Friday, June 26, 2009

NSW State Budget: the good, the bad and the windows of opportunity...

It’s time we had a look at the NSW state government’s recently announced budget for 2009-2010 – what’s in it for tenants?

Aside from a general increase in the maintenance budget of Housing NSW (long overdue), there are three initiatives of interest. We’ll call these the much-touted “saviour” of the housing industry, an attempted medium- to long-term plan to combat homelessness, and a new subsidy to assist victims of domestic violence to move out on their own.

We’ll look at each in turn over the next few days… Starting with the saviour:

The Housing Construction Acceleration Plan.

In the words of the NSW State Treasurer, Eric Roozendaal, “this provides a 50 per cent cut to stamp duty for newly constructed dwellings up to $600,000.00 purchased in New South Wales from 1 July to 31 December 2009”. This applies to everyone except for first home buyers, who already enjoy substantial relief from stamp duty, as well as various first home owner grants. (Notably the State Governments’ contribution to such grants is to continue for another year). So, this initiative might coax landlords as well as owner-occupiers into the market for new housing in the immediate future.

The government suggests in its “Budget Highlights” package that this is an investment to “support growth and construction jobs in the housing sector”. The Urban Taskforce Australia, an organisation representing property developers, has hailed the plan as the “strongest measure taken by any government in Australia to support new home construction”. Clearly, they’re quite happy with it, and why wouldn’t they be? As a targeted economic stimulus measure, it sounds like good news. But what’s it really going to do for the housing market?

The CEO of The Urban Taskforce, Mr Aaron Gadiel, suggests “… far more people will benefit – not just first home owners. Some people who aren’t first home buyers are now likely to bring forward their home purchase to take advantage of this grant”. The Housing Industry Association’s Executive Director, Mr Graham Wolfe, puts it this way: “the saving in stamp duty provides a window of opportunity for anyone looking to buy a new home”.

“A window of opportunity”… Get in quick before the money runs out! You can’t afford to miss it!!! At these prices you’d be a fool to put your money anywhere else…

Now, call me a nay-sayer and a ne’er-do-well, but perhaps there are some very good reasons why people should NOT bring their purchases forward, simply to take advantage of yet another “saving” on stamp duty. Enticing home purchasers to prematurely increase debt in order to qualify for a stamp duty concession does not strike me as a good idea. To illustrate this point, I recommend a cursory glance over numerous comments made earlier on the Brown Couch. Start with the "numbers" tag and work your way back from there.

Correct me if I’m wrong, but isn’t this Global Financial Crisis largely the product of housing related debt? Does it not seem a little odd to try to reinvigorate the market by offering yet another incentive to borrow more money now? Can somebody in government please give me a definition of the word irony?

Still, I do see one positive that may come out of all this. It could give us a few more opportunities to test out the new “Mortgagee Repossessions” amendments to the Residential Tenancies Act, now that they’ve made their way through the legislature.

Friday, June 19, 2009

The Curse of the Wolfman: discrimination in rental housing

The Brown Couch notes with concern reports in today's sports pages that Manly Sea Eagles winger and tenant, David 'Wolfman' Williams, has had applications for tenancies declined by bigoted landlords and real estate agents. According to the Herald:

"I got rejected from like seven places because I was under 25 … and a footballer," the 22-year-old said.

(David 'Wolfman' Williams, tenant.)

Your correspondent at the Brown Couch does not follow Williams' game, being instead a devotee of Australia's national football code (go Hawks!), but I do feel a strong sympathy for the man, born of a common experience. As an employee of the Tenants' Union, I too have had more than my share of applications for tenancies refused where I have disclosed my occupation.

Discrimination in the provision of rental housing in New South Wales is subject to State and Federal anti-discrimination legislation. Under each of these regimes, discrimination on grounds of race, sex and a number of other factors is illegal; unfortunately, neither of these regimes prohibits discrimination on the ground of occupational status. The Australian Capital Territory's Discrimination Act 1999, however, does prohibit discrimination on grounds of a person's 'profession, trade, occupation or calling' (s 7(1)(m)). This measure should be extended to citizens of New South Wales and Australians generally. The Wolfman and his similarly affected colleagues should not have to move to the Canberra Raiders in order to get housed.

Williams' comments indicate that another factor may be involved in the discrimination he has experienced: his age. Discrimination on this ground is generally prohibited by both State and Federal legislation. Williams and anyone else who is knocked back for rental housing because they are too young, or because 'the landlord really wants a family to move in' or some similar excuse, should consider contacting the NSW Anti-Discrimination Board or the Australian Human Rights Commission to find out more about making a complaint.

Williams says that despite the prejudice he encountered he is 'in a good place now', and the Brown Couch wishes him well as he settles into his home.

Monday, June 1, 2009

Better protection for tenants when landlords default on mortgages

Some much-welcome news: the NSW State Government has announced that it will introduce legislation this week to better protect tenants when landlords default on their mortgages and the mortgagee (usually a bank) takes possession of the premises – and evicts the tenant.

(Well done!)

We don't yet have the detail of the legislation, but the Minister for Fair Trading, Virginia Judge, says that it will provide:

    • Immediate introduction of a 30 day notice to vacate once a mortgagee is entitled to possession of rented premises
    • Permit a mortgagee who becomes entitled to possession of a premises to authorise the release of the tenant’s rental bond
    • Relief for relocation expenses, with tenants who receive an eviction notice to withhold all future rent and / or recoup advance payments – i.e. a rent holiday, or compensation from the mortgagee.

    All of which represents a massive improvement on the current law, under which tenants have been evicted by mortgagees with little or no notice, and no real prospect of compensation. (Click here to download a briefing paper by the Tenants' Union on the problems with the current law.)

    The TU has previously asked the Government to deal with the mortgagee eviction problem as a matter of urgency, so we are very pleased that action is being taken now.

    The TU and the Tenants Advice and Advocacy Services saw a wave of these cases a couple of years ago, when interest rates were rising. We expect to see another wave in the coming months, as unemployment rises. This time, it looks like the law will better protect tenants.

    Well done, Minister Judge.