Measures to start addressing affordable rental housing

| November 6, 2008

The NRAS is a good start, now Labor needs to complement it with a stronger approach to public and community housing.

It is now widely accepted that Australia has a huge housing affordability problem. Indeed, rarely a day goes by in the media without discussion of house prices, interest rates, first home buyers, and the lack of affordability.

Housing is considered affordable when households can meet basic needs such as food, clothing, transport, medical care and education after paying their housing costs (usually measured as paying less than 30% of income for those earning up to 120% of median income).

It’s not as common to hear about affordability as it relates to renters. Yet they’re doing it toughest. In fact, studies show there to be more than 600,000 families and singles in the private rental market alone in housing stress, representing 65% of low income private renters (see Yates and others).

Of course, house prices, interest rates, and supply (or lack of it) have an impact on rents, but too often measures directed specifically at renters don’t seem to get the attention they deserve.  One notable exception is the federal government’s National Rental Affordability Scheme. The scheme involves the Federal government providing an annual incentive of $6000 to be matched with $2000 by the states to newly built properties to be rented at less than 80% of market value for 10 years. While there are still some details to iron out, significantly through a Senate Inquiry to look at the legislation, the scheme is a positive step forward. By focusing on newly built properties it increases below market supply of rental properties.

Community housing providers have great interest in being involved in this initiative and it makes sense for them to be. As non-profit organisations with expertise in managing below-market accommodation, they are ideally placed to manage these homes. They are also well placed to start getting involved as partners to invest in, and build such properties. For them to take on a larger role in these areas, they will require greater balance sheets.

A change to public policy is required for this. That is, currently the community housing sector manages around 15000 properties in NSW. The vast majority of these houses are owned by NSW Land and Housing Corporation (effectively Housing NSW). This is an enormous asset base, and one that should be used to leverage resources to build affordable housing. To do this, the title of these properties should be transferred to community housing providers who could make use of the assets. Such arrangements have allowed UK housing associations to attract billions of dollars of investment into the affordable housing system by enabling them to borrow against the assets. Of course, the sector needs to be regulated to ensure that this investment of public assets is protected, but legislation to do this is already in place in NSW.

The National Rental Affordability Scheme and community housing ownership of the properties they manage will only go some of the way towards starting to address affordability for renters. Over the past 10 or so years, federal funding for public and community housing has declined by 30% in real terms, with the number of dwellings falling by 30,000 properties. With 180,000 people on the waiting lists (that is, people deemed eligible under extremely stringent criteria), this clearly needs to be addressed.

In opposition, the federal Labor Party was rightly critical of this withdrawal of funding by the then Liberal government. Labor now needs to put this right by substantially increasing investment in public and community housing to at least put those 30,000 properties back in the system. This would complement their National Rental Affordability Scheme and other initiatives already announced, and provide much needed relief to those on waiting lists. In these economic times, it is also the ideal public works type expenditure – good for the development and building industry and jobs, while non inflationary to house prices (as the properties stay in the public and community housing system rather than being sold on the market). Certainly, this type of investment is more sensible than increasing the first home buyers grant.

There is no silver bullet for addressing housing affordability for renters. Market forces and policy responses are complex. A key part of the response must be investing in public and community housing commensurate with the level of need. This is far from the case now. The National Rental Affordability Scheme isn’t a bad start, putting back the 30,000 lost public and community housing properties from the last 10 years must now become a priority.

Andrew Meehan is Senior Policy Officer at the NSW Federation of Housing Associations, peak resourcing body for community housing associations.

0 Comments

  1. homes4aussies

    November 8, 2008 at 2:50 am

    Well said Andrew
    I agree completely. The only thing I would add is that the NRAS should also be expedited and expanded as a part of any stimulus package. The first call for tender offers received applications to build around 10,500 dwellings but funds were only available for 3,500. It is a crying shame that low income Australians are being squeezed so tight by skyrocketing rents – with some becoming homeless as a consequence – when there are business and organisatons willing and able to provide more affordable rental housing with a bit more Government support! Such measures are by far and away better economic and social policies than gimmicks such as the first home owner boost.

  2. GeoffB

    November 9, 2008 at 10:10 pm

    Affordable rental accommodation

    I left a comment on Tanya Plibersek's blog that when I became an Aged Carer I lost $33.03 a fortnight, because I was now counted as a Sharer. As a result the $1400 both the person I care for and I will receive in December will go on moving costs, as we can no longer afford to live in the Blue Mountains, and will need to find somewhere even more remote from the services she requires.

    I asked Tanya Plibersek for a home loan; an amount of $85,000, as well as one for the person I Care for, and we would quite happily find a rural setting, and either buy an existing house, or build one, but not together, as the rules will then say we are in a relationship, which we are not. I asked Tanya to respond to this idea, especially as the money would go directly to someone who needed it for housing, not to someone who may already have a $40 million house on Sydney harbour to maintain, and repayments directly from our pensions. To date she has not responded, which I put down as a problem with those who have grand plans, but lack the ability to see the small picture.

    I see the need for more public and community housing, however I do not see a need for such housing to always be situated in the city. What percentage of new public and community housing is it envisaged will be built in more rural areas, and what steps will be taken to ensure the safety of the more vulnerable residents from other 'not so vulnerable' residents. Will this housing be spread throughout the community, or will it be the usual estate type arrangement?

    In our case we are not currently on the housing list, in fact we are probably on a banned list, after not being able to take up an offer of public housing because we could not afford to move in. We did not have the means to give notice and move from one house to another. The advice offered by the Department of Housing was to default on the bond, in short to give up 20+ years of good references. When we refused we were removed from the housing list. Perhaps I should have abused the housing official, as during our only visit to the housing office I observed that those who stood at the counter and abused the person serving them, seemed to walk out with whatever it was they wanted.

    Which leads to the question, what happens to the 'meek' those who do not stand at the counter and shout abuse, do they get to stay in the general community, and get to move further and further from necessary services simply because they will look after whatever housing they are given, but are at the mercy of those who do not care.

    I wonder if I will get a response from you?

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