Boarding House Residents Stories: Nina

Welcome to our series of Boarding House Residents Stories exploring a range of residents experiences in boarding houses. The stories have been collected and written by Sally Chalmers, Resources & Development, Boarding House Services, Newtown Neighbourhood Centre.

For the past 3 years Nina, aged 64, has been living in a large boarding house in Marrickville. The property has about 100 rooms (single and shared) filled with men and women of all ages and walks of life seeking affordable accommodation ($150-$180/week) in Sydney’s Inner West. There is only one manager for the complex and they don’t live on site.

Prior to living here she had been staying at an inner-city crisis accommodation for women and families. When Nina needed to move out, her options were extremely limited as her low income and lack of rental history made it very difficult to find affordable and accessible accommodation. Getting on the waiting list for Housing NSW was possible, but the wait would be more than 3 years. Even if she had the required bond money, the necessary paperwork and references required for private rental were non-existent.

So she moved, with her daughter, into a single room at the boarding house. It was convenient as she didn’t need to pay bond, and they could share the rent. One slept in the bed and the other on the floor until eventually her daughter found alternative lodgings.

The condition of the premises is poor, quite unhygienic and the manager only calls in to collect rent from the residents. Nina cooks in her room to avoid using the communal areas; which in itself is a safety hazard. She says that ‘keeping busy is her saviour’ and spends her days out and about, volunteering and taking part in community activities, such as those on offer at Newtown Neighbourhood Centre.

It is evident that her current living situation puts her safety at risk. Police are called to the boarding house so often to solve disputes between residents or to address antisocial behaviour, often fuelled by drugs and alcohol, that locals refer to it as ‘the other Marrickville Police Station’. Nina has learned to avoid areas where difficult residents gather, and to not engage with them, as it only leads to confrontations.

When asked about her future accommodation options, she says that it’s too much hassle and too expensive to move. Nina feels that having a roof over her head is a blessing, and she feels bad for rough sleepers. She knows she is in a better position than many people so is happy with her lot.

Nina's story originally appeared in the Tenant News #107. For more information on boarding houses, why not subscribe to Onboard, our new e-bulletin all about Boarding Houses? For individual advice about issues in a boarding house, or any tenancy issues, contact your local Tenants Advice and Advocacy Service.

How landlords think, and how it shapes the rental market

'Landlords hit by glut of apartments'! That's a recent headline from the Fin Review; we enjoyed reading it literally.

As Ned said over on our facebook page, the article is an insight into how landlords think – landlords like Hugh Eriksson, marketing executive, North Shore local politician and landlord, who reportedly has 'bent over backwards to keep rents near to stable', such is the glut of apartments from which tenants may pick. Why, this young pup landlord has 'even allowed pets'! Oh, the humanity.

How landlords think affects more than just your ability to choose whether you'll keep a pet, important as that is. How they think affects the shape of the rental market. As we saw in those charts from Judy Yates, if there's a glut of rental housing, it is not at the low-cost end of the market, which is very tight indeed, but further up the scale of rents.

And how landlords think affects not just affordability, but also the security of rental housing.

Eriksson says this about his thinking as a landlord:

“You don’t just buy property for rent – you buy it for the capital growth,” he says.

Rent is money that tenants promise to pay, week after week, under legally enforceable contracts, but when it comes to capital gains, there's no such promise; pursuit of them is really just gambling on someone coming along, at some point in the future, who is willing to pay more. So why is Eriksson – like so many other landlords – so interested in capital growth?

It's because in our tax system, rental income (and income from work, interest, etc) is taxed at the full marginal rate – while capital gains are taxed at only half that rate.

Yes, we tax the proceeds of speculation – gambling, really – at half the rate of the proceeds of work, bank savings and rental income. Go figure.

About 1 266 000 Australian taxpayers have gone and figured, and borrowed to buy properties that rent for less than what it costs to own them (because of interest, more than anything). Two-thirds of landlords are in this situation, which is known as negative gearing. They are gearing, or leveraging, into the prospect of lightly-taxed capital gains – so they hope – while losing income.

In an internationally unique act of generosity, our tax system makes those loses easier to take by allowing the costs of rental property speculation to be deducted against other (non-rental) sources of income. This means landlords can wear bigger costs and push their leveraging harder.

The tax system also gives their hopes of capital gain a boost by not taxing at all any capital gains on housing used for owner-occupation at. This spurs people with money to spare to spend it on their own housing – housing that they may buy from another owner-occupier, or a from landlord looking to realise their capital gains.

So, from the point of view of the speculator landlord, the best prospects for capital gains are with properties that owner-occupiers might buy, particularly owner-occupiers who are trading up and speculating in their own housing. That means relatively high value, 'premium' properties, or as premium as the speculator can get. Think established locations, which tend to have established properties, and properties that are renovated or fit to be renovated.

As Erikkson says:

“You use the rent to cover the ­holding costs while you get the DA approvals for renovations.”
Once the renovations are done, he sells. “You get your capital gain that way,” he says.

You also get expensive and and chronically insecure rental housing that way.

Expensive because speculator landlords are buying relatively high-value, high-rent properties, and passing on the low-value, low-rent stock when it comes up for sale. And they're getting those higher rents too, because they're not really adding to supply in net terms (that is, as they're growing the amount of properties in the rental market, they are also growing the number of renters), and the growth in renters is coming from higher income households who can afford to pay higher rents. These households might actually be getting quite a bit of choice between nice houses in nice parts of town – enough choice, even, to be able to get their landlords to 'bend over backwards' on rent increases and pets. (Mind you, many of them would still probably rather be owners.) But for low-income renters, the low-rent properties they need have become scarcer, and less cheap.

And it's chronically insecure housing because it is is owned to be sold, particularly into the owner-occupier market.

These are the unhappy results of the way landlords think about owning rental properties. To change the rental market for the better, we need to change landlords' thinking, and to do that we need to change the rules that encourage speculation in housing. 
 

Boarding House Residents Stories: Gretta

Welcome to our series of Boarding House Residents Stories exploring a range of residents experiences in boarding houses. The stories have been collected and written by Sally Chalmers, Resources & Development, Boarding House Services, Newtown Neighbourhood Centre.

Gretta moved to Sydney from the Central Coast for a few important reasons. Firstly, to be in a better place for proximity to support services and transport, and secondly but more importantly, so she could access the social networks and activities that help her to enjoy life.

Being diagnosed with bipolar disorder means sometimes life is very challenging for Gretta. She has learned to manage this illness over time and with the right medication, but still struggles with other physical health conditions as well. Despite these illnesses, Gretta is full of humour and has a positive outlook, even though she has had some very difficult times finding a place to call home during her years in Sydney.

She’s lived in a women’s refuge and had social housing briefly in Redfern – where she mentions that someone actually held a syringe to her throat over a cigarette! Most of her accommodation has been in boarding houses in the Inner West.

When she first moved from the refuge into a boarding house she liked the independence, but felt very scared of being in a new place. Some residents would come back late at night, very drunk. The other residents would not ask them to be quiet or call the police as they didn’t want to bring trouble to themselves, and as the only woman in the house Gretta would just keep her door firmly locked. She moved from place to place to try and find one that suited her. She doesn’t mind her current place as it is in a suburb she likes, near transport and there are only six other residents which also makes it feel more like a home.

Gretta feels that her current living arrangement is acceptable, but it also contributes to her bipolar condition. She’d like to have her friends over but doesn’t because other people in the house always want to know what’s going on even when it’s not their business. She says about her condition, “It’s very frustrating when you know how you want things to be and they just can’t be that way. I feel angry but if I show this then I’m likely to be booted out and back to square one, and this is why I isolate myself more.”

Gretta is on a disability support pension. When asked how she manages financially she says “Rent always comes first. I can always go to a food van for the other basics.” When asked about finding private rental she laughs and talks honestly about how it’s impossible to find something on her own for less than $300/week. She has tried to save up but it’s impossible to save a 4-6 week deposit on her low income – as well as paying a month in3 advance. It’s not only the money that’s difficult. She talks about the hugely overwhelming task of getting a lease. The forms and paperwork are very hard to understand and her rental history makes it difficult to get a good and reliable reference which is a priority for estate agents. She says “I do want to find my own place but I just can’t afford it – unless I live in my own cardboard box somewhere!”

Gretta is a very outgoing individual when her mental health is going well, and participates in a theatre group called ‘Milk Crate Theatre’. When she visits the Neighbourhood Centre in Newtown, she often sits and chats with a group of friends or workers. She’s doing a Diploma of Community Services, and is looking forward to working as a social worker or in counselling, where she feels her experience will be instrumental in helping those facing similar challenges to herself.

Gretta's story originally appeared in the Tenant News #107. For more information on boarding houses, why not subscribe to Onboard, our new e-bulletin all about Boarding Houses? For individual advice about issues in a boarding house, or any tenancy issues, contact your local Tenants Advice and Advocacy Service.

Renewing the discussion of Strata

We've discussed the proposed changes to strata schemes law in NSW a few times in the last 18 months. One of the most controversial elements has been changes to how a strata scheme can be 'renewed' - a euphemistic term for being sold off and rebuilt. We have written particularly about the need to consider the impact on vulnerable residents of strata schemes.

While the strata reforms themselves are on hold at the moment, they are still very much live issues. UNSW's City Futures Research Centre is conducting a survey of tenants and owners in strata to gain a better idea of the residents thoughts, concerns, and hopes if their strata scheme were to be one that attracted the attention of a developer looking to 'renew' the place.

If you are in NSW, over 18 and a tenant in a scheme that was registered in before 1990 we encourage you to consider completing the survey. 

For more information about the both the survey and City Futures, you can visit their website here:

http://www.be.unsw.edu.au/research-centres-and-clusters/city-futures/about-us

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.

Boarding House Residents Stories: Tony

Welcome to our series of Boarding House Residents Stories exploring a range of residents experiences in boarding houses. The stories have been collected and written by Sally Chalmers, Resources & Development, Boarding House Services, Newtown Neighbourhood Centre.

Within minutes of talking to Tony for the first time, he has painted you a clear picture of how he came to be in Newtown renting a single room in a boarding house for $172/week. This is the first boarding house he has ever lived in and he has now been there for around 12 months. There are 13 rooms in this house.

Serving in (and surviving) Vietnam may have contributed to his ability to battle on despite what comes his way. Now 63, his life’s ups include two marriages, having children and a successful career, but these positives have been punctuated by very difficult times such as caring for his ill wife, being widowed, surviving cancer, and his more recent separation from his second wife and young child.

Tony’s relationship breakdown, separation and his subsequent poor financial position meant that boarding house accommodation was the only real option for him at this point in his life. He currently receives a government Newstart allowance, more than half which he spends on rent. While his rental history would have given him access to the private market, the bond plus the setting-up costs of private, unfurnished accommodation was well beyond his means.

When he first arrived he was shocked at the condition of the house. He felt it was unclean, had a ‘fierce’ odour, and there was much disrepair in the communal living areas – particularly the bathrooms and kitchen which he still won’t enter due to the horrific state they are in.

The manager (an elderly male resident) does not engage in any regular cleaning or arranging repairs so many areas are damaged, rundown and dirty. Appliances, the water heater and gas stoves are often broken. Loose power cords and over-filled power points are a common sight.

Tony himself cleaned the top bathroom for almost a month just to get it up to a standard where he felt he could shower there. Tony regularly washes his bedding and uses two cans of insecticide per fortnight to keep the bed bugs at bay.

He still gets bitten.

When asked about the other residents in the house, Tony shakes his head. He advises that when entering a boarding house, people need to be prepared for dysfunction and residents regularly using medications or drugs and alcohol. He believes that 80% or moreof the residents have absolutely no idea about respect for others (or themselves). Most of them don’t work, and spend little time outside of the premises.

Since living here he has experienced antisocial behaviour, violence and unreasonable levels of noise. The police are called to the house regularly to settle disputes between residents. The manager is nowhere to be found when this occurs.

This Newtown boarding house was easy to access, affordable, close to amenities and gives him his independence while he sorts out his other priorities. He feels that his current position is only temporary, making him able to accept the not-so-acceptable living standards. He feels that the duty of care of the operator is ‘next to nothing’.

Tony is keen to take legal action regarding the unacceptable conditions in the house, and knows what he needs to do. However, Tony has chosen to do this when he is ready to leave, because of his fear of being evicted instantly for standing up to the landlord. He has seen this happen to several residents since he arrived. He is optimistic that his current housing status is not forever so is staying positive and making the best of his situation.

Tony's story originally appeared in the Tenant News #107. For more information on boarding houses, why not subscribe to Onboard, our new e-bulletin all about Boarding Houses? For individual advice about issues in a boarding house, or any tenancy issues, contact your local Tenants Advice and Advocacy Service.

Millers Point Spring Picnic – this Sunday 14 September

The Millers Point Spring Picnic – what a splendid way to express your solidarity with tenants who face losing their homes and community, and your concern for the preservation of our heritage.

See you there!

NSW Land and Housing Corporation: receipts and payments

Our recent post about the Millers Point social housing sell-off triggered a discussion in the comments section about the NSW Land and Housing Corporation's finances. Let's have a look at LAHC's most recent (2012-13) annual report, and particularly its statement of cash flows (page 31), to find out where LAHC's money came from, and where it went. 

First, the money going in (receipts).

In 2012-13, LAHC received, in total, $1.17 billion from its operating activities and investing activities. Most of this money – $762 million – came from tenants, in the form of rents and other charges (yes, social housing tenants pay money to LAHC, not the other way around).

The next largest source of receipts was sales of property, plant and equipment. Proceeds of sales came to $190 million, of which $152 million were from sales of residential properties.

In third place, government grants to LAHC came to $145 million. Of this, $19 million came directly from the Federal Government, the rest from the NSW Department of Family and Community Services... but at least some proportion of that State money came indirectly from the Federal Government, because it gives the NSW State Government about $400 million per year for various housing-related purposes under the National Affordable Housing Agreement. (And as an aside, Federal government money is not taxpayers' money).

Now, the money going out (payments).

'Property and residential tenancy' payments were the largest category – at $454 million – and include payments for council and water rates ($210 million) and repairs and maintenance ($203 million).

Next largest were payments for the purchase of property, plant and equipment: $265 million. Of this, $115 million was spent acquiring, redeveloping and building social housing.

And then there were payments for administrative and working expenses ($164 million), personnel services expenses ($55 million) and some smaller categories. Total payments: $1.04 billion.

So, at the end of the 2012-13 year, LAHC's total receipts exceeded total payments by $133 million. Add to that $30 million cash from the previous year, LAHC ended the year with $163 million in the bank.

It also ended the year with 1 328 fewer social housing properties (145 248 properties). The total value of its assets, however, was up $2 billion ($34 billion).

Some interesting points:

• Rents and other charges received from tenants ($762 million) were more than enough to cover all payments relating to operating activities ($726 million, being council and water rates, repairs and maintenance, admin, etc).
• LAHC received $152 million from the sale of social housing stock, but spent considerably less ($115 million) on purchases of new social housing stock.
• The Auditor-General elsewhere reports that in 2013 LAHC had a maintenance backlog of $317 million... yet it also had $163 million sitting in the bank.

The changing shape of the rental market

Judy Yates, leading housing researcher and friend of the TU, has kindly given us a couple of graphs that show the changing shape of the Australian rental housing market. As we've said before, understanding the changing shape of the rental market is crucial to really understanding affordability problems. Yates's graphs update the picture to the 2011 Census.

Graph 1 gives us pictures of the rental market at each Census back to 1991, according to the weekly rent of properties (in $2011 – that is, the figures for previous Census years have been adjusted in line with inflation). In this graph, as you move along the range of rents (from left to right), the line for each year rises, until all properties in the market are accounted for.

(Graph 1. Cumulative rent distribution, 1991-2011. Source: Yates.)

Let's start by looking at the line for 1991 (darker blue). At the $200 per week mark, the line sits a bit above 50 per cent; this means that a bit more than half of all rental properties were let for $200 per week or less. Moving along the range of rents, we get to the $300 per week mark, by which time over 80 per cent of the market is accounted for. At the $400 per week mark, about 90 per cent of the market is accounted for. Less than 10 per cent of rental properties in 1991 were let for more than that amount.

Now look at the line for the next Census year, 1996 (lighter blue). It closely follows the line of 1991; not much change over this period. Looking at 2001 (red), we see some change has occurred: at the $200 per week mark, the line is lower, meaning the percentage of properties let for $200 per week or less has dropped (to about 50 per cent). Same story at the $300 per week mark.

Looking at 2006 (lighter green), we see further change, more pronounced this time. The percentage of properties let for $200 per week or less has dropped to about 40 per cent; the percentage let for $300 per week or less has dropped to a bit over 70 per cent.

And by 2011, there's further change, and it is very pronounced. The sub-$200 per week part of the market has dropped way down to less than 30 per cent of all properties (20 years previously, it was more than half the market); the sub-$300 per week part is down to just over half (20 years previously, it was more than 80 per cent).

There goes the low-cost end of the rental market. We can see the change even more clearly in graph 2, which compares the rental market of 2011 to the rental market of 2001. Like graph 1, it adjusts 2001 rents for inflation; unlike graph 1, which cumulatively put together all the parts of the market as you moved up the rental scale, graph 2 shows what has happened to each part along the scale.
   

(Graph 2. Rent distribution, 1991-2011. Source: Yates.) 

It shows that in 2001 (blue line), properties going for about $200 per week were very common – they comprised almost 30 per cent of the market – and properties let for about $400 per week were rare (about 10 per cent). In 2011 (red line), it is the other way around: now $400 per week properties are common (25 per cent of the market), and properties going for $200 per week are rare (only six or seven per cent of the market).

Also, looking at the ends of the market: in 2001, there were a few properties – not many, but a few (five per cent) let for about $100 per week; in 2011, there are next to none. In 2001, there were very few properties at $800 per week; in 2011, properties at $800 per week and $1000 per week are now quite solidly represented.

Yates and her colleagues have got some research coming out soon from AHURI that shows the changing shape of the rental market in even more detail. We'll keep you posted.