Unsettled - life in Australia's private rental market

Last year Choice, the National Association of Tenant Organisations* and National Shelter conducted a survey of Australian tenants. It asked questions about life in Australia's private rental market, like how easy it is to find a place to live and what it's like applying for a tenancy, what condition is your home in and how easy is it to get the landlord to follow through with repairs, how often do you move and why, and how much does it all cost?

Today the findings from this survey will be published in UNSETTLED - Life in Australia's Private Rental Market.

It makes for interesting reading. From the report:

Our survey indicates that for the increasing number of Australians who rent, housing is frequently poor quality, insecure and unaffordable. Many tenants feel they are not catered to when searching for a new home. Some face discrimination on a range of grounds. Rental properties are not always in an acceptable condition and landlords are not always responsive to requests for repairs and maintenance needs. Tenants can be reluctant to ask for repairs or complain about their housing, because they're concerned about eviction or a rent increase they can't afford.

Key findings include:

• 83% of renters in Australia have no fixed-term lease or are on a lease less than 12 months long
• 62% of people say they feel like they can’t ask for changes
• 50% of renters report experiencing discrimination when applying for a rental property
• 50% of renters worried about being listed on a residential tenancy database
• 20% renters experiencing leaking, flooding and issues with mould 
• 8% of renters are living in a property in need of urgent repairs

Sound familiar? Australia's housing system is doing a poor job for tenants in the private rental market. That accounts for about a third of the population, but tenants experiences rarely feature in discussions about national housing policy. These discussions need to focus on more than just affordability and whether or not we'll ever be able to buy - Australia needs to take a good look at just what we're getting when we pay the rent.

***

Discussing the report this morning, CHOICE CEO Alan Kirkland said:

For Australians who don't own a home, renting should be a secure and affordable option free of fear and discrimination. Unfortunately, the research reveals a significant power imbalance between tenants and landlords, leading to a culture of fear that means many renters stay silent when something goes wrong. 

It’s deeply concerning that common features of everyday life like having children, receiving a government payment or owning a pet can be major barriers for renters trying to find a home.

NATO spokesperson Ned Cutcher said:

All too often, we hear that people are reluctant to complain to agents or landlords because they’re worried about rent increases or eviction. This research shows that this fear is widespread with 50% of renters worried about being listed on a so-called “bad tenant database". 

When people do raise an issue with a property, landlords and agents can really drag their feet before they fix the problem with 21% of renters waiting over a week to get a response about an urgent repair request.

National Shelter's Executive Officer, Adrian Pisarski said:

Tenants are often the last group to be asked about the housing challenges Australia faces. This research has tenants talking about their experiences of the system in a way that’s not often considered in debates about housing. 

Renters face constant insecurity, 83% are without a fixed-term lease or are on a lease less than 12 months long.

As more Australians enter the rental market, we need a national plan to boost supply, especially for low income households, whilst also addressing security, rights and amenity.

Download the report here

*TUNSW is a member of the National Association of Tenant Organisations.

NAHA is dead? Long live public housing!

Alarming reports have emerged today that the National Affordable Housing Agreement (NAHA) could be axed in the next federal budget.

The NAHA is the current iteration of a long running agreement between the federal and state & territory governments about the provision of public and social housing in Australia. The first iteration was the 1945 Commonwealth State Housing Agreement, and while public housing has copped a few knocks in the meantime, the scrapping of NAHA could mean the death of public housing as we know it.

From news.com:

The National Housing Affordability Agreement, which has cost the Federal Government almost $9 billion since it was launched in 2009 by the Rudd Government, will be axed in the May budget, The Australian reports. 

Instead of the public housing stock rising since the agreement was launched, figures released in the 2017 Report on Government Services last month show the supply has actually gone backwards by 16,000 homes. 

And 20 per cent of the existing housing stock was now considered in an unacceptable state, while 8 per cent was uninhabitable.

None of this will come as news to those who keep an eye on such things - in fact, we've been making noise about both of these issues for what seems like an eternity (see here and here, for example). But axing the agreement is not the way to fix these problems - getting a better agreement is.

A key problem for the NAHA is that it altered the way federal and state & territory governments share responsibilities for funding the supply and maintenance of public and social housing. Times were those costs were shared - specifically, state & territory governments were required to match federal funds dollar for dollar. But the NAHA let the states and territories off the hook, on the basis that the emerging not-for-profit landlords - the Community Housing sector - could take on a greater role in delivering these services while tapping other sources of revenue.

For the record: we've always agreed that they could, but not at the expense of continued investment in social and affordable housing by all levels of government. It stands to reason, then, that our support of any new "bond aggregator" model that is currently being considered by the Turnbull Government would be similarly qualified.

National Shelter has issued the following media release, along similar lines:

National Affordable Housing Agreement Essential 

Reports to axe the National Affordable Housing Agreement (NAHA) reported in news.com and the Australian today have been met with shocked disbelief by National Shelter the peak affordable housing body. 

“If true this will be an act of vandalism by the commonwealth against a vital essential funding program which supports the most vulnerable including funding two thirds of all the homelessness services in Australia.” 

“The NAHA wasn’t well conceived and has not been well managed but axing the only funding for public housing and homelessness services without discussion, consultation or any alternative plan amounts to vandalism against many of the most vulnerable in our community”, said Adrian Pisarski National Shelter Executive Officer. 

The NAHA funds the maintenance of our social housing system as well as homelessness services provision and this looks like the Commonwealth is abandoning the field by removing essential funding for social housing and homelessness services. 

“At a time when rough sleeping is rampant in our cities and housing affordability a daily headline this is not the time for the Commonwealth to cut and run.” Mr Pisarski said. 

“National Shelter has been critical of the performance of the NAHA and plead with the Commonwealth and States to address issues of, sufficiency, transparency, accountability and performance but ditching it is not the answer”, Mr Pisarski added. 

“We need a national plan which supports social housing, homelessness and addresses housing affordability more generally thru attracting private and public investment and broader reforms of planning, taxation and tenant rights at state levels. This is not an either or situation, we need every tool at our disposal, including a reformed NAHA.” 

The Commonwealth needs to negotiate these reforms with State Governments and the community sector not abandon the field. National Shelter remains available to advise all parties on reforms to housing and homelessness.

Why all politicians should support tenants' rights

Yesterday the Australian Senate passed a motion seeking the implementation of a national minimum standard of tenancy rights. Senators Lee Rhiannon of the Greens, and Doug Cameron of the ALP introduced the motion, and Senator Rhiannon tweeted about it after it passed.

The full text reads that the Senate:

a) Notes that: 

i) The proportion of Australians leasing in the private rental housing market is the highest in over 50 years; 

ii) Long-run structural changes in Australia' s housing system are leading to increasing numbers of households choosing to rent on a long-term and in some cases, a permanent basis; 

iii) Comparative international studies, including a 2011 study by the Australian Housing and Urban Research Institute, show that tenancy laws administered by the Australian States and Territories perform poorly in the provision of tenant protections against arbitrary eviction, excessive rent increases and allowing tenants the full enjoyment of their home; 

iv) In the absence of affordable owner-occupied housing, life-long renting is now a prospect for many people; 

v) Australian tenancy laws may no longer be fit for purpose; and

b) Calls on the government to: 

i) Work with the States, Territories and relevant non-government organisations to set national minimum tenancy standards to ensure that tenants' rights are protected in relation to matters including fairer processes around lease terminations and evictions, fair standards to govern the amounts by which rents can be increased and provide for long-term residential leases that enable households the full enjoyment of a secure home.

This is a welcome development - while the states and territories administer their own tenancy laws, the cultural conceptions and attitudes towards renting are fairly common throughout the country. Each of the laws reflect this. No state in Australia has banned "no grounds" evictions as a way of promoting long-term residential leases, though the ACT and Tasmania have come the closest. No state in Australia effectively protects tenants against excessive rent increases, though again the ACT comes the closest.

What this motion really tells us is that the changing profile of households renting their home is beginning to make a difference in electoral politics. In the last NSW election, we saw the seat of Newtown won by the Greens' Jenny Leong who, among other things, ran on a tenants' rights platform. As the number of people affected by poor renting laws grows, the conversation of how we as a community value the safety and stability of a rented home will only grow as an electoral issue. It will especially grow away from the inner city.

Indeed politicians of all parties should take note as the profile of whole electorates will change with the growth of the tenant population. We noted before the previous Federal Election, some particular marginal seats and their renting populations. It will be interesting to do the same again in April with new Census figures and the current parliament. The increasing inaccessibility of property ownership through ever rising prices means the pool of landlords may also begin to shrink. Already some are reporting an increase in the size of individual landlords' portfolios, and this is something we've noted ourselves before, too.

More people staying in the rental market for longer - particularly those whose upbringing might have delivered an expectation of home-ownership at some stage in life - means an increasing range of political views and allegiances will start to converge on the question of tenants' rights. Voters from across the spectrum will inevitably begin to question why the law allows them to be removed from their homes when they have done nothing wrong. While it can be easy to point people further and further from the city in search of affordable home ownership as their means of achieving some security of tenure, this will not last long as a solution.

Perhaps they will even question why it is that investors appear to be living quite so large on the public purse - through tax breaks that cost the national budget literally billions of dollars each year - without ever having to justify the results. And while many will retain the aspiration and appetite to invest in property, if they are not lucky enough to come from a property owning family the barriers to entry will continue to grow faster than they can keep up. This will leave some wondering whether their vote is worth leaving with any political parties who may continue to have a tin ear to their plight.

Some politicians are starting to cotton onto this, and that's a good sign for those of us working for better tenancy laws across the country. Let's keep it up!

The wrong kind of supply

When it comes to housing affordability, we have a bit of a mantra here at the Brown Couch: it's not supply and demand, but the type of supply and demand that matters.

Jennifer Duke's recent article in the Sun Herald shines another light on this. Drawing on data provided by Don't Rent Me's Anthony Ziebell, Duke writes:

The vast majority of apartments in NSW are two-bedrooms – with 2298 – followed by 1322 one-bedroom apartments. And in many suburbs, one-bedroom apartments aren’t substantially cheaper than two-bedroom apartments, forcing some tenants to change their wishlist.

Ziebell is a friend of the Brown Couch, and he's run his data by us as well. He points out that more than half of new rental listings across the eastern states of Australia are 1 and 2 bedroom units. In New South Wales it was at 56 per cent the last time he pulled this data, which he obtains by regularly scanning online rental advertisements. This data comes hot on the trail of our own Rent Tracker report, which last week showed how rents have climbed even in parts of Sydney where thousands of new rental bonds have recently been lodged, indicating growth in rental supply.

So what's going on?

Ziebell suggests activity in Australian housing markets places too high a focus on investors' interests, rather than housing need. From Duke's article:

Don’t Rent Me founder Anthony Ziebell warned too much of a focus on investors, rather than those who will actually be living in the properties, is leaving Sydney filled with “inappropriate” homes.  

“Sydney’s rentals are the smallest in the country,” he said.

“If you’re building an apartment block, how many one-bedroom apartments can you sell compared to three-bedroom apartments? 

“It’s not about providing suitable housing, it’s about getting the maximum profit. This is leaving renters without anywhere suitable to live,” he said.

He's onto something. But before we get to that, let's back-track to October 2013 - when first home buyers were still vaguely a thing, and Catherine Cashmore penned an article for Property Observer called Investors or owner-occupiers: who are we really building housing for?. (Hint: it wasn't owner-occupiers then and it's not owner-occupiers now.) Cashmore was talking about conditions in Victoria, but the general themes could be applied anywhere:

The relatively small one and two bedroom units featured as 'affordable' tend to fall into the investment sector of the market, not just because of tight lending restrictions banks impose on first home buyers for this type of accommodation, but also due to high owners’ corporation fees set aside to service the lifts and other security features.

A great deal has happened since 2013, including the steady decline of first home buyer activity and a slowly rising interest in the plight of the poor old renter. But as we can see, those still standing in our dysfunctional housing system are yet to catch on. Or perhaps they just don't want to?

Like others, we've often cited the ABS Lending and Finance data, as we did in December 2013, to show that about 92% of money lent to property investors goes towards established dwellings. The remaining 8% contributes to new supply, as landlords are far, far more likely to trade in existing housing stock than invest in new construction. Property investment finance has more or less continued in these proportions despite recent development activity.

Even so there are considerable chunks of money being poured into new apartment blocks by investors, and this has been particularly so in areas close to jobs and transport over the last couple of years. Whether these dwellings are purchased by investors 'off-the-plan' or through a subsequent sale is beside the point for this discussion. What's not beside the point is that development is being propped up - if not driven - by this investment, and investment is being driven by something other than what Australian households need.

So what's driving investment?

We've written extensively about the impact of federal tax settings on the type and nature of investment in Australia's residential property, so we won't go over it again today. Suffice to say that it has changed the shape of the rental market. Investors purchase dwellings with prospects for capital gains in mind rather than any consideration of need or demand from tenants.

The recent insights from Don't Rent Me and the Tenants Union are yet more evidence of this.

Latest Rent Tracker release

Today we have released the second issue of Rent Tracker which brings together the Rent and Sales Report as well as data from various other points to give you a clear and easy way to understand rent movements in New South Wales.There are more tenants in NSW than ever before, with bonds held in the Rental Bond Board rising much more quickly than the population.

For tenants renting houses in the west of Sydney there hasn’t been a lot of movement in rents for new dwellings over the last year. Of course that’s no guarantee a sitting tenant hasn’t had to deal with a rent increase or two. 

Rent prices for new leases in apartments have increased and decreased in different amounts across Sydney over 2016.
Interactive, and larger versions on tenants.org.au/tu/rent-tracker

However, for tenants in units there has been a lot of new stock coming on to the market - and because homes are not like other items, this means median rent prices have gone up, not down. A new building is generally nicer than both the building it replaced, and the other, older properties still on the market. This difference means it rents at the higher end of the scale, pushing the median rent higher.

For example Sydney, Parramatta and Rockdale LGAs together added more than 5200 new apartments in the last year, and new rents went up about 5% in each of those areas.

Greater Sydney generally added more than 27500 new rented homes to the market, with the fastest growing areas Camden lodging 20% more bonds than this time last year, and Lane Cove just over 15%.

The renting population of NSW also grew, though somewhat more slowly. Lithgow-Mudgee and Lake Macquarie both saw increases of around 6% of rental stock and were the largest increases outside of the Greater Sydney area.

Get the full edition of Rent Tracker, as well as interactive versions of these maps on tenants.org.au/tu/rent-tracker

New Ministers

New NSW Premier Gladys Berejiklian has announced her first Cabinet and front bench.

The Tenants' Union congratulates our new Minister for Innovation and Better Regulation (covering Fair Trading NSW as part of the portfolio), the Hon. Matt Kean MP.

Member for Hornsby and
Minister for Innovation and Better Regulation,
the Hon. Matt Kean MP

Kean was elected to the Legislative Assembly in 2011, as the Member for Hornsby. He served as a Parliamentary Secretary for Community Services in 2014-15, and more recently for Treasury in 2015-17, but this marks his first Ministerial position. According to the Register of Disclosures by Members of the Legislative Assembly, Kean is a tenant, and his appointment comes as the NSW Government prepares to introduce legislation to amend the Residential Tenancies Act 2010 following the statutory review of the Act. We understand drafting is well underway so we don't expect this Ministerial reshuffle to have too great an impact on the reform process - especially since Kean's predecessor, the Hon Victor Dominello MP, will take on the more senior Finance, Services and Property portfolio under which Innovation and Better Regulation sits.

(On that note, we offer our congratulations and thanks to Minister Dominello as well. Dominello held the Innovation and Better Regulation portfolio since April 2015, making him one of the longest serving Ministers for Fair Trading in recent history. During his time in the portfolio he introduced Rental Bonds Online, which allows tenants to deposit their money with the Rental Bond Board directly before entering into a residential tenancy agreement. He presided over the review of the state's renting laws, and while this will not deliver stability, liveability and affordability for tenants Dominello did commit his Government to improving the law for survivors of domestic violence who need to end a tenancy. He'll no longer take carriage of this reform, and it remains to be seen just how it will be implemented, but we acknowledge his consultative approach to its development, and his dedication to seeing it through. Finally, Dominello also oversaw the drafting and implementation of the state's new strata laws. While these laws are not without controversy, they've taken a useful step towards better representation for tenants in the operation and management of strata schemes in New South Wales.)

The Tenants' Union also welcomes the return of Pru Goward to the Family and Community Services portfolio. Goward resumes this portfolio along with Social Housing, while retaining her appointment as Minister for the Prevention of Domestic Violence and Sexual Assault.

Member for Goulburn and
Minister for Family and Community Services
Minister for Social Housing, and
Minister for the Prevention of Domestic Violence and Sexual Assault,
the Hon Pru Goward MP

When Goward previously held the Family and Community Services portfolio there was no Minster for Housing, with responsibility for Social Housing split between Family and Community Services and Finance and Services. This didn't work so well, and a discrete Social Housing portfolio has since been created. It sits alongside the Family and Community Services portfolio, reflecting the Government's view that a Social Housing tenancy is a form of welfare dependency.

Since Goward last held the Family and Community Services portfolio, with shared responsibility for Social Housing, the Government has launched its Future Directions for Social Housing strategy. As a ten-year strategy, there is still much to be done in developing and implementing many of its key proposals, and Goward will now take charge of these. Most notably, she will preside over discussions arising from the current IPART Review of Social and Affordable Housing Rent Models. She will also oversee the Government's efforts to grow the social and affordable housing portfolios for the first time in many years.

Finally, the Tenants' Union congratulates Anthony Roberts - himself a former Minister for Fair Trading - on his appointment as Minister for Planning, Minister for Housing, and Special Minister of State.

Member for Lane Cove, and
Minister for Planning,
Minister for Housing and
Special Minister of State,
the Hon. Anthony Roberts MP

The inclusion of a Housing Ministry is not new, but it hasn't been done since Frank Terenzini held the portfolio in Kristina Keneally's administration, circa 2010-11. Back then, a Housing Minister was really just a Social Housing Minister with a shortened title, so what is new is the inclusion of both a Housing portfolio, with links to the Planning portfolio, and a Social Housing portfolio tied to Family and Community Services. No doubt this broadened focus reflects Berejiklian's much publicised ambition "to make sure that every average, hard-working person in this state can aspire to own their own home", and it bodes relatively well for housing policy discussion during Berejiklian's time as Premier. Of course, we mustn't forget that now former Planning Minister for Rob Stokes once took a swipe at negative gearing and capital gains tax discounts for their contributions to housing unaffordability. His departure from these policy discussions doesn't bode quite so well...

Welcome to 2017 - the year of the renter

Welcome back to the Brown Couch for 2017. It's been a swell (at times sweltering) break - now it's time to dust off the old keyboard and get ready for another big year.

Domain's Jennifer Duke has dubbed it "the year of the renter" on account of the rising population of Australians who are long-term tenants, tipped to outnumber home-owners in parts of the country during 2017. Duke opines that "... if the growing group of tenants are to be housed with security and decency, fixing the rules that surround the rental market is something that has to be done now." We couldn't agree more.

While we're firmly in the "every year is the year of the renter" camp, we must admit there's a growing interest in tenants' rights across the country. The perennial housing affordability conversation is slowly starting to explore the costs and conditions of long-term living in the private rental market. Of course, there's still a long way to go, but there's a noticeable change in the air. For one thing, our own engagement with the mainstream media has never been higher, and we're getting a far more sympathetic ear than we might have expected even just a year or two ago... For example, check out our spot on ABC News 24's Weekend Breakfast program from late last year:

There's a long way to go, but there will be a couple of big opportunities to push the discussion further as we move through this current year of the renter. For one, we'll have a new Premier who has listed housing affordability as a key priority area, and while we don't yet know what this means for the Social Housing and Fair Trading Ministerial portfolios, we'll have to take it as a positive sign as the Government considers the final stages of the statutory review of renting laws, and pursues its ambition for Social Housing reform. Fingers and toes crossed, just for good measure.

We can expect some of the 2016 Census data to start coming through towards the middle of Autumn, which will tell us just how much our renter population has grown over the last five years. And we're expecting a report from a national survey of tenants that was conducted late last year by Choice, National Shelter and the National Association of Tenancy Organisations, so watch this space. In the meantime the next issue of Rent Tracker is just around the corner, and we'll have more to say about the impact of Airbnb on the Sydney rental market in the coming weeks.

2017 is set to be another big year, full of opportunities to join the push for a better deal for tenants. Keep an eye out for us, and jump in where you can.