National Reconciliation Week

This post written by our Legal Officer - Aboriginal Support, Jessica Hall. Along with an Aboriginal Paralegal, Jessica works to support the Aboriginal Tenants' Advice and Advocacy Services and conduct litigation to advance legal rights of Aboriginal and Torres Strait Islander tenants in NSW.

This week is National Reconciliation Week, recognised each year between May 27th-June 3rd and placed during this time due to two significant milestones in Australia’s journey to reconciliation: the 1967 Referendum (May 27th) and the historic 1992 Mabo decision (June 3rd).

This year in particular, marks important anniversaries of both these events – 50 years since the referendum that amended the Australian Constitution to legally recognise Aboriginal and Torres Strait Islander peoples, and 25 years since the landmark Mabo decision which legally recognised native title rights in Australia for the first time.

Here at the Tenant’s Union, we marked this week with a successful morning tea yesterday organised by our Aboriginal Paralegal John in collaboration with Community Legal Centres NSW, National Association of Community Legal Centres and Justice Connect, to host friends and colleagues in the spirit of reconciliation.

As we commemorate these two milestones with NRW events around the country, we ask that all Australians join together in a unified front to be a part of the journey to reconciliation, mutual respect and a better future for our first Australians.

The motto for this year’s NRW is ‘let’s take the next steps’, reflecting that we are all responsible collectively for the future of reconciliation in Australia. The Uluru Statement from the Heart speaks to the next steps to come, and the long journey to be taken together as Australian people for a better future.

NSW Opposition's affordability pledge

NSW Labor announced a housing affordability package over the weekend. It's worth a look.

As reported in the SMH, the Oz, and ABC Online, the headline is that under a NSW Labor Government 25% of government owned land that is earmarked for residential development would be set aside for Affordable Housing. Additionally, 15% of new dwellings or floor space on "privately developed" land would be designated as Affordable Housing, "available for rental or sale to low- to moderate-income households."

As reported in the SMH and ABC Online, with comments attributed to NSW Planning Minister Anthony Roberts, the plan lacks detail. It is unclear just what is meant by "Affordable Housing", although the term does have a meaning in modern housing policy parlance. It generally refers to rental housing that is let at around 80% of the going market rate, and it is usually managed by a registered Community Housing landlord. It is not clear how Affordable Housing "for sale" would be determined, though we note the policy states Labor would "work closely with industry experts, including Community Housing Providers, to formulate the rules around this policy". That's good, but they could include tenants and prospective home buyers in that list of experts as well.

For his part, Minister Roberts says the plan is "totally flawed", and that the NSW Government has already created affordable housing. In comments to the ABC, he is reported to have said:

We are doing it incredibly successfully without destroying the value of peoples' properties, without actually going into the marketplace and providing a level of Government intervention that is no good for anyone.

Presumably he was referring to the Social and Affordable Housing Fund, under which the construction of 2,200 new properties was announced in early March. He might also be referring to the Communities Plus initiative, under which land owned by the Land and Housing Corporation - that's the public housing landlord in New South Wales - is to be "recycled". For the uninitiated, that means knocking down established communities in places like Redfern, Waterloo, Macquarie Park, Telopea and Riverwood, and replacing them with new, higher density neighbourhoods that will include both Social and Affordable Housing. But they'll include more dwellings for sale into the private market than anything else, because that's how this "recycling" model gets funded.

Ignoring the significant upheaval this causes tenants and residents within those communities, Minister Roberts might be right - that is one way to deliver Affordable Housing in parts of Sydney without destroying the city's property values. In fact, it seems designed to encourage further growth in the value of property, while carving out small tracts of affordability for a lucky few. To be clear, that is affordability relative to our extremely unaffordable housing market, as opposed to affordability by any real objective measure. That's good for property owners, but on its own it's not so good for tenants and would be home-buyers struggling to find something they can afford in the places they'd like to live. And it's really not good for the public housing tenants who value their properties in an entirely different way - by making homes and neighourhoods in the communities that are about to be destroyed.

In any event, the scale of Sydney's affordable housing crisis is such that a few thousand extra dwellings here and there won't really put much of a dent in it, even if we do rent some of them out a little more cheaply than the rest. What is needed is a clear and meaningful target for affordable housing to be included in new residential developments right across the city, if not across the state. We need a sustained effort to get more and more of it built with every new development that gets off the ground. On this note we'll give the NSW Labor policy a big thumbs up.

We'll be surprised and disappointed if the NSW Government comes out with a substantially different policy when it announces its own housing affordability package, as it has promised to do in the coming State Budget. Given the recent Federal Budget's focus on delivering Affordable Housing through the proposed National Housing Finance and Investment Scheme, and the reference to aggregate supply targets (including targets for social and affordable housing), residential land planning and zoning reforms, and inclusionary zoning arrangements in the proposed National Housing and Homelessness Agreement, the only real difference we're hoping to see in the Government's plan is a little more attention to detail.

Time will tell.

It was like leaving your family

Dancing with Bluey at Christmas

In September 2016, Shelter NSW published a report by Professor Alan Morris of the University of Technology Sydney called 'A contemporary forced urban removal: The displacement of public housing residents from Millers Point, Dawes Point and the Sirius Building by the New South Wales Government'.

In an article in The Australian Journal of Social Issues, hot off the press, Professor Morris places the events at Millers Point in a broader context. His article is called '"It was like leaving your family": Gentrification and the impacts of displacement on public housing tenants in inner-Sydney'.

Professor Morris uncovers an early media release from then NSW Finance Minister who announced that the government was considering selling off much of the public housing in Millers Point, because 'the government needs to consider it in the context of all of the surrounding areas, including the Barangaroo redevelopment area.' [my emphasis]. Previously we wrote: 'Ponder ... the real agenda at Millers Point is to free up housing stock around Barangaroo for gentrification and to create a Paris Quarter ... a touch of Montmartre.'

Professor Morris argues that 'place' attachment of most of those interviewed was profound and the removal announcement and the actual move were devastating. Interviewees spoke of deep sadness and anxiety at the thought of leaving. Residents who had moved told of their isolation and melancholy at having lost their social network. He concludes:

The critical theorist warned of the implications of only utilising "instrumental reason" in the formulation of policy, arguing that you need to always take account of the human cost of any policy implementation. ... As illustrated, in the case of Millers Point and the Sirius Building, the focus primarily on the revenue that the sale of public housing stock will generate has resulted in enormous suffering. ... The move will exacerbate the already deep and growing spatial divide between rich and poor in Sydney and the social mix that was a feature of Millers Point will be obliterated along with its rich history. A major concern is that in this age of deepening neo-liberalism, the Millers Point / Sirius Building could be the start of a major state government offensive against public housing tenants in other sought after gentrifying / gentrified areas.

And this is all at a time of a billion dollar windfall in revenue from stamp duty to the NSW Government.

Back in March of this year, we reflected on the third anniversary of the announcement to sell all public housing properties in Millers Point. Here, we posed the question: if portfolios such as health and education are not funded by cannibalising themselves, then why must social housing be funded this way?

We update the sad statistics from a ravaged community.

At 25 May 2017, 151 properties have been sold for $400.89M, with a median sale price of $2.44M and sales in the range $1.47M and $12.30M. This represents 138 sales, with the top price being for a block of 12 one-bedroom apartments covering 7 properties sold in one line. Based upon sales to date, an estimate of funds to be received from these sales is $686.81M. On top of this figure, stamp duty has netted an additional $21.08M, bringing expected total revenue from the sales to more than $700 million! This is far in excess of the Government's target of $500 million.

Yes, as of March 2017, the NSW Government has built or has under construction 764 new social housing dwellings across New South Wales from the proceeds of the sales. But at what cost?

At the beginning of the process 579 tenant and household members (in 399 tenancies) were to be relocated. At 25 May 2017, 555 tenant and household members (in 383 tenancies) have either vacated or are committed to moving, with a further 24 (in 16 tenancies) still uncommitted to moving.

So, Professor Morris's article is timely because the New South Wales Government is ramping up the pressure and evicting the last remaining public housing residents who have refused to move.

Sally Parslow and her dogs off to Court

On 20 April 2017, the New South Wales Supreme Court placed a stay on the first application to the New South Wales Civil and Administrative Tribunal by Family and Community Services Housing NSW seeking a possession order on the grounds that the tenant has refused offers to move to alternative premises. Read the story of Sally's last-ditch fight.

At 6.30am on Thursday, 10 May 2017, the Sheriff enforced a warrant of possession against Peter Muller, a tenant who was no longer eligible for social housing, despite being a public housing tenant for seven years and having lived in the area for two decades. This received some media coverage.

Indeed, they have also placed a Cyclone fence around the four remaining residents of the Sirius Building, one of whom is 90 year old Myra. The NSW Land and Environment Court shortly will deliver its judgement on action brought by local residents following the then Minister for Heritage's refusal to place a heritage order on the Sirius Building, despite a unanimous recommendation that he do so from his own Heritage Council. Read the latest here.

And some of the fighters amongst the residents reluctantly have agreed to move to other premises that the previous Minister for Social Housing set aside for them ...rather than risk homelessness. Here, Barney Gardiner (thanks, Barney) is seen taking down the posters that plastered the front wall of his home, where he has lived for the past 27 years. Others have moved away (go well, Patricia Corowa ... Yes, you have fought the good fight).

Barney moving up the road

As Millers Point becomes an enclave of the wealthy, let's not forget what has been lost. ABC's 'Open Drum' published the story of a daughter of Millers Point. She's the young girl dancing with Bluey, one of her mum's boarders in the photo at the top of this blog. John Blay is a writer, naturalist and walker. He has written extensively about the bush and its people in poetry, drama and prose. But back in 2012, John was a resident of Millers Point. He was forced out when the previous New South Wales Labor Government commenced the process of selling off public housing. Well, here's John Blay's recollections of living at Millers Point for more than 34 years:

I’ve now had numerous books published, mostly history and natural history that arose from my researches in State Archives and at the Mitchell Library, whilst based at my home nearby in Millers Point. But also I’ve written poetry and numerous plays. One, a bicentenary commission from the ABC called The Fleet, was focused on The Rocks / Millers Point district. The cultural side of the area has always been important, its raffishness, its bohemian, artistic atmosphere that passed down through Norman Lindsay, the Parker Galleries and the various art schools, not to mention the Rocks Markets. The richness of the district has always been an inspiration, the world heritage quality of the architecture along with a community that had been in place since settlement. Millers Point has in my view always been relatively crime free as a result of the close community relations. The stability of our tenancies, especially during the Maritime Services Board helped the sense of belonging. We believed we were there for life. Community leaders like Shirley Ball and Sally Parslow helped create the sense of solidarity and peacefulness. ... It nearly broke my heart when I was forced to leave Millers Point.

Read all of what John says here. You can read other residents' stories here.

In the NSW Parliament, Alex Greenwich, the local MP for Sydney, again has asked the NSW Government to let the remaining residents of Millers Point stay. He says that a compassionate approach can achieve the government’s aims while protecting vulnerable, long term tenants. Like in all our previous blogs, we also say it is not too late for the NSW Government to review the situation and allow the remaining residents to stay, especially the older folk who should be able to age-in-place. People like Sally and Myra. People like Chris and Christina, Ian, Barbara and others not mentioned in this blog.

But, NSW Government, time is fast running out. Very much so. A smithering of justice would be welcome.

National Sorry Day 2017

Today marks 20 years since the Bringing Them Home report was tabled in parliament. Most Australians know where they come from and where they can be at home, for the Stolen Generations this connection was often shattered. Language, connections to ancestral country and families were lost for many. New relationships had to be established, and old pain still needs to be healed.
National Sorry Day is the first step on the path to reconciliation and tomorrow we start National Reconciliation Week 2017.
Today, we say sorry. We say sorry to all those affected by the Stolen Generations policies, and other historic and current Australian policies which have resulted in significant disadvantage being placed on Aboriginal and Torres Strait Islander communities across New South Wales and the entire country.
Saying sorry doesn’t mean a lot if you don’t also work to address the wrong. For the Tenants’ Union we work with Aboriginal networks such as the Aboriginal Tenants Advice and Advocacy Services, both to address individual tenancy disputes, and systemic issues such as the quality, funding and management of Aboriginal housing in New South Wales.

This artwork was created by Pauline Coxon, former tenancy advocate and Biripi artist living on Ngarigo country. Entitled Making Tracks to your Tenancy, Coming Home. Today it speaks to us of the the value of knowing where your home is, as we work towards ensuring all people can create spaces in which they can feel at home.

See Pauline’s work for the Tenants’ Union here: https://tenants.org.au/news/artwork-aboriginal-artist-pauline-coxon

Ever the forgotten people

It's been some time since we marked an anniversary on the Brown Couch, and clearly this won't do. We can remedy this today, as it is the seventy-fifth anniversary of Sir Robert Menzies' delivery of the Forgotten People speech. On 22 May 1942 Robert Menzies broadcast his speech over the wireless, as part of a series of "fireside chats".

The speech remains an important touchstone for Australia's political and cultural narrative, because of the role it played in establishing the dominance of the two major parties in our parliamentary system. It preceded the formation of the Liberal Party of Australia that Menzies himself would lead, and it summarised the political philosophy that has more or less captured the centre of Australian politics ever since. At its heart was a forgotten middle class - "those people who are constantly in danger of being ground between the upper and the nether millstones of the false [class] war; the middle class who, properly regarded represent the backbone of this country."

Menzies' and the Liberal Party would go on to win government in 1949. He remained the Prime Minister of Australia until 1966, making him the country's longest serving leader. Those who seek to reach similar heights within the Liberal Party often pay tribute to his rhetoric, as Joe Hockey did when he referenced "lifters and leaners" in the 2014 Federal Budget; or his legacy, as Julie Bishop did when she joined Prime Minister Turnbull in challenging Tony Abbott for the party's leadership in 2015. But perhaps more importantly Menzies' rhetoric of the "forgotten middle class" continues to set the tone for politicians, journalists and commentators who wish to occupy and define the politically fertile middle ground. "John Howard's battlers" and even "Tony's tradies" come straight out of the Forgotten Peoples' playbook, while the Australian Labor Party puts its focus on "values" and the dignity of work, rather than its origins in late nineteenth century class consciousness and historical links to organised labour, as it strives for middle-ground appeal.

The Brown Couch took an in-depth look at the Forgotten People speech back in 2012. We discussed how the text of the speech - particularly as it concerns the notion of "home" - might be interpreted through a housing policy lens. We saw how Menzies' conception of "homes material" was a precursor to the 1956 Commonwealth State Housing Agreement, under which fewer public housing dwellings would be built or retained and more funds were provided to building societies and state banks to aide "the habits of frugality and saving "for a home of our own."" In this way, the post-war experiment of public housing for Australia's returned soldiers and working families began its drawn-out end. Australian homes would no longer be built by governments but by the forgotten middle class.

We explored Menzies' notion of "homes human", in which the home is construed not by its four walls and hollow rooms but by the people and relationships emerging from within. Noting that Menzies seems to have excluded renter households from his ideal here, we examined the history of Australian home-ownership, and the policies and economic conditions that have supported it over a number of generations. In particular we saw how the continuing political interest in supporting home-ownership gradually morphed into support for homeowners. We might now say this has shifted further still to support home values, given so much of the nation's economic wellbeing is tied up in our homes' worth as financial assets. Whether or not they are owned by the people who make them their home should now seem immaterial to this idea.

Finally, we looked in on Menzies' "homes spiritual", where one's sacrifice, frugality and saving to make a home is the very expression of a "fierce independence of spirit". Here we noted that, as far as housing is concerned, saving and frugality had long since given way to borrowing with the expectation of accelerated capital gains. We might now also say that drawing on said gains to fund high levels of consumption not only ensures a home-owner's independence is spiritually rewarding, but financially so as well. And not just for the individual - it could prop up an entire economy if everything else falls apart.

All the more concerning, then, is the exclusion of long-term renters in Menzies' conception of the middle class - those forgotten people he implores us still to forget. The steady decline of first home-buyers and the rise of second, third, fourth and fifth home-buyers must be eroding the very soul of this nation of once fiercely independent folk. More concerning still, from an economic point of view, is the likely concentration of wealth into fewer and fewer sets of hands, and the loss of a key driver of confidence and consumption, if current housing trends continue.

When we looked at the Forgotten People speech five years ago, the Australian property market was going through something of a wobble. It appeared at the time that house prices might have started to peak, and a correction about to begin, so we questioned the very idea that purchasing homes for capital gains amounted to savings. We all know how that turned out. But in our conclusion, we proposed that those with the best claim to live in Menzies' "home spiritual" of responsibility, savings and frugality are tenants. Capital gains in housing may not since have fallen away, but we're inclined to stand by this conclusion. For tenants, that fierce independence of spirit comes from scrimping and saving each week to make the rent, from constructing the best possible home even though it could all come to an end with a simple notice in the mail. From living a full life while making do, staying under the radar to keep that roof over one's head, and moving on with good grace when the time sadly does come.

Whether or not you're in a well paid job - or any job at all - there is deep satisfaction in knowing your home is something you work hard for. Homeowners must feel this, too. No doubt they feel it even as they pass the point where their home's value starts spitting out two or three times more than what goes into it each week, or as prices start to gain more in a year than one can earn doing most ordinary jobs. Sure, there's risk in borrowing against the family home, but as long as you can service the debt and the property's value keeps going up it will more pay for itself in the end. Who wouldn't be satisfied by that?

But taking some of that hard-earned free money and investing it in more housing, where it can work towards the accumulation of more free money? That's not hard work. That's just skimming off someone else's hard work, which is why we don't think Menzies had landlords in mind any more than he did tenants when making his point about "homes spiritual".

Here we might stop to mark some other important anniversaries. It is precisely 219 days since Bernard Salt had a short article published in the Weekend Australian, in which he lamented that young people are eating too much smashed avocado on toast in expensive cafes when they should be putting their money towards home loan deposits instead. And it is now eight days since Tim Gurton said on 60 Minutes that he didn't turn his inheritance into a rich property portfolio by spending $40 a day on smashed avocados and coffee, and not working.

As we have seen, the idea that a home is built on sacrifice is a theme that runs deep throughout Australia, but the reaction to this characterisation of stupid and improvident youngsters not doing enough to get on the housing ladder suggests that, at least in its current form, its time might soon be up. Menzies' forgotten people could put nice things on hold in order to save and acquire a first home; so too their children and many of their grandchildren. Millenials suspect that when it comes to housing they've already missed out. Their future already sacrificed, they're having nice things instead. They needn't give up on "homes spiritual" or "homes human" in the meantime.

Far from spurring the hapless youngsters of Australia on, comments like Salt's and Gurton's may be just what's needed to galvanise another emerging class - that of the long-term renter. This takes us right back to the opening passages of Menzies' speech, and the idea of a forgotten middle class that occupies a space between opponents in a fictional class war. Perhaps its time this middle class was redefined, its challenges reassessed? As we reflect upon this anniversary of the Forgotten People who continue to influence our nation, it's worth asking - who among our political leaders would be brave enough to do that today?

Rental affordability deteriorates, again

Hot on the heels of the Anglicare Rental Affordability Snapshot for 2017, the SGS Economics and Planning, Community Sector Banking and National Shelter Rental Affordability Index for December 2016 reveals what most Sydney-siders and New South Welsh-folk already know: the squeeze on rents is getting tighter.

Picture by thepurpah

The headline finding is that Sydney's rental affordability is as bad as ever, having plunged to a record low towards the end of last year. The average household now pays around 29% of their income on rent - meaning that renters with even reasonable wages are heading towards a form of housing stress, if they're not already there.

Unsurprisingly, the least affordable suburbs are harbour-side. They include Elizabeth Bay, Rushcutters Bay, Potts Point, Woolloomooloo, Double Bay, Milsons Point, Kirribilli, Darling Point, Point Piper, Edgecliff and Woollahra. For a dual income household with kids, bringing in $140,000 a year, a three bedroom home in any of these iconic suburbs would be unaffordable (30%-38% of income) or severely unaffordable (38%-60% of income), according to the index. For a single working parent earning around $70,000 per year, a 2 bedroom home in most of these suburbs would come in at the unaffordable range. Rent for an unemployed person looking for a single bedroom unit would be extremely unaffordable (60% or more of income) in all of these suburbs.

There's still some hope for working families. The dual income couple with kids might find a three bedroom home with an acceptable rent (20%-25% of income) around places like Hornsby, Epping, Lidcombe, Lakemba, Earlwood, Kogarah or Miranda. A single working parent might pay an acceptable rent for a two-bedder around Liverpool or Penrith.

But there's no such hope for the single unemployed person. Rents for one bedroom homes remain in the extremely unaffordable range for this cohort, throughout the entire Greater Sydney area. Even if three or four unemployed folk decided to pool resources and go in together for a sharehouse, rents for suitable properties remain extremely unaffordable until about Blacktown, Liverpool or Engadine. Further out they become severely unaffordable, but that's as far is it goes across the remaining suburbs.

Things improve for dual income households with kids once you get past the limits of Sydney, with the rest of New South Wales showing rents for three bedroom homes as generally acceptable, affordable (20%-25% of income), or very affordable (less than 20% of income). Of course, that's based on an annual household income of $140,000, which might be harder to come by in some of the further flung parts of the state, so take that with a grain of salt.

Single working parents will also do better outside of Sydney, subject to the same caveat: two bedroom homes for a household with an income of $70,000 per year will be acceptable, affordable or very affordable in most parts of New South Wales. Wollongong, central Newcastle and Byron Bay are the exceptions.

Where available, single bedroom homes remain severely unaffordable or extremely unaffordable to an unemployed person receiving an income support payment, right across the state. For those prepared to share, a two bedroom place might be moderately unaffordable for anyone on an unemployment benefit (25%-30% of income) around Wellington, Parkes or Cobar. If you can find a third person, rent for a three bedroom home might be acceptable in Cobar. Of course, your income payments might take a bit of a hit if you leave Sydney for one of these towns, as your chances of finding paid work will be somewhat diminished. You'll probably have your payments cut for up to 26 weeks after moving to an area with lower work prospects so don't forget to factor that in...

Why is this happening?
Conventional wisdom is that prices go up when supply doesn't keep up with demand, but there are a number of indicators telling us things are a little more complicated when it comes to rents. For a start, contemporary discussion around housing affordability tends to focus on the supply and demand of housing as a financial asset, rather than for its purpose of providing shelter. "Housing demand" has become something of a proxy for "mortgage demand", and "housing supply" is geared towards meeting the needs of mortgagors rather than home-makers - even if at the micro level these are often the same thing.

A quick look at where the current demand for residential property finance is coming from reveals a whole lot of it is going to investors.

Aust. property lending monthly ('000), investment (red) v owner occupation (blue), Jun 2001 - Feb 2017. Source: ABS

Evidently there's been more money pulled into the rental market than for owner-occupation over the last little while. In other words, the rental market is currently enjoying the lion's share of supply. But we can't assume this puts us on a path to affordability because the vast majority of supply into the rental market is coming from investors purchasing established dwellings rather than new builds.

NSW property investment lending monthly ('000), June 2001 - Feb 2017, established (red) v new (blue) dwellings. Source: ABS

Much of the increase in rental market supply comes at the expense of supply for owner-occupiers. Potential first home-buyers are particularly impacted by this, and they're remaining in the rental market for longer. Increasing rental market supply is absorbed by a more-or-less corresponding increase in demand for rental housing. But as we can see from the blue line above, investors have been putting larger amounts of mortgage finance towards new construction over the last little while. New construction delivers supply to meet "mortgage demand" - not just the demand for shelter - which should be putting downward pressure on rents. But, as the index shows, it's not.

Our latest Rent Tracker report shows this as well, indicating that rents have gone up in Sydney even where large amounts of new supply has been brought into the rental market. Based on the number of new rental bonds lodged, Rent Tracker doesn't distinguish between new rental supply coming from construction compared to that which comes from increased investment in established dwellings. But checking this against data from the NSW Department of Planning & Environment we can see that a great many new dwelling completions across Sydney are in the form of new apartments. These are most likely being purchased by investors.

New dwelling completions, Sydney. Source: NSW Dept L&E

With a high proportion of one and two bedroom units turning up for rent over the last few months, despite families with children making up the highest chunk of demand for rental housing, it's evident that this kind of investment is not being driven by what households really need. Rental supply is not being driven by renter demand, because housing supply is being driven by mortgage demand.

That's the story with new construction, but it's also the story with increased rental market supply in general. Investors aren't pulling established dwellings away from owner-occupiers because they want to provide housing for people who can't afford to buy, but because they hope to grow their wealth. The allure of wealth, after all, is what is driving demand for mortgages. Aided by tax settings that expedite the debt-to-wealth strategy - negative gearing and capital gains tax discounts - investors are encouraged to buy property based on prospects for profit rather than any measured demand from renter households. They're buying more expensive property as higher price tags come with faster and bigger gains. They're leaving the cheap stuff to developers who can turn it into more expensive property in order to meet investor demand...

Over time, this has changed the shape of the rental market. Affordable rents are a thing of the past.

Volume and rents ($/2011) of Australian rental properties over time. Source: AHURI

For that matter, we don't measure demand for rental housing like we used to. Back in the olden days the National Housing Supply Council - now defunct - used to report on the affordability and availability of rental housing. Then, as now, there was a shortage of properties available for rent to households on the very lowest incomes, for much the same reasons that we can see today. But it's easy to imagine that if this work had continued with appropriate levels of government support, we'd have a much clearer understanding of our rental affordability challenges and how to tackle them once and for all. Instead we've allowed things to get much worse.

Last week's Federal Budget has pinned a lot of hope on measures to increase supply. This includes the renewal of the National Affordable Housing Agreement, to be renamed the National Housing and Homelessness Agreement (NHHA). Under the NHHA the Australian Government will work with the states and territories to increase the supply of (mortgage driven) private rental housing through measures such as planning and zoning reforms. With the latest Rental Affordability Index in mind, we'll take a closer look at these Budget measures in a later post. In the meantime, parties to a new National Housing and Homelessness Agreement would do well to consider monitoring both rents and demand for private rental housing across the income spectrum, to ensure this Budget's impacts are being properly accounted for down the track.

The Landlords' Budget

It's been dubbed the Budget that forgot the renters, but chances are your landlord is pretty happy with he 2017 Federal Budget's housing affordability measures. With first home buyer incentives that will push prices higher, and new rewards for speculative investment, this should be the stuff of landlords' dreams.

Let's take a quick look. We'll see what Lenny the Landlord - pictured below - thinks of the Budget's headline measures.

ABC TV's The Checkout presents: the landlord. Let's call him Lenny.

First up - unlocking supply. The Turnbull Government says it will ease restrictions that are holding back housing supply by sorting out some of the planning and zoning issues that make it hard for developers to build enough properties for landlords to invest in. They'll throw some money towards infrastructure upgrades to make sure developers don't have to worry too much about installing water supply pipes and sewerage systems, and so that future residents of new developments don't get too bogged down in traffic jams on their way to work every morning. They'll even tip in a bit of surplus land to help kick things off.

Lenny the Landlord says he quite likes these ideas. "Anything that gets me off the hook on housing affordability, I'm all for it," he grins. "As long as my high mortgage costs can continue to keep my tax bills down, I'm one happy chappie". A brief shadow of doubt creeps over him as he wonders whether all this fast-tracked supply could affect his longer term capital gains. His delight is palpable when he realises the measures would almost certainly result in higher land values where applied. "Forget the accountant," he chortles, "I'm heading straight to see my mortgage broker. Gotta get in on the ground floor, right?"

Next - creating the right incentives. The Turnbull Government says it is taking "prudent steps" to provide the right incentives for home-owners by allowing first home-buyers to make voluntary contributions to their super fund in the hope of saving for a deposit, and allowing older home-owners to top-up their super funds with the proceeds of sale. They'll also try to limit foreign investment by requiring half of all new supply to be sold to domestic buyers, and they'll prevent foreign investors from sneaking off without paying capital gains tax. What's more, they'll sting foreign investors with a levy unless they rent their places out for at least six months of every year.

Lenny the Landlord says he's a little worried about the impact of reducing foreign investment, but on balance he's still a fan of these measures. "Look, I'll be honest with you, this first home-buyer thing is a bit of a worry," he says. "There's not enough of them around, which makes it harder for investors to get the very best price when it does come time to sell. Thankfully we've got a steady stream of internationals coming in to stem the flow - capping the number of properties we make available to them could hurt. And who else can afford Australian property? I guess we might just have to settle for selling to other landlords in the long-run, so it's a good thing we've still got our tax perks."

When asked about a possible return of first home-buyer activity on the back of this Budget, Lenny laughs. "Yeah, please, that'd be great. Obviously this super fund thing is only going to help those who are already pretty much ready to buy - making sure they've got a bit of extra cash on hand to bid up prices is no skin off my nose." He thinks for a moment, and his eyes light up. "Actually, they might be able to bid up my property when it's time to cash out. That'd be, well... super!"

What does he think of the incentives for empty nesters? "Well, assuming some of them actually do it, I reckon it'd be good for those of us looking to pick up an extra investment property. More good homes on the market means more gains coming through hefty mortgages, makes it easier to ensure steady losses see, so you can get all the tax breaks and make it worth your while." He pulls out his mobile phone, but quickly puts it back in his pocket. "I must remember to make that call to my broker..."

The levy on empty houses? "Well, that's an interesting one," says Lenny. "I like the thought of foreigners having to rent their places out for six months at a time - that takes the pressure off me a bit. I can take my time between tenancies if I need to, keep the place vacant for a couple of months and still get my tax breaks. Bonus for me - with foreign investors evicting tenants every six months or so, there'll be plenty of competition for my place when I do put it back into the rental market. There'll be no trouble getting a little bit more rent here and there, so keeping my property empty every now and then could totally be worth it in the end!"

Lastly - improving outcomes for those most in need. The Turnbull Government says it will improve outcomes in social housing and homelessness by continuing to fund social housing landlords and homelessness services, encouraging "social impact investment", giving more tax breaks to landlords and creating a bond aggregator that will encourage private and institutional investment in new affordable housing products.

Lenny the Landlord says he's not really fussed with all this government housing business. "That's really not my concern," he mumbles. "I'm not running a charity here. I think the government should do that, so it's good they're doing that I guess".

When asked if the bond aggregator might prompt him to diversify his investment portfolio, he appears a little confused. "Diversify?" he asks. "What do you mean?" We briefly explain the proposed Affordable Housing Finance and Investment Corporation and how it could allow him to invest in other companies that would put money into the affordable housing sector. Perhaps he could even make a direct investment himself? He remains unsure. "Look, that all sounds interesting but I think I'll stick with what I know. I'm not sure investing in something other than the place I've got is a good idea. I mean what if some of this affordable whatchamacallit is built nearby, and my property ends up going down in value?"

"No, no," he says, reassuring himself. "We invest in property because we know prices always go up. Let me have another look at these new tax breaks you mentioned, they sound promising..." His mood picks up again. "You mean I can get an extra 10% off my capital gains tax if I give my place to one of these community housing dooverlackies for a few years to rent out at a smidge or two below the market? Sign me up! Heck, that means I could even sell the place a year or two earlier than I was thinking! I can start the ball rolling on buying the next one... and the next one... and the one after that..."

With that, Lenny the Landlord pulls out his mobile phone and walks off with a spring in his step.

Evictions begin at Millers Point

Words and pictures from John Dunn, Friends of Millers Point

This morning the NSW Government is taking action against public housing tenants in Millers Point.

FENCE AROUND SIRIUS

At Sirius the assets branch of the NSW Government is erecting a cyclone wire fence around the site. Family and Community Services (FACS) has informed residents that the fence is being installed to improve public safety.

The fence around Sirius appears to be poorly located for protecting public safety but it is well located if it is in preparation for demolishing of Sirius and its ground-floor courtyards. In the meantime it alienates more of the common areas of Sirius from its residents. Effectively, the government is evicting the remaining tenants of Sirius an inch at a time.

All of the interior common areas have been locked away from the tenants of Sirius. Recently, senior FACS officers cancelled Myra's booking of the Phillip Room which had been booked for a studio session in which people were to draw her. The Phillip Room was subsequently covered in black plastic so that it could no longer be used. Myra's drawing studio sessions were moved to the courtyards of Sirius and proceeded with great success and without incident. Similarly, Myra has had guests for Friday Night Sirius, a barbecue event in the courtyard. Myra has been looking forward to the next Friday Night Sirius barbecue on 2 June. Also during the past few months, the Sirius Foundation has conducted dozens of tours of Sirius which have been booked by more than 1000 people and are conducted by Tao Gofers, the leading architect of Sirius. Initially tours were allowed inside Sirius, but as their success has grown, the areas they are allowed into have contracted.

Watching the fence being erected at Sirius one is reminded of the Berlin Wall going up. If Sirius represents the Heart of Sydney, the NSW Government appears determined to destroy it.

EVICTING A MILLERS POINT RESIDENT

This morning the sheriff was scheduled to evict Peter Muller from 32 High Street, Millers Point. Currently he remains in his home, surrounded by residents and supporters. The staff from the assets branch of the NSW Government were keeping a close eye on proceedings from a safe distance.

Caveat Rentor - Tenants as consumers Part 1

Last month Jessica Irvine, senior economics writer for The Age and the Sydney Morning Herald, delivered the Ruby Hutchinson Memorial lecture hosted by the ACCC and Choice. It is worth listening to the whole speech as Irvine addresses the need for changes in housing, childcare and disability care. Today however, we'd like to extend and explore one of the most important lines of Irvine's speech.

"Renters are consumers too. They're consuming a service and they're getting a very poor one in many cases"

Jessica Irvine is absolutely correct - renters are consumers. However, a large part of the problem with our renting laws is that they consider renters to be just like other consumers. This means the legislation makes assumptions about relationships between landlords and tenants - as service providers and consumers - that lead to really unfair situations.

Part of the reason renting isn't like other consumer transactions is the scarcity of the service being offered. If you need some food, or some clothes, or white goods, you have many alternatives and probably a range of products to choose from. It is a rare grocer who only has one banana on the shelf, but tax data tells us about 70% of landlords only own one property, and 90% own two or less.

You might say "but there are over a million landlords, which means there must be over a million properties in the rental market - how can that lead to scarcity?" Even if we take all the properties as a whole, they are not all in the same place, of the same configuration, or the same quality. Remember the last place you rented? There is only one property like that property in the world. Whereas you could go to a competitor of your nearest white goods store and find another fridge just like the last one you looked at, you can't do that with a home.

The other factor is the importance of the service. It's much easier to make do when some of the food in your fridge goes bad, or you get a really bad rip in a pair of jeans, than it is getting by without a home. For instance, you have the right to a refund for a fridge if it's faulty. The shop or manufacturer might give you a new one (just like the old one), or the cash value of the entire purchase price so that you can go and buy a new one. This is true regardless of whether you bought it last week or 6 months ago. If your rented property is faulty you don't get an exchange or a full refund, because the landlord knows two things. First, there isn't another home in the warehouse for them to simply hand over. It will be significant effort on your part to find a new home. And second, you would generally rather stay in the faulty home than sleep on the street.

In many ways this is why our tenancy laws are so inadequate. Assumptions are made about the way parties interact which assumes a regular consumer - business relationship, and that all is required of the law is to "balance the interests" of these parties. But landlords are not like other businesses. They generally only own one or two rental properties, so they are not transacting with their "consumers" with much regularity. If they're really churning through tenancies they might be transacting on average once every six months or so, but given most tenancies last for at least couple of years it's likely to be far less frequent than that. They have no concern for branding, or public relations because they have so few interactions. They are not concerned about moving product because they don't really have much of it to move. They know their "consumers" need it so they don't even really need to promote themselves as a "business". Even their agents - who do provide a service but not for tenants - are more concerned about how landlords perceive them because of the low number of interactions compared to potential "customers".

Added to this, consumers in the private rental sector don't even have the same ability as other consumers to enforce their rights.  Imagine going to fast food restaurant, like McDougall's and they refused you service because one time you took their competitor, Starving Jill's, to the Tribunal for serving a mouldy burger. Bizarre yes? But this is exactly what tenants face:

Ultimately, we need tenancy laws that recognise that tenants are consumers, but at the same time that renting your home is a special kind of consumer service. Renters are consumers, but at the same time, they are families, workers, and community members. The inadequacy of the service is in large part due to the failure to recognise this dual role - which doesn't exist when you buy a new fridge or choose to eat a different type of apple. Changing this will mean having the courage to stand against the claim that the property owner's investment decision is more important than the tenants' home.

We also need to rethink the assumption that a landlord is not "in business" for the purpose of the Australian Consumer Law. There is need for a bit of guts to stand against the sad puppy-dog eyes of investors who are only too happy to receive the benefits of negative gearing (a tax deduction for making investment in your business), but not submit themselves to the consumer protection that should come along with it.