with the Rental Bond Board themselves.

The change will come into force on 30 January 2017. From that time on, a landlord or real estate agent will be prevented from "requiring or receiving a rental bond from a tenant" unless they have registered to use Rental Bonds Online, and have given the tenant an opportunity to pay their bond to the Rental Bond Board directly, using the service. The only way landlords and real estate agents will be able to lawfully avoid telling you about the service will be to refrain from taking a bond in the first place.

No doubt we'll be hearing more about this over the next couple of months...

End of the line for justice in Gosford?

We've just heard that tenants on the Central Coast will lose their dedicated NSW Civil and Administrative Tribunal (NCAT) hearing rooms. These have been co-located with the Gosford Fair Trading Centre since 2004. They were established there when tenancy disputes were heard by NCAT's predecessor, the Consumer Trader and Tenancy Tribunal (CTTT), which was administered by Fair Trading until its amalgamation with other tribunals as NCAT in 2013. Now the Fair Trading Centre is moving and NCAT - administered by the Department of Justice - says they can't stay where they are.

It's a long way to Newcastle for tenants trying to avoid an eviction

Commencing early December, most hearings will take place in a single room at the Gosford Courthouse, two days per week. From 2017 onwards, formal hearings will be held in Newcastle or "other Central Coast locations".

This presents a number of problems. The Central Coast Tenants Advice and Advocacy Service outlined some of these in a letter to the NSW Attorney-General, not long after they were informed of the decision:

Prior to having a dedicated Tribunal Centre in Gosford, arranging hearings was a very ad hoc affair with matters heard in Woy Woy Courthouse, Wyong Council Chambers, Edogowa at East Gosford, local community centres and the like.

As with any temporary venue, there was often confusion by some or all of the concerned parties regarding the whereabouts of the available hearing room on a particular day

On occasions the staff at these locations were not notified or otherwise unaware of a scheduled hearing and this often resulted in cancellations, postponements or relocations of hearings.

Because assigned conciliation rooms were not provided in temporary facilities this resulted in a lack of mediation opportunity and therefore matters that could be potentially resolved without requiring a hearing were far less likely.

Other detrimental factors in utilising temporary facilities included a lack of close proximity to public transport, unfamiliarity with the location, lack of privacy, lack of security, lack of amenities and lack of available parking.

Clearly, dedicated hearing rooms in Gosford have meant improved access to justice for tenants on the Central Coast for more than a decade. But even if NCAT addresses each of the concerns above, the significant reduction in its capacity on the Central Coast remains a worry.

We've taken a look at some numbers. NCAT doesn't provide the quality of reports that its predecessor did, so we've had to go back to the CTTT's annual report from 2012/2013. There we can see that in that period there were 3,706 matters heard in the two Gosford hearing rooms over a total of 173 hearing days. That gives us an average of around 20 matters heard per day, at 10 per room. The numbers were similar for the preceding year, so we'll assume they paint a reliable enough picture.

As we've noted above, the current proposal is for NCAT matters to be heard in a single hearing room on the Central Coast, two days per week. Let's knock off a few weeks for Christmas and assume that gives us a maximum of 100 hearing days per year. If they can sustain the rate of 10 hearings per room per day, we can expect them to handle about 1,000 matters each year from December. NCAT is about to start running at a little more than a quarter of its current capacity on the Central Coast.

This will be a real test for their case-management strategies and systems.

About 75% of NCAT hearings are in the tenancy or social housing lists, and about 60% of those are applications made by landlords seeking to end a tenancy. The majority of tenants' trips to the Tribunal are to try and fend off an eviction - but for those who do try to take a landlord to NCAT over repairs and maintenance, expect a long wait. And if your landlord is after termination and possession orders and doesn't want to play nice, the thought of a return trip to Newcastle might prompt you to reach an agreement that's not in your interests, rather than stick to your guns and go to a formal hearing.

Tenants shouldn't be forced to make such compromises. In the interests of justice, NCAT needs to find itself a sensible, permanent venue on the Central Coast.

Happy anniversary, Tenants' Union of NSW

The very first meeting of the Tenants' Union of NSW was held 40 years ago today, on August 17th 1976. We are now 40 years strong.

Past and present staff and board members of the Tenants' Union,
celebrating 40 years of advocacy

We've been building up to this milestone all year. We launched our celebrations with a BBQ at Northcott Towers, sharing food and cake with good friends and colleagues. We've shared 40 moments from our organisation and our network's history, reflecting on the great work of tenants' advocates past and present. And we've compiled a 40th anniversary bumper edition of the Tenants' News.

On Monday we threw a bit of a birthday bash, including a half-day forum on the future of tenants' rights. We've already shared some of the best bits on Facebook, and we'll be adding a few more over the next couple of days.

Oh, and we've produced a half-hour movie that tells our story. We're really quite proud of it - we'd love for you to check it out.

Happy anniversary, Tenants Union of NSW!

Negative Gearing in the News

On 25 April 2016 the Grattan Institute released a report entitled 'Hot property: negative gearing and capital gains tax'. It finds that, contrary to urban myth, rents won’t change much, nor will housing markets collapse.

And on page 27 of this reports it explains the role that negative gearing plays in undermining the security of tenure of tenants of residential premises across Australia:

The higher churn of properties encouraged by negative gearing also exacerbates a lack of secure long term tenancies in Australia. Most of Australia’s housing stock is owned by landlords with only one or two properties, because progressive land taxes significantly reduce the returns from larger landholdings. As many of these landlords are negatively geared, and want to turn over their properties in order to stay negatively geared, most Australian landlords are reluctant to agree to long-term tenancies. Their political interests have also led to Australian tenancy law providing much less security for tenants than in other countries.

Check out this report at: https://grattan.edu.au/report/hot-property/

How the media reports it ...

From the ABC, 'Negative gearing: Tax deduction's removal "would boost Commonwealth revenue by $1.6b annually"'. Read more at: http://www.abc.net.au/news/2016-04-25/research-calls-for-abolishing-income-tax-deduction/7356270

From The Sydney Morning Herald , 'Top earners benefit most from negative gearing, Grattan Institute finds' and , indeed,' surgeons, anaesthetists, finance managers and lawyers will be the overwhelming beneficiaries of the Turnbull government's decision not to touch negative gearing in the budget. Read more at: www.smh.com.au/business/federal-budget/federal-budget-2016-top-earners-benefit-most-from-negative-gearing-grattan-institute-finds-20160425-goeef5.html

And Peter Martin's comments at: http://www.smh.com.au/federal-politics/federal-election-2016-opinion/federal-election-2016-malcolm-turnbull-out-on-a-limb-over-negative-gearing-20160425-goeoj3.html

Let's leave the last word to Adrian Pisarski of National Shelter who states:

I'm surprised that younger people in Australia are not throwing bricks at auctions ... 

Read more at: http://www.smh.com.au/federal-politics/political-news/throwing-bricks-at-auctions-negative-gearing-fight-begins-after-turnbull-rules-out-changes-20160425-goe2ms.html

Update on asbestos testing, compensation scheme

Last week, The Brown Couch published a piece outlining a NSW Fair Trading scheme to identify, purchase, and demolish homes containing toxic loose-fill asbestos. Fair Trading's Loose-Fill Asbestos Implementation Taskforce have since clarified some ambiguities about how tenants of affected dwellings may be impacted.

Above: advertisement for 'Mr Fluffy', responsible for installation of the substance 

Most notable is the question of relocation assistance. The fact sheet addressing compensation under the scheme provides that up to $1000 is available per tenant "named on the residential lease". This proviso seemingly excludes those who are considered tenants under the Residential Tenancies Act, but do not have a written agreement between themselves and a landlord. However, relocation assistance will in fact be provided to tenants with oral and/or implied agreements, as well as sub-tenants with written agreements, if they can provide the Asbestos Taskforce with evidence of their status as tenants. Such applications for relocation assistance will be assessed on a case by case basis. 

Also left open was the question of how an owner that had agreed to Government purchase of affected land would go about terminating a tenancy agreement over the property. This is especially pertinent as a landlord cannot terminate a fixed-term tenancy agreement because the property has been sold unless their intention to sell was disclosed before the tenancy agreement was made. The Taskforce has provided  termination will be affected according to the ordinary means available under the Residential Tenancies Act. 

This leaves open the possibility that affected tenants with fixed-term agreements may negotiate the terms of any agreement to end the tenancy early. However, it will of course remain open to landlords to terminate fixed-term tenancies at the conclusion of the term, and to terminate periodic tenancies without grounds. 

It also appears possible that either tenant or landlord may be able to terminate on the grounds that the agreement has been 'frustrated', because the property is uninhabitable. 

Tenants that suspect their home may be affected should contact their local Tenants' Advice and Advocacy Service for assistance. Contact details for the general services operating in Local Government Areas identified as containing homes with loose-fill asbestos are as follows:

- Illawarra and South Coast Tenants Service: 4274 3475
- Northern Sydney Area Tenants' Service: 8198 8650
- Southern Sydney Tenants Advice and Advocacy Service: 9787 4679
- South Western NSW Tenants Advice and Advocacy Service: 1300 483 786
- Western Sydney Tenants' Service: 8833 0933

Aboriginal tenants may also contact the following services:

- Greater Sydney Aboriginal Tenants Service: 9696 0873
- Southern NSW Aboriginal Tenants Advice and Advocacy Service (Murra Mia): 4472 9363
- Western Aboriginal Tenants Advice and Advocacy Service: 6884 0969

Asbestos testing, compensation for tenants

NSW Fair Trading has established a program to identify, purchase, and demolish homes that contain loose asbestos as ceiling insulation. Its Loose-fill Asbestos Implementation Taskforce has identified 28 Local Government Areas, where a company trading as ‘Mr. Fluffy’ installed the toxic substance in residential properties throughout the 1960s and 70s. The LGAs identified include metropolitan and regional areas throughout NSW.

A roof containing loose-fill asbestos

The NSW Government is offering free testing of potentially affected properties before 1 August 2016. Unfortunately, testing is not available for tenants directly, as it must be organised by the property’s owner. Registration for testing is available online, or by contacting Service NSW.

Compensation may be available for tenants of properties that are purchased and demolished under the scheme.

Relocation assistance up to $1000 will be provided to any tenant “named on the residential lease”. It is unclear whether tenants with an oral and/or implied agreement with the landlord would be eligible. These constitute residential tenancy agreements to the same extent as those whose agreement is recorded in writing, per Section 13 of the Residential Tenancies Act. This requirement would also seem to exclude sub-tenants. We hope to clarify these ambiguities soon. 

Tenants are also eligible for compensation up to $1000 for the replacement of “soft furnishings and or/porous materials like clothes, curtains or linen” that are exposed to loose-fill asbestos. Only household items kept in contaminated areas will need to be replaced.

Fair Trading’s website identifies demolition as “the only way to remove the health risk of loose-fill asbestos insulation from an affected property”.

Tenants who suspect their home may be affected should contact their Local Tenants’ Advice and Advocacy Service for assistance. 

Contact details for the relevant general services are as follows:

- Illawarra and South Coast Tenants Service: 4274 3475
- Northern Sydney Area Tenants' Service: 8198 8650
- Southern Sydney Tenants Advice and Advocacy Service: 9787 4679
- South Western NSW Tenants Advice and Advocacy Service: 1300 483 786
- Western Sydney Tenants' Service: 8833 0933

Aboriginal tenants may also contact the following Aboriginal services:

- Greater Sydney Aboriginal Tenants Service: 9698 0873
- Southern NSW Aboriginal Tenants Advice and Advocacy Service (Murra Mia): 4472 9363
- Western Aboriginal Tenants Advice and Advocacy Service: 6884 0969

Fair Trading NSW is also hosting free information sessions in select locations; check their events register.

Which Optus-approved renter are you?

Of all the contributions to The Institute of Tenancy Culture Studies, a report on renting from a Telco giant was one we’d have pegged as most unlikely. And yet, somehow, here we are. On Wednesday Optus released excerpts from 'The Renter of the Future' – a survey that purports to uncover the “attitudes, behaviour and technology trends” of Australia's tenants. Its commissioning and publication are openly driven by a product launch targeting rental households, and there's certainly no shortage of cringeworthy marketing speak throughout. So it’s tempting to dismiss it as a work of highbrow advertorial. But it does make some claims relevant to more than whether you say ‘Yes’ to a new modem, and has been attracting attention, so is worth some unpacking.

'Yes' man Josh Thomas: is this the future of renting?

A central finding of the report relates to how and why tenants are in the rental market. It claims that 27% of tenants are “flexibility renters”, whose status as tenants is attributable to “[liking] the flexibility of moving when they want to”. This is in contrast to the other 73% - “stability renters” who “prefer to stay in one place for a while”.

It also contrasts markedly with our 2014 survey of the NSW rental market. When we asked “Why do you rent?” only 9% of respondents nominated ‘flexibility and mobility’. We gave respondents six options in response to this question - accounting for those priced out of the buyers’ market for now or for good, those who prefer to invest elsewhere, and those who are renting where they can’t buy. Whilst the Optus report contains no information as to the methodologies employed, it would appear that its use of a simplistic dichotomy between ‘renting for flexibility’ and ‘renting for choice’ has created a distorted picture of tenants’ motives.

The Optus study also includes a separate division of the renting population into four ‘personalities’. Only one personality, the “pragmatic homeseeker” comprising 44% of all tenants, rents due to an inability to enter the homeowners’ market. The other groupings are “pragmatic lifestylers”, “tech lifestyers”, and “tech homeseekers” - the latter categories relating to tenants' technological and digital engagement.

But accounting for tenants that cannot afford to buy, those looking to buy or build, and those saving to buy, our study found that 69% of tenants could be termed ‘pragmatic homeseekers’. We’d also note the obvious artificiality in the Optus report's division between tenants shut out of the owners’ market and those interested in the tech industry. Clearly, one can ardently desire home ownership and remain passionately interested in their smartphone. The four ‘rental personalities’ suggest mutual exclusivity where none exists. Perhaps this component of the report is merely a product of its commercial imperatives.

Finally, the Optus report does note that renters move much more frequently than owners – every 1.8 years compared to every 8 years for mortgagors and 18 years for those who own outright. But it fails to consider the disconnect between such frequent moves and the relatively low number of ‘flexibility renters’ (whether you put that figure at our 9% or Optus’ 27%). Could it have something to do with the instability forced upon tenants by our rental laws? We say it certainly could. Our study found that, of respondents who had moved in the last three years, 14% said their landlord telling them to leave was the main reason, 12% nominated a rent increase, and 4% pointed to a disagreement with their landlord. Moreover, a full 92% were worried about having to move in the future. On a national scale, a recent study from the Australian Housing and Urban Research Institute found that 27% of tenants who move house have their hand forced by eviction or unaffordability. 

So proceed with caution - it’s fair to label the key claims of the Optus report as dubious to say the least. We won't pore over its supplementary claims, though in most cases such an exercise would be better suited to an advertising blog. 

But at the very least, the mere existence of this report points to a burgeoning realisation that tenants represent an ever-growing slice of whatever market you're trying to sell into - and that perhaps we should be taking better care of them.

And yes, we also value a high-speed Internet connection as much as everybody else.

Welcome to Dubbo, please enjoy your stay...

Earlier this week a scanned copy of a letter started doing the rounds on social media . It was said to be from Family and Community Services, delivered to tenants of the Aboriginal Housing Office in the Dubbo area where the 45th Koori Rugby League Knockout is to be held this weekend.

The letter reads:

As the warmer months of the year approach and with school holidays currently well underway it is timely for Family and Community Services (FACS) Housing Services to remind our tenants about the Good Neighbour Policy, particularly in regard to additional persons and visitors. 

FACS is well aware there are a number of activities scheduled to take place in Dubbo. Some of these are occurring right now, and then there are other activities planned for the remainder of the school holidays. One of these activities is the NSW Annual Aboriginal Football Knockout to be held in Dubbo over the long weekend. 

Please be assured that FACS is very supportive of all activities, in particular the football event. However, we are aware that the football, in particular, brings high numbers of visitors into Dubbo to celebrate the event with friends and family and many stay in social housing properties. 

Having visitors is enjoyable however sometimes it may bring stress particularly if you are unsure of how to manage situations that get out of hand. If we can help in any way please contact your CSO on [number] or if there is an emergency please call the police... 

On the other hand if you are disrupted by neighbours or their visitors please also make contact with your CSO or the police.

Quite understandably, the appearance of this letter raised a few eyebrows at the Aboriginal Tenants Advice and Advocacy Services. Was it real? Where did it come from? And why is it written in such a patronising tone?

We contacted FACS Statewide Housing Services to see if we could get some answers. They confirmed this letter was sent from FACS' Dubbo office to all local Aboriginal Housing Office tenants last week. They also confirmed the local office had received numerous complaints about the letter and had gone into a bit of damage control, liaising with local 'Aboriginal representatives' to explain the thinking behind the letter. We're not exactly sure what this means, but we do know that the Western Aboriginal Tenants Advice and Advocacy Services was kept pretty busy with phone calls from local tenants yesterday.

Local FACS offices have got a bit of form when it comes to sending ill-conceived correspondence en masse to tenants. Long-time readers may recall this little piece of Christmas cheer dropped into the letterboxes of tenants on the South Coast a few years back, which assured local tenants that "rent doesn't stop for Christmas".

Now, it's fair to say that the tone of the letter sent by the Dubbo office is, on the face of it, a little less offensive than the one we saw on the South Coast not three years ago. But given the nature of this particular correspondence - directed at tenants of the Aboriginal Housing Office, in anticipation of an annual event that is run by and for Aboriginal people - we have to look beyond what we see at face value. The Koori Knockout is an annual event, which is held in a different location each year, and this is the first time a FACS Housing Services office has seen fit to circulate such a note to all local Aboriginal Housing Office tenants.

Hopefully it will be the last, because - understandably - it hasn't been very well received. To see just how badly this has been seen by Aboriginal people, check out this post to the 2015 Koori Knockout host's facebook page, and the response it has attracted.

There's a pretty clear lesson for FACS in both of these incidents. If you want to alienate yourself from the communities you're supposed to be serving, just whip up a quick letter and send it around to as many people as you can think of without a second thought.

On the other hand... if you want to engage with local communities to have a genuine dialogue about anticipated concerns arising from events like Christmas or a Koori Knockout in your area, don't just whip up a quick letter and send it around to as many people as you can think of without a second thought. This is true for everyone, but it is especially true for communities who have good reason to be wary of the thinking behind a Government agency's activities towards them.

Instead, consult with key folks in your community about what you want to say, and why you want to say it. Talk to 'Aboriginal representatives' before you send your message out into the world, rather than after the damage is done. They'll tell you if it's going to be wide of the mark, and they might even help you put something worthwhile together.

That's exactly what we did - and we came up with a special edition of the Tenant News. It's published with the Koori Knockout in mind, and it's full of great yarns by and for Aboriginal tenants.

There'll be a few printed copies of the Koori Tenant News circulating around Dubbo this week, so keep an eye out for it if you're in town for the Knockout. And it's available to download from our website right now. Let us know what you think!

We reckon it makes for better reading than that letter from the local FACS office.

Caution following REI's lead over rent drop

Breathless good news on rental affordability from Tele land this week.

Citing Real Estate Institute of NSW data, the state's favourite tabloid told us that rent in some of Sydney’s blue chip neighbourhoods – including Bondi Junction, Neutral Bay, and Manly – is down by between $25 and $70 per week.

REI president Malcolm Gunning attributed this fall to a ‘glut’ of new apartments released onto the market in 2014. 

A strong second quarter does not a triumph make

But we suggest caution before jumping to any of the same conclusions. Whilst REI data is not freely available to the plebeian blogosphere, it’s worth noting that the basis for the article’s claims appears to be a REI study of the second quarter of 2015 alone. This is a perilously short period of time from which to be drawing any bold conclusions such as these.

What's more, as the second quarter takes place over both a university break and the feared ‘polar vortex’ period, autumn and winter variations for rent in student and waterfront neighbourhoods are also relevant. Indeed, of the ten suburbs cited in the article, six are beachside or waterfront, and two are situated in the immediate vicinity of Sydney University or the University of New South Wales. Bondi Junction arguably fits both criteria.

Remember too that REI data is based on asking rather than actual rents. As we noted recently, this paints a misleading picture of the market. Far more reliable is the equivalent data in the Rent and Sales Report – based on the rent paid in new tenancies, as discerned from rental bonds lodged with Fair Trading (i.e. almost all of them). And published free of the desire to push any particular narrative. 

That, too, is a quarterly publication, with the second quarter edition due in a tantalising 21 days. We will wait on its findings before making any breathless conclusions of our own.

GST hit-ups stifle more valuable conversation

Like Stewart to Stewart, Mason to Foran, or Cherry-Evans to the Gold Coast (and back again), we were hit with a Northern Beaches 1-2 this week.

Try time

Ever the pugilist, the Prime Minister and Member for Warringah did the grunt work early. Way back in 2014, the first Abbott-Hockey budget downsized projected spending on health and education over the next decade, pushing $80 billion dollars of ‘cuts’ or ‘efficiency measures,’ depending on how you feel about that sort of thing.

His offload to NSW Premier, Member for Manly, and Liberal Party teammate Mike Baird was a while in the making. But arrive it did – the unstoppable force calling on us to save the health system by upping the GST from 10 to 15 per cent in a barnstorming Monday address.

Given Australia’s steadily low GST, it is perhaps no surprise that the debate around increasing our tax on consumption has been around for nearly as long as the tax itself. Most relevantly for our purposes, the No Land Tax party called for precisely the same rise before the recent state election, in a flurry of yellow bibs and clip art testimonials.

But both the Premier and No Land Tax pitch GST reform in artificially narrow terms – the one true path to health system deliverance, and to shifting fiscal responsibility away from landowners, respectively.

And, of course, as a regressive tax, low-income renters would feel the pinch of an increased GST more than most – even if it remains unclear precisely where the hypothetical compensation for this hypothetical rise would leave this vulnerable group.

This state would benefit from a broader discussion about tax reform than the one currently enveloping the GST alone. In particular, the Tenants’ Union is an established proponent of a broad-based tax, applying to all land in New South Wales, as a boon for renters and owners alike:

“Land tax is an important source of NSW State Government revenue. Land tax also has the potential to improve housing affordability for purchasers and renters, and economic activity generally. Our present system of land tax does not realise this potential, and should be reformed.”

There is no single path in tax reform - the PM and Premier’s fancy footwork in pushing the line notwithstanding. And we say land tax reform should play a prominent part in a much-expanded conversation.

Read more about the Tenants’ Union’s land tax reform position here

'Social Housing in NSW' discussion paper... and what's not up for discussion

The NSW State Government has produced a discussion paper on the future of social housing in New South Wales. Its major theme is 'providing opportunity and pathways for client independence', by which it means 'more actively supporting clients' – particularly working age tenants, and young people – to 'transition out of social housing'.

As for what they would transition into... that would be private rental housing, though the paper has hardly a word to say about it.

This is the biggest gap in the discussion paper, and in current discussions about social housing generally. Much gets said about the failings of the social housing system; not nearly enough about the failings of the private housing system, and private rental in particular.

But you really cannot have a proper conversation about social housing – much less actually do any of the things the State Government says it wants to do to social housing – without also saying and doing something about private rental. 

Private rental fails low-income households (ie those in the bottom 40 per cent of the population by income). The 2011 Census counted 219 202 low-income households privately renting in New South Wales. Of these households:

• 78 per cent – 171 563 households – were paying more than 30 per cent of their income in rent; that is, they were in 'housing stress';
• 43 per cent – 94 959 households – were paying more than 50 per cent of their income in rent; that is, they were in 'housing crisis'.

Research by Terry Burke and Simon Pinnegar tells us a bit more about experience of low-income households in private rental. Their survey found:

• 86 per cent 'worry constantly about [their] financial situation'
• 84 per cent 'don't have enough money set aside to meet unexpected expenses'
• 75 per cent experience a 'constant struggle to pay regular bills'
• 61 per cent say 'costs put stress on household relationships'
• 42 per cent say that their 'children have missed out on school activities such as excursions'
• 26 per cent say that their 'family has sometimes gone without meals'.

Focusing on those in housing stress, they report these additional effects:

• 35 per cent say that their 'children have had to go without adequate health and/or dental care'
• 32 per cent 'sold or pawned personal possessions'
• 28 per cent 'approached a welfare/community/counselling agency for assistance'

These rates are between 50 per cent and 100 per cent higher than the rates for households not in housing stress.

That's just how private rental fails on cost; it also fails on security (about one in six tenancies end at the instigation of the landlord, and everyone is subject to termination without grounds at the end of their fixed term, or on three months notice otherwise); and it fails on consumer protection (according to our own survey, 79 per cent of private renters have put up with a problem, rather than assert their rights, because they feared adverse consequences).

It is simply unreal to expect appreciable numbers of households in social housing to happily 'transition' into this. And we know this because Housing NSW already operates such a policy (it reviews tenancies for continuing eligibility at two, five or ten year periods), and has done for seven years, and over this time the rate of exits from public housing has declined. This policy has made matters worse for public housing tenants (who stay poor to stay housed) and for those on the waiting list (who are stuck longer in private rental, or homelessness).

If the NSW State Government really wants to help those on the waiting list, and make 'transitioning' out of social housing a realistic prospect, it must discuss reforming the private rental market too. It should also be open to discussing increased funding for social housing, so that there's more of it. Unfortunately, this too is not up for discussion in the paper, which is predicated on funding 'within the existing envelope'.

At a briefing on the discussion paper, FACS Minister Gabrielle Upton was asked about the lack of reference to the private rental market and its problems, and she replied that the policy levers for reform were not within her grasp, but instead with others in the State Government and, even more so, the Federal Government, and that rather than wait for any action from them, she just had to get on with it. Fair point. But if the social housing policy that follows from the present discussion does not consider the reality of the private rental market, and how it fails low-income households, and how other government policies have shaped it that way, any initiatives for 'opportunities and pathways' out of social housing will only raise false hopes, or real fears.
 

Proposed Redfern public housing criminal record ban won't work

The Daily Telegraph reports today that police have proposed to the NSW State Government that applicants for social housing should be banned from being allocated tenancies in Redfern and Waterloo if they've been previously convicted of drug offences.

Redfern Local Area Command Superintendent Luke Freudenstein is quoted:

'I know everyone's got to have a place to live... but they're going back into an environment where they fall back into bad habits and it's not doing justice for their rehabilitation.'

For that very reason, we think the proposal should be rejected, because it won't work.

As the Superintendent says, everyone's got to have a place to live. If you make a person ineligible for a sizeable part of the social housing system in Sydney, they will have wait longer for another offer of social housing... and while they wait, they'll still got to live somewhere. Most likely, they'll be transient, moving between family, friends and associates. There's every prospect that they'll be back in same environment, at risk of the same 'bad habits', but they'll be there as a transient homeless person.

Research by Eileen Baldry and her colleagues at UNSW shows that for people leaving prison, having only transient accommodation is one of the strongest risk factors for their being imprisoned again. They conclude:

Chaotic living arrangements made doing anything about drug rehabilitation, employment or social connections virtually impossible for the study participants [ie ex-prisoners]. A majority of these transient participants was re-incarcerated by nine months post-release.

To do justice for rehabilitation of ex-drug offenders, the State Government should focus on providing secure housing and helpful support, not denying both.  

Trashy newspaper going to war on tenants, facts

We'd prefer to ignore the Daily Telegraph's latest attack on public housing tenants ('Going to war on trashy housos'*), but since we were so recently discussing the relevant facts and figures, we'll engage.

The Tele reports that 'taxpayers are slugged $10 million each year for public housing tenants wilfully trashing their properties', and that this is 'taking money away from necessary maintenance and the building of new houses'.

Some perspective, from the NSW Land and Housing's most recent annual report: in 2012-13, LAHC spent $203 million on repairs and maintenance (for its 145 248 properties).

So, repairs to 'wilfully trashed' properties represents less than five per cent of its repair bill.

That figure might be reduced further, if we could account for the cases where Housing NSW, at the end of a tenancy, writes up as 'Tenant Repair Costs' damage that properly should be called fair wear and tear or a defect for which the tenant is not responsible. We know from the TAASs that this sometimes happens.

Of course, it also sometimes happens that a tenant intentionally or negligently damages a property. It would be terrific if it never happened. But we should keep in mind that it represents a very small proportion of LAHC's repair bill.

As for paying the bill, also keep in mind that in 2012-13 LAHC received $762 million in rents and other charges from tenants – which is more than six times the amount of the grant it received from the NSW State Government ($126 million) – and that it ended the year with $163 million cash in the bank.

But the Tele wants to go to 'war', and reports that 'Government sources suggest a quicker eviction process is necessary for tenants who damage properties because the current investigation and termination process is so lengthy that tenants are simply disappearing, leaving taxpayers to foot the bill'.

What is the Tele – or its 'Government sources' – saying: 'no, don't disappear, that way we can't evict you first?' Changing the law in this regard would do nothing to increase the prospect of recovering the costs of repairs legitimately charged to tenants – in the small number of cases where that actually happens at all.

* We don't link to the Tele. Google if you want to read it.

What the Commission of Audit says about housing

The much anticipated report of the National Commission of Audit was released yesterday.

 (Chair of the National Commission of Audit, Tony Shepherd)

Of the comment generated so far, we reckon Fairfax's Peter Martin has nailed it with his criticism of the partial nature of the Audit: it looks at government spending, but not really at tax, and certainly not at tax expenditures.

Martin gives the example of retirement incomes; we can also see the flaw in the Audit in what is says about housing.

The Audit zeroes in on spending on Rent Assistance ($3.6 billion pa), affordable housing – in particular, the National Affordable Housing Agreement ($1.3 billion pa), which funds social housing, and the National Rental Affordability Scheme ($1.5 billion over four years) – and alleviation of homelessness ($159 million pa). It frames these as 'programmes that duplicate State responsibilities' (on the basis that 120 years ago, it did not occur to the drafters to include 'housing' in section 51 of the Australian Constitution).

The Audit notes the 'limited success' of these programs in delivering affordable housing and reducing homelessness, and so considers that the Commonwealth should pull back and 'limit its involvement in this area to providing rent assistance to income support recipients'. That includes social housing tenants, who'd henceforth be paying market rents. There'd be no housing agreements or grants to the States and Territories for social housing or affordable housing; the National Rental Affordability Scheme would go too.

The Audit mentions the Henry Review in support of the case for extending Rent Assistance and market rents to social housing; it does not mention, however, that the Henry Review also recommended an additional payment for 'high needs clients' of social housing.

And that's it. Because it doesn't really look at taxes, and certainly not tax expenditures, the Audit misses the really big housing subsidies: the $30 billion pa benefit for owner-occupiers effected by not taxing their capital gains, imputed rents or land values; and the $7 billion pa benefit for landlords effected by not taxing income spent on the costs of speculation (negative gearing) and only half-taxing the gains of speculation.

These benefits have encouraged households with money (or credit) to spare to spend it on their own housing, or on speculating on rental housing, driving up prices and limiting the effectiveness of the Government's own spending on social housing and affordable housing and homelessness alleviation.

The Audit has missed the real problem in housing policy, and the opportunity of offering real solutions.