The rent is too damn high - but why?

Keen followers of rental related reporting will have noticed some pretty dire headlines over the last couple of days. The ABC screams "Mission impossible for low income renters", the Sydney Morning Herald yells "Poor priced out of Sydney rental market", while The Australian exclaims "Dearth of housing for the poor".

Why is my rent going up again?

Some regional papers have jumped in, too, with reports from Broken Hill, Goulburn, Albury, Yass, Port Macquarie and Newcastle that high rents have made headlines locally.

The Daily Telegraph offers a slightly more subdued "Anglicare rental affordability report shows welfare recipient struggle to find housing", which gives us a clue as to what all this is about - Anglicare Australia has just released it's Rental Affordability Snapshot for 2013. The news is not good.

We wont go into the headline findings - they've been covered pretty well by the papers. Suffice to say that if you're on a low income - like a Centrelink payment, or a wage from a part-time job - your chances of finding something decent to rent in the private rental market are pretty slim. Well, almost non-existent, actually. This is not just in Sydney, it's across New South Wales, and it's across the country.

For keen followers of rental related reporting this should come as no great surprise, even if it does fly a little in the face of current reporting conventions. We already know the rent is too damn high. It's kind of nice to think that others are getting this message - at least for a day or two - thanks to the work of Anglicare Australia. But it's a shame that the conversation tends to stop there. Who is asking the next question: why is the rent so high? And what happens to those of us who can't afford it?

As it happens, we were in attendance at the recent Shelter NSW conference "Hot Topics in Housing Policy", where one Emilio Ferrer of Sphere delivered a presentation called "The Private Rental Market - Affordability and Homelessness". Ferrer observes a correlation between rising rates of people seeking to access homelessness services, and rising rents in the private rental market. He says that these rises are not the product of economic indicators such as GDP, unemployment or wage growth. Nor are they the result of a decline in the availability of social housing properties. Instead, he says, they are the result of chronic underinvestment in housing supply by the private sector, which has resulted in a consistently low vacancy rate over several years.

"The effect of this on tenants," he suggests, "is that it's a landlord's market. Some tenants are priced out of the market, and some tenants are selected out of the market". By this he means that it becomes easier for landlords to pick and choose tenants, because when vacancies are low, competition is high, and the pool of applicants for an affordable property will be much larger. Applications from those with lower incomes will be some of the first to hit the culling room floor.

You can find the slides from Ferrer's presentation (as well as others from the conference) here. We think he's pretty much on the money. As we've alluded to before, current policies that are said to encourage private investment in rental housing just aren't producing enough new stock. According to Ferrer's data, it doesn't even come close - in order to get back on track we'd need to build about twice the number of new dwellings than were built in 2011/12, every year, for the next twelve years.

But there's something else to consider here. Not every tenant who finds their options limited by what they can afford ends up homeless. As we said in this previous post:

In the real world, of course, people do consider the affordability of housing when they decide whether to leave the parental home, or the share house, and form a household of their own, and demand some housing – owner-occupied or rented – of their own. And some of those already out there in the housing market might look again at its affordability, and decide to withdraw, back to the spare rooms of parents and friends.

It's a curious balance. The answer is not just to "build more homes", but to build more homes that people can afford. This will call for a range of policy solutions - indeed, we should be looking at an entire national housing strategy - and as Anglicare's Andrew Yule has said following the release of the Rental Affordability Snapshot yesterday: let's not let this fall off the agenda.

Boarding Houses Act – update

A quick update on the partly-commenced Boarding Houses Act 2012.

('Houses', by Kevin Woods)

• The part that has commenced  – the Boarding Houses Register – is starting to fill up, and is now presented in searchable format on the NSW Fair Trading website. Proprietors of existing registrable boarding houses must register by 30 June 2013. After that, new proprietors must register within 28 days of commencing operations.
• Those parts of the Act that have yet to commence – in particular, the parts about occupancy agreements (Part 3) and the revamped regulatory regime for assisted boarding houses (Part 4) – we expect to commence in the next month or so, when the Boarding Houses Regulation 2013 and the standard form of occupancy agreement are good to go. Keep in mind that upon commencement there's another three months before the application of the occupancy principles becomes a term of every occupancy agreement.
• We were asked recently if councils could use their inspection powers under the Act to investigate whether premises were a registrable boarding house. We've had a look, and we say no: the inspection powers can be exercised only in relation to registrable boarding premises that are on the register, and only for the purpose of determining compliance with requirements imposed by the Environmental Planning and Assessment Act 1979 and the Local Government Act 1993. Councils investigating whether premises are a registrable boarding house might look for evidence elsewhere: see section 100 for examples of the circumstantial evidence that may be used in proceedings to determine whether premises are a registrable boarding house.
• Any other questions? Try the TU's Tenants' Rights Manual, which now has a new chapter on boarding houses – read it online at the State Library.

The doctor is not in...

The release of the Grattan Institute's report on budget pressures on Australian governments has us all talking about taxation revenues and spending today. The report highlights two things - that we're not paying enough in tax to fund things at a level that we've become accustomed to; and that the majority of those things are actually education, welfare and health... Evidently it should be some time before we see a budget surplus in Australia.

Apparently we're getting more out of a trip to the doctor than we used to, and it's costing us. As the Grattan Institute's John Daley says:

The big driver, costing $30 billion, is extra spending on health. Contrary to popular belief the extra spending isn't being driven by ageing. It's that compared to 10 years ago, today's 60-year-olds see the doctor more often, have more tests, face more operations and take more drugs. We are getting something out of the extra spending, more people are staying alive, but the question is, who is going to pay for it?

The problem isn't entirely with who we tax and the way we collect our taxes, although this will inevitably feature in any discussion inspired by this report. Rightly so. But falling revenues are the symptom of our economy's bias toward market forces - it relies too heavily on private incentives to deliver social outcomes. When we look at that list above - education, welfare, health - we see things that a functioning democracy should regard as essential social services, the provision of which we all benefit from even if we're not frequent users of those services ourselves. They are the very basics required to ensure personal aspiration can reap its reward, no matter where you get your start in life. They are also necessary for a cohesive society that grows, develops and improves itself as each new generation of aspirant sets its mind to the challenges of the day.

But we can also see things that have undergone significant reform over the last couple of decades, particularly in how they are funded and delivered. There is a growing reliance, in each of these areas, for private forces to provide the service, and individuals to foot the bill. The government will reward your private investment - be it through a health insurance rebate, a discount for early repayment of your loan for tuition, or a co-contribution and preferable tax treatment to your superannuation - in order to reduce your reliance on government to actually deliver those services.

There's something missing from that list above, and that's housing. It is in the provision of housing that we can really see how our privately financed (ie market driven) service economy is creating some of our tax revenue problems. As we've argued before, our governments could achieve a great deal more through direct investment in rental housing supply, rather than the current approach of subsidising landlords, through generous tax concessions, who trade almost exclusively in second hand dwellings. 

But - and we've said this before, too - it runs much deeper than that. If you're building houses that people can actually afford to live in, you're not only building national wealth, you're building savings as well. You're building the foundation of a stable economy. From the outset, you're supporting jobs, but you're also supporting retail and service economies. You're building resilience and breathing life back into that aspiration we spoke about before. And when the nation is properly housed, we'll get far more value from our spending on education, welfare and health, too...

NSW State Govt axes Welfare Rights Centre funding

The NSW Welfare Rights Centre is a community legal centre that helps people deal with the social security system. If Centrelink thinks you've done something wrong – or you think Centrelink's done something wrong – you ring Welfare Rights.

For decades Welfare Rights has been funded jointly by the Commonwealth Government and the NSW State Government. Now the NSW State Government has cut its contribution. The NSW Family and Community Services Minister, Pru Goward, says funding this sort of service is the Commonwealth's job, not the NSW State Government's. Five frontline staff will have to go.

Social security payments come from the Commonwealth; they go to citizens of New South Wales. New South Wales citizens spend their payments on goods and services at New South Wales businesses. They pay rents to New South Wales landlords – in many cases, to Minister Goward's own Housing NSW. They pay for kids' uniforms and excursions in New South Wales schools.

The NSW State Govt should fund the services provided by Welfare Rights to New South Wales citizens, because they're New South Wales citizens. But aside from that, it makes good sense to fund these services, to help make sure those payments keep going to New South Wales businesses, schools, landlords – and the NSW Government. 

We're asking the NSW State Government to rethink. You can too, by contacting Minister Goward and your local State MP.

[UPDATE 22/4: And on Friday 3 May, you can voice your concern in person at the 'Save Welfare Rights' emergency rally, at 12.30 outside the NSW State Ministerial offices in Governor Macquarie Tower.]

Housing Payment Deduction Scheme - public housing to be judge of its own cause

Details as to the 'Housing Payments Deduction Scheme' proposed by the Commonwealth and State Housing Ministers have been released – along with draft legislation. It's rather different to what we discussed previously.

It's not just about compulsory deductions from social security payments for rent going forward – though it does provide for this, where a public housing landlord thinks a tenant is 'at risk' of not paying (more on that in a second). Rather, a big part of the scheme is about compulsory deductions for what a public housing landlord says a tenant owes them – without having to go to the Tribunal or court.

The scheme would make Housing NSW, and the public housing authority in each of the other States and Territories, the judge of its own cause. In effect, Housing NSW would be able to write its own garnishee orders.

As public housing tenants know, Housing NSW has the power to make decisions that affect them enormously, including in relation to their financial liability to Housing NSW. It can vary and cancel rental rebates, including retrospectively, which can plunge tenants into debts of many thousands of dollars. It makes these decisions in the absence of a really rigorous system of review and appeal (there's the Housing Appeals Committee, which does what it can, but it has no statutory basis, and cannot force Housing NSW to change a bad decision). A modicum of oversight is provided by the Tribunal: only a modicum, because the Tribunal won't review a decision to vary or cancel a rent rebate, so you're stuck with the debt, but at least the Tribunal will make up its own mind about the terms on which the debt is to be repaid.

The proposed scheme would remove even that modicum of oversight. No need to go to Tribunal – the draft legislation merely provides that Housing NSW would have to have taken reasonable action (sent a letter, perhaps?) to recover the alleged debt. Instead Housing NSW would be able to go straight to Centrelink to get the money.

And it's not just rent rebate cases that could be dealt with this way – any alleged liability could be, provided it's more than four weeks outstanding and more than $100. Instead of dealing with a problem with a bit of tact and negotiation, Housing NSW could just go to Centrelink.

That's where Housing NSW says you owe money. As we indicated, the proposed scheme would also allow Housing NSW to go to Centrelink where you don't presently owe them, but where you're 'at risk' of not paying. Under the draft legislation, an 'at risk' tenant could be someone whose has paid late, or paid short, three times in a year.

This is an outrageous proposal. It is not about preventing homelessness, or even about improving the state of arrears; it's about public housing authorities avoiding oversight. And with no need to negotiate with tenants, and no need to make a case to the Tribunal, Housing NSW's decision-making will only get worse.

How TAASs prevent homelessness

We've been talking for a while about the value of Tenants Advice and Advocacy Services. TU Executive Officer, Julie Foreman, reports on their value particularly in preventing homelessness.

New South Wales has the highest rate of low-income households who are in rental stress. Households in this situation are at risk of becoming homeless.

Workers in Tenants Advice and Advocacy Services (TAASs) play an effective role in homelessness prevention by consistent, successful negotiation to save vulnerable tenants from homelessness.

The National Partnership Agreement on Homelessness to which the New South Wales Government is a signatory, has four core outputs, one of which is:

Tenancy support for private and public tenants, including advocacy, financial counselling and referral services to help people sustain their tenancies.

TAASs play a unique role in ensuring that this State meets its obligations under the Agreement.  The Tenants Advice and Advocacy Program is the only program which offers specialised advocacy for New South Wales tenants.  TAASs' work on behalf of tenants who need the support of an advocate to retain and maintain a roof over their head is both cost and outcome effective.

Highly skilled, dedicated TAAS workers provide advice, advocate on behalf of tenants to a range of parties, and make referrals to other services to ensure their support forms part of a holistic approach to tenants’ health, financial and life skills challenges.

The TAASs' six-month project demonstrating effectiveness in preventing homelessness
To investigate the TAASs' role in preventing homelessness, a six-month project was undertaken from July-December 2012 by 15 TAAP direct services.  The data they recorded highlights the positive impact of support provided to clients whose tenancies were vulnerable.

During the course of the project, 516 tenancies at risk of termination were identified. As a result of the advice and advocacy provided by skilled TAAS workers, homelessness was averted in 424 cases (82.2 per cent).

Only tenants at risk of losing their homes were included in the study, that is:
•    a termination threat existed;
•    a tenant had received a notice of termination;
•    a CTTT termination hearing had been listed; or
•    a termination order had already been made.

The tenants were not only vulnerable in terms of losing their homes but they were also challenged by a number of cultural, age and disability related vulnerabilities. 

The data is summarised in the tables below.  All outcomes and results relate to tenancies, which were identified as vulnerable.

It is clear that TAASs not only play an important consumer protection role in providing information and advice to all tenants: they have a significant role in preventing homelessness. 

(This is a revised version of a report appearing in 'Around the House', the newsletter of Shelter NSW.)

Tenancy culture studies: Bread

The Institute of Tenancy Culture Studies could not let this week go by without at least a passing reference to Margaret Thatcher.

Thatcher, 1925 - 2013

Thatcher brought the 1980s "Right to Buy"scheme in the United Kingdom to life, offering substantial discounts for tenants to buy their council or housing association homes. The scheme proved highly popular - and, for some, profitable. But, by preventing councils and housing associations from spending the proceeds on new construction, it all but ended their ability to meet continued demand for low-cost housing. It did nothing to ensure the long-term affordability of housing in the United Kingdom.

But that's not what we'd like to talk about right now. The Institute for Tenancy Culture Studies would like to focus its 'post-Thatcher' attention on the clever BBC series 'Bread'.



Bread features the Boswell family - a plucky mother and her five adult children, a wayward father who drops 'round any time his new girlfriend isn't looking, and Grandad, who lives in the terrace next door. The Boswells manage a relatively comfortable existence during Thatcher's Britain through sheer hard work and determination. In the depressed 1980s economy of Liverpool it's fundamentally about survival. As the matriarch, Nellie Boswell, once put it:

'We're a team. A business. We survive because we're a family and we have a plan. You work yourself to death, I cook myself to death, and the reward is money in that pot.'

Thatcher would have loved it, except for one small thing: nobody seems to have a real job. The Boswells make their money by ripping off the DHSS and engaging in the ultimate free enterprise of shady cash-only deals. At the end of each day they gather around the dinner table and make their contributions to the 'pot' - noting one another's efforts with a sense of solidarity that would not be out of place on a picket line. They pull together, for the good of the family, and they know how to make a quid.

... and they're tenants. Well, at least that's what they told the DHSS. They swapped houses with Grandad so that they could charge each other rent, and claim it back through the welfare system. Pure genius!

Bread pioneered the combination of comedic story-telling with soap-opera style drama. It was quite often fanciful, but hardly far-fetched. Its characters were an interesting hybrid of plausible realism and theatric caricature, and in a way they still resonate on account of this. They are all inherently likeable - their constant affirmation that things are on the up is impossible to disagree with. You just want them to keep on getting away with it... well, at least for the first couple of seasons.

But Bread was very much a product of its time. It is difficult to imagine a similarly themed television show breaking onto our airwaves with such charm and sophistication today, without being shouted down as an affront to the post-Thatcher world.

We can look back on it and laugh. But remember kids, there's no future in ripping off the system...

Social housing landlords grab carbon payments

Last month pensioners and other recipients of social security payments started receiving the Clean Energy Supplement and, as foreshadowed, Housing NSW has started taking a bit of the supplement (25-30 per cent of it) in rent, by including it in the assessment of public housing tenants' rent rebates.

Housing NSW states its rationale:

Ongoing increases in general income support payments to social housing tenants, such as the carbon tax payments paid to people receiving pensions and allowances, are included as assessable income when social housing rents are calculated.

The NSW Government has included these payments in rent calculations in accordance with the normal rent setting practices.

You can see where Housing NSW has gotten it wrong. The Clean Energy Supplement (in Housing NSW's terms, the 'carbon tax payment') is not a 'general income support payment'. It has a specific purpose – to offset the additional costs of the new carbon pricing system ('the carbon tax').

And including this supplement in rent rebate calculations is not 'in accordance with normal rent setting practices'. Normal practice is to not consider these specific purpose supplements. Normal practice is what happens to the pension supplement paid specifically to offset the costs of the GST – it does not get assessed in the calculation of rent rebates. This has been the case for more than a decade.

It's not just Housing NSW making this unjustified grab. We hear community housing landlords are doing it too – except there's no mention of the Clean Energy Supplement as 'assessable income' under the Community Housing Rent Policy.

Community housing tenants concerned that their landlord has assessed their income wrongly should consider asking for the assessment to be reviewed.

  

Fixing things with the NSW Land & Housing Corporation

A short while ago we noted that the Land & Housing Corporation intends to 'review' the maintenance of public housing in New South Wales, before entering into new maintenance contracts in 2014. It looks as though this review is already under way.

That's good news, because there are certainly some problems with the way things are currently done... but it remains to be seen whether the Land & Housing Corporation will ask itself any of the right questions if it wants to patch together a half decent system - or better yet, fix the thing once and for all.

Last month, the Corporation released an Industry Briefing Paper outlining a new approach to contracting for repairs and maintenance. This paper was more of an attempt to garner support for change from the private interests they hope to contract with, than the teasing out of policies that might reduce tenants' potential repair and maintenance frustrations.

It gave us a couple of insights into what the Corporation is hoping to achieve with its next round of contracts - such as changing the pricing mechanisms for responsive repairs, putting tenants in more direct contact with contractors, and giving contractors greater responsibility to identify and complete repairs and maintain public housing properties.

Don't get us wrong - some these are potential game-changers in the quest for a better system, at least for some of the problems that the Corporation's tenants currently face. But, after looking through that paper a couple of times, we're none the wiser as to how the Corporation hopes to minimise or avoid disputes with tenants over the urgency of repairs, and the quality of repairs once they've been done.

This is a pretty key issue. In the last couple of years there has been a marked increase in the number of tenants' applications to the Social Housing Division of the Consumer, Trader & Tenancy Tribunal, for orders that repairs be properly carried out. Sometimes, even when a tenant gets the repair order they have applied for, those repairs are still not properly seen to...

It may be that the Land & Housing Corporation supposes it can fix these problems by changing the nature of its contracts. Or, it may be that they just haven't given it that much thought. It would be interesting to know which. But that's another problem with this briefing paper... it's all been conducted behind the relative translucency of the NSW e-tendering website.

We're waiting, with bated breath, to see what the Corporation has to say to its tenants about new approaches to repairs and maintenance. Or, for that matter, to the community organisations who frequently work with them.

Public housing rent payments: one size does not fit all

Australian Housing Ministers met last week to discuss housing policy: you can read their communique here. One of the smaller items on the agenda caught our eye: the 'Housing Payment Deduction Scheme', under which rent payments will be deducted directly from public housing tenants' income, before the money even hits their bank accounts.

A scheme like this, applied on a compulsory basis to all public housing tenants, is not a good idea.

It might sound like a good idea to the Housing Ministers, because it promises to reduce arrears. And lots of public housing tenants think it's a good idea too – so good, in fact, that they already do it, voluntarily, through Housing NSW's Rent Deduction Scheme.

But there are people for whom this sort of scheme doesn't fit. For example, we've an acquaintance who lives in public housing who has a few health problems. When he gets paid, he doesn't use the money to pay his rent straight away: he uses it to pay one of his doctors. Then he goes to Medicare, gets paid by them, pays another doctor, goes back to Medicare and gets paid by them again. Then he pays his rent.

This orderly process of payment and repayment would get stuffed right up if a Housing Payment Deduction Scheme got in and took the money first.

There's bound to be other examples where individual circumstances make the compulsory deductions a bad fit. Maybe the operational policy for the scheme could be so devised to anticipate them all, and provide for housing officers to make adjustments in those circumstances... maybe.

Or it might be more efficient and effective to let each person judge for themselves whether the scheme fits their circumstances and whether it suits them to use it. Lots of public housing tenants have already judged yes, it suits them – that's great. And that's probably as far as it should go.