Our growing housing crisis: what to do?

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Gary Harkin.

family-meal
Family. Lisa5588. flickr cc.

‘Gen Rent’, the unfortunate demographic

The data on Australian residential property is scary. In the overheated Sydney market, the aspiring homeowner will receive no change from $300,000, after a 20 per cent deposit, legal costs, and stamp duty. Even given oft-cited parental support, it is members of a rare group indeed which can rifle that level of savings from the piggy bank to make it into their own home.

More and more Australians than ever are being priced out of the homeowner stakes and shunted to rent status. ‘Gen Rent’ used to be about young folk only, and was transitory – a temporary bridge to home ownership. The Gen Rent demographic has rapidly expanded to include many people aged 50-plus, many permanent renters, and of course the young.

Beyond the obvious rift of inequality in our community, this dire situation has massive implications for governments into the future. Think about our current retirement income system. It clearly implies people own a home outright before retirement. The 2016 HILDA report (funded by the Australian Government) shows the prevalence of home ownership dropping in recent years. Broadly, historically stable at 70 percent, it now sits at a 50-year low of 64.9 percent.

Effective government housing policy?

Where are the meaningful housing policies from our governments, for those seeking to purchase a roof over their heads? It seems there is not enough strategic consideration or support coming from the federal government. While investors can leverage an investment property financially via the current generous negative gearing and capital gains tax provisions, the single homeowner aspirant seems to garner less policy support than this.

The national CEO of Vinnies, Dr John Falzon, says “If it [the government] continues to walk away from the problem, we can only arrive at the scandalous conclusion that homelessness is not just caused by government policy, but rather that homelessness is government policy”.

The Residential Tenancies Act Review Victoria

sorry-rented
rented. Our Home At. flickr cc.

With the recent rapid growth and structural change of the rental sector, it is gratifying to see initiatives towards policy improvement. Gratifying because there is significant cause in recent years for concern about the status of tenants. In Victoria, The Residential Tenancies Act 1997 is the main legislative source of consumer protection for people living in rental housing. The state government is midway (2015-2018) through a major review of consumer rights regarding renters and the obligations of landlords, with an expectation that new legislation will be in place by 2018.

The underlying premise is that citizens have a right to housing which is safe, affordable, and secure. Sector changes include increased rental periods (over ten years, and even permanent rental arrangements), a wide rental demographic including older Australians, and an increase in the number of landlords stimulated by the investment attraction of financial leverage provisions.

The Victorian government is well aware of the stark reality of rental stress for many current tenants, especially those on low incomes. After paying sometimes exorbitant and unfair rent, many of these people often have little left to spend on essentials like food, utilities, fuel, and education.

Vinnies in Victoria have lodged a submission to the review. With over 300 conferences (branches) in Victoria, they are well aware of the hard facts. They face them daily as they engage in their primary work of visiting distressed people in their own homes.

Key recommendations are about extending the act to regulate the market, not just the relationship between landlord and tenant. There is also a call to codify minimum conditions and amenity standards, and to include registration provision for rooming houses and the recent phenomenon of share houses. Among the recommendations are echoes of the rental culture in some European countries, facilitating long-term residential leases enabling a tenant to undertake a range of property improvements.

Rental culture elsewhere

What can we learn beyond Australia? I have a relative in Dublin. Brigid has rented her adult life in Irish public housing, successfully raising her family of five, nowadays including seven grandchildren. She respects the place as of it were her own. When she retires from work in the next eighteen months, her rent will be adjusted downwards in accordance with her reduced income. Sure, she carries a legacy deal from the 1980s unavailable in the Ireland of 2016, but the point is valid. Here is an example of government intervention to secure for its citizens the basic human right of housing.

New York City is hardly an outpost of socialism, yet here too we witness a continuing heritage of protection and regard for tenants mandated by the City’s legislature. Rent-stabilised apartments are very common in NYC (about 50 percent of all apartments). Landlords could only increase rent in 2014-2015 by one percent for a one-year lease, with other stringent conditions also in place.

In Europe, there is a strong heritage of long-term social housing. Public or social housing as a percentage of the overall housing stock varies in Europe from country to country, ranging from a high of 35 percent to single-digit figures.

Going forward

What is to be done? Certainly, across the Australian political canvas, there seems to be a sort of unwitting synergy across related issues from the lack of affordable housing and the rental affordability crisis to homelessness. Such momentum will compel political action in 2017 towards redressing this inequality.

Gary Harkin is a member of Social Policy Connections, and an occasional contributor to SPC News.

 

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