Looking after mums and dads - part 1

Mums and dads need looking after. We know this because every time someone comes up with a way to make renting fair we hear a caution - we can't go around doing things that will hurt mum and dad investors. They've bought into the property market at considerable expense, in good faith, with an expectation that policy settings will remain as they are. After all, they're just trying to build themselves a little wealth.

This is never more true than when we're talking about tax reform. As it happens, we're talking about that right now, so it's worth exploring what a "mum and dad investor" really looks like.

One of the ways we can do this is by looking at data collected by the Australian Tax Office. We can count the number of taxpayers who have declared income from a rental property as part of their end-of-financial-year returns.

If we like, we can also divide the data up into different bands depending on what those taxpayers' taxable incomes are. Current discussion around tax reform has been conditioned by just such a division. The Property Council of Australia recently asserted "negative gearing is the way that many mums and dads get into the housing market to build their prosperity." Borrowing from a 2014 statement from the Housing Industry Association, they went on to say:

Two million Australians own an investment property. Two thirds of property investors who benefit from negative gearing earn a taxable income of less than $80,00 a year. These are not high income earners. There are 840,00 Australians with taxable incomes below $80,000 a year who negative gear. This includes 53,800 teachers, 52,000 retail workers, 35,900 nurses and midwives, 22,600 hospitality workers and 10,400 emergency service workers.

Commentators such as the ABC's Michael Janda and SMH's Peter Martin have pointed out that a reference to "taxable income" is disingenuous, precisely because negative gearing is a method of reducing taxable incomes. But the conversation hasn't moved far from this point. Other than the kinds of vocation these "mums and dads" might find themselves in, we still don't know much about them.

Treasurer Scott Morrison took us further when, as Social Services Minister back in July 2015, he said "private rental accommodation is supported by a large pool of mum and dad investors making private rental stock available through negative gearing. By number, almost 80% of these investors are middle income Australians earning $80,000 a year or less, owning just one property. They are school teachers, police officers, nurses and office workers saving and investing to provide for their financial security."

Note that important distinction - middle income Australians owning just one property. We can see what Morrison was getting at by looking at another measure in the tax data.

Australian taxpayers with interests in rental property. Source: ATO

The majority of Australian property investors are one-hit-wonders. In 2013-14, the latest year for which data is available, 72.02% of Australia's taxpaying landlords held an interest in only one rental property. This has remained steady for many years, with the number hovering between 72% and 73% since 2005-06. So when we're asked to think about mum and dad investors, we're really being reminded that there are around 1.5million Australians who've indebted themselves to invest in a single rental property. Whether they earn $80,000 or $800,000 before tax is beside the point; what's not beside the point is that they do not have the economies of scale to make adjustments to their investment "strategy" should conditions change. In short, they're amateurs.

What's also not beside the point, but is all too frequently overlooked, is that these are not merely "mums and dads saving and investing to provide for their financial security". They're landlords building wealth by buying up other people's homes. There's a level of social responsibility that comes with that, and there's a legal responsibility too. But for most, the imperative is purely financial, and there's not a lot of interest in acquiring the knowledge or developing the skills required to become a good landlord. Again, these are amateurs.

But while our army of "mum and dad" landlords may not be overly concerned with the social function of the houses they buy, or the people who live in them, there's reason to think more are graduating from amateur to enthusiast when it comes to the "saving and investing" function. A closer look at the tax data, extracted above, reveals an interesting trend: portfolios are growing, and established landlords are taking on additional rental properties at a faster rate than those buying in for the first time.

Growth of interests in rental properties, 2005-06 - 2013-14. Source: ATO

It's not hard to imagine why this might be. New entrants need to sacrifice and save in order to break into the housing market, whereas those with an existing portfolio can simply adjust their equity and debt in order to take on another property. Traditionally, the pathway to residential property investment has been to buy a home to live in, then leverage that home to buy another that someone else lives in - taking advantage of negative gearing while you're at it. Such investors might be induced by capital gains tax discounts to leverage again and buy up more. But, with prices as they are, such a strategy is becoming difficult to follow. First-time buyers are now just as likely to go for an investment property than a home to live in, but either way they're competing with established "mum and dad" investors. Increasingly, these mums and dads are "saving and investing to provide for their financial prosperity" by picking up their second, third, fourth, fifth and sixth investment properties. This is something to keep an eye on.

It's also only part of the story of mum and dads in the rental market, so we'll return to this topic in a later post. We'll explore how these investors have changed the shape of the rental market, and how they've produced a new generation of mums and dads who really do need a helping hand from our tax and housing policies - the ones who live there.

Long live public housing in Millers Point!

Tomorrow marks the two year anniversary of the announced sell-off of public housing in Millers Point and The Rocks. This is significant, because the "project" of relocating tenants was given two years to run.

To celebrate their survival remaining tenants will march tomorrow, down Kent Street to the Village Green. Why not join them?

While you're there, reflect upon the resilience of the remaining 75 households. Reflect upon the hundreds of properties that have been vacated, and the tenants who have now moved on.

Reflect upon the 58 properties that have been sold to date for around $150million. With almost 300 more properties to be sold, reflect upon the price of an iconic and historic Sydney suburb.

Reflect upon the history and the heritage in the place. From the significance of these sites as Gadigal country - Australia's first displaced people - to the beginnings and tensions of a penal colony. To Australia's first government owned rental housing, the proposed redevelopment of the 1960s, and the Green Bans movement that followed...

Throughout it all, ordinary Sydneysiders have made this place their home. Reflect upon that tomorrow, as they're marching down Kent Street to celebrate their survival.

And reflect upon it again, as the highest bidders continue to roll in to capture the spoils.

Update on asbestos testing, compensation scheme

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

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

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

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

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

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

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

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

Aboriginal tenants may also contact the following services:

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

Happy International Women's Day!

In celebration of International Women's Day, the women of the TU have enthusiastically produced a special edition of Tenant News – our printed publication for tenants.

At the 2011 Census there were more than 950,000 women living in rented homes across New South Wales. Today there will be many thousands more. This issue of Tenant News tells some of their stories – stories of struggle and hope in finding home.

You’ll find women writing about the legal insecurity that impacts on their ability to make a home when renting, and about how LGBTIQ, refugee and older women face discrimination in the rental market. We also explore public housing redevelopment policies and more.

The common thread in all these stories is the search for stability, liveability and affordability when making a home. Renting laws can be changed to facilitate these basic needs. In our submission to the Residential Tenancies Act Review, we've asked Minister Dominello to do this by including changes to the law on evictions, rent increases and repairs. Read our full recommendations for change in our submission.

We've printed 4,000 copies of Tenant News – you should already have yours if you're on our postal list. If you'd like a copy (or many), please email us. Copies are free for tenants and community workers!

Please help us by giving Tenant News to other tenants, community workers and clients.

Stories in this issue include:

Women finding home

Women from a refugee background face a multitude of challenges and barriers when trying to find a place to call home in Australia. Read more

More than bricks and mortar

Robyn lives in south western Sydney and has experience as a tenant who has been through a redevelopment process in public housing. Read more

Women working for change

We talked to six women who live in residential parks who are all creating meaningful change within their communities. Read more

Transgender women & homelessness

Although only 7-11% of the population are same-sex attracted and/or transgender they constitute 25% of the young people who are homeless. Read more

A champion for housing rights

Ruth Simon has dedicated herself to ensuring justice for Aboriginal people through her work, both paid and unpaid. Read more

The Tenants' Union turns 40!

On Thursday 11 February the TU launched our 40th anniversary celebrations with a BBQ at Northcott Community Centre. Read more

When home isn't safe

Indigo is a 20 year old queer person who has felt unsafe at times, due to the behaviour of housemates in share housing. Read more

Is my residence my home?

One of the themes for the TU's 40th anniversary celebrations is My House, My Home. But is that true if you rent? Read more

Women tell their tenancy stories

Six women give different perspectives on the life of a tenant and what 'home' means to them. Read more

Tenancy Q&A: Domestic violence

Cass Wong, TU Litigation Solicitor, explains the steps required for a survivor of domestic violence to terminate their tenancy. Read more

Transgender Women and Homelessness

Originally published in our recent International Women's Day Tenant News special, this article was written by Amy Davis, a PhD candidate at University of Wollongong and a staff member at the TU. We post it today as a small contribution to Sydney's Mardi Gras festival.


Transgender and trans are umbrella terms applied to people whose sense of themselves as gendered people (gender identity) is in some way incongruent with the gender assigned to them at birth, where assigned gender is typically based on the medical perception of external genitalia. 

Some (but not all) trans people choose to socially and/or medically transition by changing their name to one that is more appropriate to their affirmed gender, wearing gender-affirming clothing, accessing hormone therapy or undergoing surgical reassignment procedures, among other things. This article specifically addresses the experiences of trans women, being people who were assigned male at birth and who identify as female.

It is difficult to estimate the rate of homelessness among young transgender people since homelessness statistics are not collected in relation to trans status. However, taking same-sex attracted youth and/or transgender youth together, in NSW it has been estimated that although only 7-11% of the population are same-sex attracted and/or transgender they constitute roughly 25% of the young people who are homeless.

Parental rejection and family violence based on gender identity have been cited as causes of homelessness for young trans people in Australia. Homeless can mean sleeping rough on the streets but it can also mean staying in supported accommodation, ‘couch surfing’, or living in accommodation that falls below minimum community standards such as boarding houses. 

Fundamentally, homelessness is about insecurity which can in turn have devastating effects on a person’s mental and physical health. Given that trans people are already four times more likely to have been diagnosed with depression than the general population, the compounding effects of homelessness on trans people can be dire.

Alyssa, 23, who identifies as a bisexual trans woman, has been no stranger to insecure housing and accommodation stress. Her family lived in multiple houses across Australia when she was young and never stayed in one house for more than a year.

However, as she began to medically and socially transition in her early twenties it put more pressure on her relationships with her family members and in turn her housing situation.

“My parents were also not great people to grow up under,” Alyssa says. “In my early twenties I was also briefly homeless and couch surfed for a while until I found my feet living independently.” As Alyssa’s relationship with her father broke down it became necessary for her to leave home. “I was homeless briefly due to moving out of my Dad’s house into my grandfather’s house but he passed away shortly after I moved, so I couch surfed after that point, rather than go back to living with my Dad.”

Alyssa now lives in share housing after spending a year living in transitional, supported accommodation provided by Twenty10, a non-profit organisation which works with young people of diverse genders, sexes and sexualities. She is now partway through a computer science degree at the University of New South Wales and works full time at a software company. While Alyssa’s accommodation situation has improved since leaving home she says that being homeless puts a lot of pressure on the mental health of young trans people.

While Alyssa reached out to support services it took her a long time to find stable accommodation. Research has consistently found trans youth regularly experience harassment, violence and transphobic abuse when accessing accommodation services, both on the part of the workers and other service users. On top of that, staff and residents at some women’s services reject trans women or refuse to acknowledge their affirmed gender. For many trans people this not only means that they do not feel comfortable disclosing their gender identity when accessing services, but that some prefer to sleep rough rather than access accommodation services.

Alyssa says, “I branched out to a number of different places, most of them had negative results (being at capacity already, or not being very willing to help me as I’m a big queer). I found temporary year-long housing with Twenty10 which helped me a ton.”

Alyssa expressed concern around the lack of accommodation services for trans women and other LGBTIQ (lesbian, gay, bisexual, transgender, intersex, queer) people.

“When I was homeless in my twenties I had a few queer youth help groups to reach out to, particularly The Gender Centre and Twenty10, but nothing else aside from that,” Alyssa says. “I think that at the moment there is a big deficit of safe housing in general for queer women, particularly for women without a steady income or on a Centrelink allowance. Having more houses that can house at-risk people can only be a good thing in my mind.“

Research suggests that between an estimated 5,000 and 6,250 LGBTIQ youth are homeless in Australia on any given night, a significant proportion of which would be in NSW. The LGBTIQ youth service package as part of the Going Home Staying Home reforms is funded to accommodate only 140 young people, meaning that LGBTIQ youth homelessness is significantly underfunded in NSW. Alyssa would love to see a place that provides a safe and supportive environment for people like her who have experienced transphobia. In the meantime, however, young trans women like Alyssa are struggling with limited support.

For more info and resources, check out twenty10.org.au and gendercentre.org.au

Asbestos testing, compensation for tenants

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

A roof containing loose-fill asbestos

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

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

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

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

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

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

Contact details for the relevant general services are as follows:

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

Aboriginal tenants may also contact the following Aboriginal services:

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

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

Housing, tax and growth

The long road to sensible tax reform has taken an awkward turn today, with Federal Treasurer Scott Morrison holding out a much maligned and now discredited report as evidence that Labor's proposed changes to negative gearing (and capital gains tax exemptions) would take a wrecking ball to Australian housing. Aside from Labor leaping to its own defense, the BIS Shrapnel report - commissioned by a mysterious "private client" - has prompted a couple of good responses. See, for instance, this piece by representatives of the Grattan Institute, and the joint statement from ACOSS, National Shelter, the Australian Youth Affairs Coalition and the National Association of Tenancy Organisations (of which TUNSW is a member).

Much has been said about negative gearing since Opposition Leader Bill Shorten announced Labor's proposal in mid-February. We've kept relatively quiet on the matter, because we've been waiting to see whether the Government will come up with their own vision for reform. Recent indications suggest they may pass, although Scott Morrison has not yet made this official.

We'll get onto it, though, because even throughout all the furore not much has been written about what Labor's proposals will mean for tenants - other than the usual guff about rents going berserk and landlords burning down houses before suffering any loss without generous taxpayer funded subsidies. Well, okay, maybe we made that last bit up, but with some of the commentary going on out there, you'd be forgiven for thinking such civil disobedience is truly on the cards.

Of course, there have been exceptions. Some very well considered articles have been produced over the last three weeks - one such being a piece in The Conversation penned by Professor Gavin Wood. Wood took a look at the short- and long-term implications of Labor's plan, should it become a reality, and suggested that we might expect a bit of a step backwards before things start to improve. That's a reasonable assumption given the housing market - and indeed the whole Australian economy which relies so heavily upon house price speculation - will have to adjust. It's this adjustment we should be focusing on, rather than whether or not landlords will try to pass on the "costs" of losing their tax breaks by trying to increase rents en masse - some will, others wont, everyone will have to adjust.

Wood's article concludes:

Many believe that repayment and investment risks carried by heavily indebted home buyers played a central role in precipitating the global financial crisis. Tax concessions that favour taking on debt exacerbate those risks. If Labor’s proposals succeed in attracting attention to these and other structural problems that plague Australian housing markets, they will have a much wider significance.

Meanwhile, the Australian Bureau of Statistics has just released a report showing that economic growth for the December quarter was higher than expected - coming in at 3% against a forecast of 2.4%. One of the key drivers of this growth was household consumption - ordinary people spending ordinary money on ordinary things like food, fuel and shelter. There's a problem, though, because incomes are on the decline as higher-paid jobs in the mining sector are replaced by lower-paid jobs in services and retail. Which means, for the last few months at least, our economy was driven by consumers tapping their savings, or - and this is far more likely - the equity in their property holdings. In other words, taking on more debt to spend on consumption, while hoping that further house price rises will pay for it in the long-run.

This is an unsustainable way of achieving growth, but it is also grossly inequitable. It's not hard to see who the losers are in such an economy, even while the good times last for those in the winners' circle. Perhaps it's time we did make some of those adjustments.