Monday, July 31, 2017

Tenants’ Union welcomes Labor’s flagged shift on renters’ rights

The Tenants' Union of NSW has released the following statement about reported changes to the NSW Labor Party's Sustainable Communities platform



NSW Labor has flagged a new policy agenda that could change the game for renters, says Tenants’ Union NSW.

Over the weekend, the NSW Labor party’s conference recognised a growing number of families rent their homes in New South Wales, and pledged to modernise rental laws to provide certainty, balance and fairness in the rental market. Early reports suggest this could include placing limits on rent increases, ending unfair evictions, and strengthening rights for renters with pets.

“These would be significant reforms, they’d be welcomed by renters right across New South Wales,” said Ned Cutcher, Senior Policy Officer with the state’s peak body for renters. “The Tenants’ Union of NSW has been calling for this kind of reform for years and it is extremely encouraging to see the discussion taking prominence.”

Mr Cutcher was quick to point out that the NSW Labor party changing its platform at conference time, while in opposition, does not necessarily lead to reform.

“The timing is good because the Government has still not brought in the changes it promised over a year ago, following a statutory review of our renting laws,” Mr Cutcher said. “We’re obviously following that pretty closely, and now we’ll be watching to see how Labor responds when those changes are brought through.”

“We know the NSW Greens have a strong renters’ rights platform so it makes for some healthy debate in Parliament when the time comes.”

Mr Cutcher said a limit on the frequency of rent increases would bring New South Wales into line with the rest of the country, but ending unfair evictions and strengthening rights for renters with pets would be genuine innovations in the Australian context.

“All over the country tenants can be evicted without a good reason, and all over the country families are prevented from making decisions about keeping pets because their landlords say no. For the growing number of renters across Australia these rules seem pretty harsh,” Mr Cutcher said.

“We’d love to see this change in New South Wales and we’ll happily work with NSW Labor to help develop these policies.”

For that matter, we’d love to work with Minister Matt Kean and the NSW Government on this all the more.

Thursday, July 27, 2017

Hit the pause button

Front page of The Sydney Morning Herald, 26 July 2017
A fortnight ago ABC News reported that Australia looks almost certain to win a seat on the United Nations Human Rights Council. However, do we deserve a seat?

In recent years Australia's human rights record has become very blemished ... not just in the area of treatment of asylum seekers and refugees. Back in August 2014 Ms Kim Boettcher, solicitor for Seniors Rights Service addressed the United Nations' Open-Ended Working Group on Ageing (5th session), and drew attention to the plight of tenants of social housing at Millers Point and The Rocks. She told the Working Group how one of the elderly residents said to relocate her away from her community is ‘one step short of putting you up against a wall and shooting you because it’s saying you are of no value to society. You are worthless.’ You may read her full address here. Indeed, last year The Millers Point Community Working Party and Tenants Union of NSW made submissions to the Australian Law Reform Commission on 'Protecting the Rights of Older Australians from Abuse', arguing that the actions of the NSW Government in Millers Point constitute systemic elder abuse.

The NSW Government's sale of public housing in Millers Point continues. As at 11 July 2017, there have been 151 sales, some of multiple properties. Altogether the sale of 200 properties at Millers Point has raised $422.77 million (with a further $22.09 million being generated in Stamp Duty!). You may check the NSW Government's dedicated website for their figures at the end of June 2017 here.

But at what cost? At the time of the Minister's announcement to sell all social housing stock in Millers Point, there were 579 residents in 399 tenancies in the portfolio.

At 19 July 2017, 16 residents in 10 tenancies remain. So, altogether 563 tenant and household members in 389 tenancies have either vacated or are committed to moving. There are 2 tenants remaining in the Sirius Building. We have previous reported extensively on the impact of forced relocation on the residents.

So when is enough, enough? This once proud and historic community indeed, the only community to have bestowed upon it the status of 'A Living Heritage', has been decimated by the cruel edict in March 2014 to remove all social housing tenants from their community and sell off their homes, resulting in great pain and suffering! The last few surviving elderly, vulnerable tenants ask the NSW Premier, Gladys Berejiklian, to end this abuse of their basic human rights and allow the few to stay, and 'age-in-place'.

A new development gives our Premier the opportunity to redress this great injustice. On Tuesday of this week, the NSW Land and Environment Court made a ruling that the NSW Government's decision not to put the iconic Sirius Building on the heritage list was invalid. This gained wide media coverage on the ABC News , The Sydney Morning Herald and The Guardian . Shaun Carter, Save Our Sirius chairperson, said it was a good day for the building, the local community and the whole of NSW. He urged the Premier to hit pause on the demolition and and sale of Sirius. He said let's talk about the heritage listing of Sirius and how the building could be used for social housing again. He added: 'We are desperately short of social and affordable housing, let's now use it for what it was intended.'
Last two remaining Sirius residents Myra Demetriou and Cherie Johnson
and Save our Sirius chairperson Shaun Carter. (ABC News)
So the question becomes: Will the NSW Government show compassion and allow Myra and Cherie (and the other older residents of Millers Point) to age-in-place in their homes? Yes, stop the evictions, with more residents facing hearings at the NSW Civil and Administrative Tribunal. Yes, seize the opportunity which the Land and Environment Court has provided and let's talk again about the importance of retaining social housing in Millers Point. You have received oodles of cash from the sales to date and you also announced a billion dollar windfall in revenue from stamp duty in this year's State Budget. If you still insist on selling the homes which are not in the Sirius building, then defer this and do so when these few remaining residents don't require them. 

Over to you, Premier! Show the nations of the world that our great state, New South Wales, has a government that leads the way by being fair and compassionate when it comes to its citizens, no matter of age, race or creed! Let's make a seat on the United Nations Human Rights Council more than mere words.

The authors of this post are Barney Gardner, member of the Millers Point Community Working Party, and Robert Mowbray, Project Officer - Older Tenants with the Tenants' Union of NSW.


Monday, July 24, 2017

Renting with pets: a canary in the coal mine

To keep, or not to keep a pet? Ever since we raised the issue in our contribution to the review of NSW renting laws, debate has raged about whether this should be a decision for investors or homemakers to make. Unless you've got a particular love for, or an aversion to animals yourself, the side you come down on will perhaps be influenced by whether you spend your time talking to landlords or tenants.

Our views on this issue have been clearly and firmly put, and are a matter of public record. Today we're going to step back a little to explore what this discussion tells us about the state of our housing market. Our conclusion is that the "renting with pets" debate is a study in all that is wrong with our housing system, and a clear indicator of why it needs to change.


There are two stories to tell here. The first is how the private rental market has become the long-term landing place for a growing number of Australians looking to establish a new home, with limited prospects for debt-free home-ownership in the lifetimes of many. The second is how the residential property market remains dominated by small-time investors who are not motivated by the needs of householders, nor any broad sense of social responsibility, but by capital gains.

In New South Wales, there were 83,870 more rented dwellings at the 2016 Census than there were in 2011. Compare this to owner-occupied dwellings, which grew by 35,362 over the same period - with 19,649 more owned outright, and 15,713 more owned with a mortgage. The number of unoccupied dwellings grew by 19,403, which means any new dwelling built in the last five years, or established dwelling that changed hands during that time, is more likely to have become a rented home than anything else.

Of the 2.15 million renters in New South Wales at the Census, almost 90% were in the private rental market relying on so-called "mum and dad" investors for a place to call home. That's up from about 83% in 2011. The lion's share of renters are aged between 20 and 40, and a quarter are aged between 40 and 65. 41% of renter households are families with children, making them the single largest group of renters, while 20% are couples making a home together. 27% of renters are single and living alone, and 9% are sharing with others. Many would like to bring a pet into their homes.

Analysis from the 2011 Census confirmed that a growing number of households are renting for ten years or longer - not necessarily in the same home - and we expect to see this pattern continue as academics and researchers crunch the 2016 data. The proportion of dwellings that are owner-occupied is in slow decline, but those that are rented is rising more sharply, showing that fewer renters are now exiting the market to take on home ownership.


Critically, the number of people taking on debt to achieve home ownership has tapered off quite considerably. The growth of homes owned with a mortgage has slowed in each Census period since 2001. Compared to rented dwellings, for which that sharp rise has been recorded, this growth has been particularly slow in the last five years.


The number of homes owned outright has recorded similarly slow growth, which provides an ominous sign for the growing ranks of long-term renter households - even if you do manage to buy a home some day, chances are you'll never pay it off. In a nation that has defined itself as egalitarian and propertied, that's a source of frustration in its own right. Add the lack of agency Australia's renter households have over basic questions such as whether to plant a tree, paint a wall, or keep a pet, and it's easy to see why the "renting with pets" issue continues to flare up. For those who would write these frustrations off as mere indulgence, bear in mind that for the large numbers of tenants who are grown-up, pursuing long-term relationships and raising families in their rented homes they are simply the issues of the day. In another ten or fifteen years from now we may well be wondering why our aged-care and retirement systems - designed with a home-owning population in mind - have simply collapsed in a heap around us, but for now the "renting with pets" debate is a clear sign that all is not well and those most affected are not going to forget it anytime soon.

On the other side of this equation are our landlords, who by definition do not find themselves in the position of having "missed out" on property ownership. It's a little harder to get a handle on them, but we can use statistics from the Australian Tax Office to paint ourselves a picture. The last data we have available is from the 2014/15 financial year, and it tells us that the vast majority of Australia's tax-paying landlords own only a single rental property or two.


They're mostly one-off or small-time investors, "mums and dads" who are more interested in property for its capacity to generate wealth than providing homes for families. They'll hang onto a property for maybe five years or so then sell it, banking the gains or putting them towards their next investment. For the most part, Australian landlords are not interested in building large portfolios, and they don't want to concern themselves with the day-to-day workings of property investment. They tend not to engage with things like renting laws, tribunal procedures, or tenants' rights unless they have to. Many are happy to ignore these aspects of investment altogether, handing them all over to real estate agents who know only too well they won't have anyone looking over their shoulder as long as the rent rolls in and the outgoings stay under control.

Because they're not building economies of scale, landlords tend to stick to a simple and rigid formula. The tax data also shows that while they're holding property, almost two-thirds of Australia's landlords are operating at a loss.

They do this because they can count their investment losses against non-investment income, such as salaries and wages, for income tax purposes. By running at a loss, landlords can reduce their day-to-day tax liabilities, masking the expense of holding property. They also expect property to go up in value, providing tax-discounted windfalls when they sell. In a sense they're gambling - losing a little money today in the hope of making it all back and more in the future, and our tax system encourages this through negative gearing and capital gains tax discounts. But in the meantime the majority of Australia's landlords are still running at a loss, which makes them highly sensitive to unanticipated expenses.

For many, this sensitivity is built into their investment strategy, such that they will be overly concerned with the type of household they will rent their property to - and just as importantly, who they wont. Tenants with pets are seen as a risk, even though they are clearly liable under renting laws for any damage their pets might cause. Our renting laws are less clear on whether a landlord can over-rule a tenant's decision to keep a pet, but many take this as a given. It is common practice for tenancy agreements to include a "no pets" clause at the insistence of the landlord or their agent.

The "pets and renting" debate helps us identify key changes we need to make to our inequitable housing system in order that it may provide greater equality of experience. At the federal level we need to rethink the way property is taxed, and find ways to foster a view of investment that delivers homes for families rather than just bricks and mortar. At the state level we need to revisit renting laws, and give tenants greater agency over the decisions they may make, and the responsibilities they take on, as householders.

Friday, July 21, 2017

Australia's 10 million spare bedrooms

This morning The Guardian published an article using recent data released from the Australian Institute of Health and Welfare. It was a good piece, but it had a somewhat misleading headline. The Brown Couch's founder had this to say:


If the vacancy rate in public housing is only 3% what was the headline trying to say? They were measuring the use of bedrooms in public housing and noting that one in six bedrooms is "under-utilised."

As it happens, this year the Census data introduced a specific measure of "Housing Suitability" which measures whether a household has spare bedrooms, or needs extra. Let's take a look at the state of bedroom use.

Not the typical use of a bed
The data shows about 75% of our spare bedrooms are in owner occupied housing. It isn't just that a majority of Australian homes are owner-occupied - 87% of homes owned outright have at least one spare bedroom, and almost 60% have two or more. Mortgaged homes are slightly better, as only 77% of these have a spare bedroom. 41% have two spare rooms or more.

Australia wide, the story is the same. There are more than 10 million spare bedrooms in Australia. Around two thirds of our mortgaged homes have spare rooms, as do 80% of homes that are owned outright.

Social housing looks very different. Not only do less than a third of tenanted social housing properties have a spare room, there are more in this tenure type that are mildly overcrowded. 2 in every 5 social housing dwellings are in need of at least one extra bedroom.


Renters both in the private rental market and social housing are much better at utilising their bedrooms than owner-occupiers. There are different reasons for this - where private renters are pushed to efficiency by price signals and competition (ie you generally only rent as many rooms as you need, unless you're either bonkers or rich), social housing renters are pushed by the allocation strategies of their landlords. Social housing tenants who do have a "spare" bedroom do so because they need it, and are entitled to it under the policies of their provider. For example, households may be given an additional room for a live-in carer, for family members who reside with them part-time, or for cultural reasons.

Of course, the other major reason we hear of social housing tenants ending up with a spare bedroom is that their allocation is not really suited to their needs, or their needs have changed since their allocation  made. You can't really blame a household for so-called "under utilising" if they're occupying the only property that is available to them - our failure to build enough social housing properties throughout the ages means many people have nowhere to downsize to as their needs change.

Despite this, social housing tenants are clearly putting their part of the nation's housing stock to the most efficient use, relative to the rest of the population.

Well done to you all!

Thursday, July 13, 2017

Economically viable supply

Speaking at a Sydney Alliance assembly on housing affordability last night, the NSW Minister for Planning and Housing, the Hon. Anthony Roberts MP, dismissed targets for affordable housing in new residential developments as a simplistic and unrealistic housing solution. "In reality all these targets do is reduce the supply of affordable rental housing because it makes many developments economically unviable." Instead, he talked up the Government's intention to solve Sydney's housing affordability crisis by rezoning large swathes of the city and fast-tracking new supply.

Inclusionary zoning is like a box of chocolates...?
This is a curious position for a Housing Minister in the Berejiklian "housing-affordability-matters" Government to take, given the overwhelming evidence suggests a single-minded focus on new supply is a simplistic and unrealistic housing solution.

Since the beginning of 2017 - dubbed "the year of the renter" by Domain as there will soon be more renters than homeowners in Sydney - we've discussed the issue of housing affordability and supply many times on the Brown Couch.

In late January we released a Rent Tracker report, which highlighted how rents have gone up even in suburbs where large numbers of properties are being added to the rental market. In February we discussed how Sydney's new housing development is producing the wrong kind of supply, driven by the demands of investors rather than householders and home makers. In April we noted the findings of Anglicare's seventh Rental Affordability Snapshot, showing that rental affordability is as bad as it has ever been and still gets worse every year.

In May the latest Rental Affordability Index was released, confirming what Rent Tracker and the Rental Affordability Snapshot had already suggested about deteriorating rental affordability despite increasing residential development activity. We dug in a little to look at exactly what's going on, exploring how the wrong kind of supply has changed the shape of the rental market. It produces higher rents rather than improving rental affordability.

In June we joined the dots on housing affordability, looking at how the NSW Government's housing affordability package is likely to impact upon the market for supply. We suggested it might be combined with both the NSW Opposition's housing affordability package, which includes targets for affordable housing, and some of the Australian Government's Federal Budget measures, which includes a method for funding new affordable housing, to help keep residential property developers afloat while ensuring at least some new supply is delivered into the affordable rental housing sector.

Also in June we discussed the release of data from the 2016 Census, which shows that the renting population is still growing faster than the population generally, and the stress of high housing costs affects renters far more than it does homeowners.

Something we haven't yet discussed is the Australian Housing and Urban Research Institute's recent report into "Housing supply responsiveness in Australia". This report found that most of the growth in Australia's housing supply has been taking place in the mid-to-high price segments, rather than low price segments, and suggests "there seems to be structural impediments to the trickle-down of new housing supply". It also says that "targeted government intervention might be needed in order to ensure an adequate supply of affordable housing." The report hasn't received a lot of attention other than a quick report in the Guardian when it was released earlier this year. It could do with some more, so we'll take a closer look at it when we can.

In the meantime, let's get back to the Minister's words from last night. "In reality all these targets do is reduce the supply of affordable rental housing because it makes many developments economically unviable."

On the other hand, current developments are causing rental affordability to deteriorate again, and again, and again. So at what point do we stop and wonder - if we still can't afford to live in them, what is the value of an economically viable development after all?

The answer to that question might make more sense to someone who values housing as nothing more than a financial asset, rather than a place to call home.

Tuesday, July 11, 2017

Caveat Rentor 2 - Tenancy Economics

Today's post is a guest entry from our Principal Solicitor, Grant Arbuthnot. Grant has more than 20 years experience advising tenants, their advocates, and has worked for the Tribunal and community legal centres as well as the Tenants' Union. Here are his thoughts on tenants as consumers.


Economists and accountants both agree this joke stinks. 
The assumption a healthy consumer market has suppliers competing on price, quality and service for the business of consumers allows another examination of our rental market.

At present, there is a shortage of supply of affordable premises for rent. Competition between prospective tenants for available premises is understandable.

Consumers competing for the business of suppliers is not healthy. Consumer competition means that pricing favours the suppliers, and that quality and service are not significant issues.

Tenants might expect that once a tenancy has been secured the competition will cease. However, this is not the case. Sitting tenants compete with prospective tenants to retain their tenancy.

In a fixed term tenancy, tenants are aware that they can be required to leave at the end of the fixed term. Fixed terms are rarely greater than a year. In a periodic tenancy the vulnerability is present and constant.

This is because the law allows landlords to dispose of tenants without having to give a reason.

Tenants who demand contract performance by the landlord risk being replaced from the surplus of prospective tenants.

This is usually about repairs. It is the most popular breach of contract by landlords. The likelihood of receiving a termination notice (without grounds) is increased by demanding repairs.

It is not surprising that many tenants put up with expensive and substandard premises to avoid the stress, cost and inconvenience of having to move house.

Amending the Residential Tenancies Act cannot undo the problems of supply and demand. But abolishing no grounds termination can relieve sitting tenants of the constant competition with prospective tenants. They might even get some repairs done.

To find out more about how tenants are affected by unfair evictions, visit Make Renting Fair.

Wednesday, July 5, 2017

NAIDOC week 2017 - Our languages matter

This article written by the TU's Legal Officer (Aboriginal Support), Jessica Hall. Jessica works closely with the Aboriginal Tenants Advice and Advocacy Services across NSW.

It’s NAIDOC week, and once again the TU is reflecting on and recognising Aboriginal and Torres Strait Island culture, talent and resilience, and the contributions that Indigenous Australians make to our country and our society.

This year’s theme is Our Languages Matter. The 2017 theme aims to “celebrate the essential role that Indigenous languages play in both cultural identity, linking people to their land and water, and in the transmission of Aboriginal and Torres Strait Islander history, spirituality and rites, through story and song”.


From the earliest days of European contact there was often an assumption that Indigenous Australian languages were of less value than English and this view soon hardened into government policy, reinforced through education and employment practices. Aboriginal and Torres Strait Islander people were discouraged from speaking their languages, so that many children had little or no knowledge of their traditional languages.

This year’s NAIDOC week theme comes at a time of important discussion and proposed NSW legislation to review treatment of, and to recognise and protect, Indigenous Australian languages, with NSW to become the first state to pass a law protecting Indigenous languages. The recently released draft Aboriginal Languages Bill 2017 seeks to implement measures to protect and revive NSW Aboriginal languages by a focused and sustained effort, including a Strategic Plan and a new Centre for Aboriginal Languages of NSW.

Aboriginal languages also became available as a HSC subject for the first time in 2016. Prior to this, students were only able to take Aboriginal language courses from kindergarten to year 10. The moves towards education reform will aid Aboriginal young people to become the future custodians and caretakers of their languages. This renewed focus to support and maintain Aboriginal Languages is a step in the right direction.

Dhubany by Millmullian, 2015
Indigenous languages and oral storytelling are integral for linking Aboriginal people to their lands, and maintaining cultural identity through the passing of stories through generations. Historically, colonial relocation was a significant contribution to the disruption of Indigenous language and storytelling. According to the Australian Institute of Aboriginal and Torres Strait Islander Studies, over 250 Indigenous Australian language groups covered the continent at the time of European settlement in 1788. Today only around 120 of those languages are still spoken.

This historic relocation and the effect it had on Indigenous languages is being echoed today by a continued forced relocation of Aboriginal people - by the use of no grounds notices, which force Aboriginal tenants from their homes without reasonable cause. The Aboriginal Tenants Advice and Advocacy Services across NSW are now consistently quoting no-grounds evictions as one of the major issues facing Aboriginal tenants, both in social housing and private tenancies. There should be legislation in place that allows the Tribunal to refuse such notice by taking into account an Aboriginal tenant’s cultural connection to country. The movement from dispossession and displacement to eviction without grounds draws worrying contrasts.

With reflection on the clear lessons that Indigenous languages must be recognised in Australia, we hope that the government will also move towards bettering Aboriginal and Torres Strait Islander rights in all areas, including Aboriginal housing. Here at the TU, we will celebrate NAIDOC week at a number of events, including a stall in association with CLCNSW at WEAVE’s annual NAIDOC Woolloomooloo festival on Saturday 8 July.

Happy NAIDOC week!

Monday, July 3, 2017

How will your tenancy end?

There are over two-dozen ways your legal interest in property - aka your tenancy - could end if you're renting in New South Wales; even more if you're in social housing.


In most cases, your tenancy doesn't end without you relinquishing the property to the landlord. In all cases, a trigger of some kind is required. A tenancy doesn't end simply because the fixed-term period concludes - after the fixed period your tenancy continues as a "periodic agreement" under the same conditions as before.

Some triggers for termination are less common than others. For instance, your tenancy might end if your landlord's interests become vested in you - perhaps if you were to marry, or form some other legal union under which all your property interests merge. Or it might end if a person with superior title, such as a mortgagee, becomes entitled to exclusive possession of your home. Similarly, your tenancy might end if a person succeeding title, such as the beneficiary of a reversion of your landlord's property rights, becomes entitled to the property at the exclusion of others.

Your interest in a tenancy ends if a final apprehended violence order that excludes you from the premises is ordered against you.

Your tenancy could end if you die.

Your tenancy could end if your home becomes unlivable through no fault of your own or the landlord's - for example a severe storm taking out part of the property.

Your tenancy could end by returning the property to the landlord by prior agreement. For that matter, it could end by returning the property to the landlord without prior agreement - although that method will generally always cost you something.

You could end your interest in a co-tenancy by giving notice and moving out. You could end your co-tenant's interest by taking them to the Tribunal and getting an order, in exceptional cases.

You could trigger the end of your tenancy by obtaining a Tribunal order for termination on hardship grounds. Your landlord could do the same.

You could end your tenancy because the landlord isn't keeping their part of the bargain. If you're not meeting your own obligations, your landlord could do the same.

Your landlord could apply to the Tribunal to end your tenancy if you've been using the place for an illegal purpose. They could also do that if you've threatened, abused, intimidated or harassed them, or if you've caused serious damage to the place or injury to them or a neighbour. They'd have to prove it, though...

You could end your tenancy if the landlord decides to sell. Your landlord could end your tenancy if they do sell, and the buyer wants to move in - but only if you're in a periodic tenancy.

You could end your tenancy if you need to move into an aged-care facility, or are offered a place with a social housing landlord.

If you're a social housing tenant, your tenancy could end if you become ineligible for social housing, or if your landlord wants to move you to another place and you decline. Strict procedures are to be followed in either of these scenarios.

You could end your tenancy because the rent is increased, if you're in a fixed-term agreement of two years or more (but hardly anybody is...)

You could end your tenancy without a reason, at the end of a fixed term or during a periodic agreement. Your landlord could do the same.

But there is always a reason to end a tenancy.

As a tenant, being able to end a tenancy "without a reason" is appropriate, as it allows you the basic freedom to relocate as your housing needs change. In general, there is no reason to justify those needs to your landlord, or explain to them how your circumstances have changed such that you now wish to move house. Your landlord should have no concern beyond knowing when the property will become available to them again, so that the comparatively simple process of finding a new tenant can be commenced.

On the other hand, landlords being able to end tenancies "without a reason" is bad public policy. It undermines tenants' abilities to establish their homes with any certainty. As we see it, landlords tend to use the "no reason" option in one of three circumstances: where they have a good reason that the law does not accommodate, where they have a good reason but would rather not be put to the trouble of proving it, or where they have a questionable reason that they'd rather not go into.

A fairer renting law would give landlords a couple of additional reasonable grounds, and remove their ability to end tenancies without a good reason. With this in mind the Tenants' Union of NSW, along with more than 40 allies and supporters, are calling on the Government to Make Renting Fair. Visit rentingfair.org.au to find out more.

Tuesday, June 27, 2017

2016 Census confirms housing unaffordability is for renters

Population and housing data from the 2016 Census has been released today, which means it's time to get your nerd on.


There are three critical things it tells us about housing in New South Wales.

First - there's been an increase in the number of households living in our state over the last five years, up from 2,471,305 in 2011 to 2,604,320 in 2016. The number of unoccupied dwellings has also increased, from 265,338 to 284,741. In percentage terms, unoccupied dwellings have risen from 9.7% to 9.9% of all dwellings. The idea of a sustained influx of foreign investors who leave properties empty is looking a little shaky on these numbers, but even so we're going backwards. It's clear we should be doing more to encourage property owners to put those empty dwellings to use, like taxing the unimproved value of land rather than transactions and transfers.

Click for full size!

Next - there's been a significant increase in the number of people renting in New South Wales. There were 826,922 renter households at the 2016 Census, which was 83,870 more than there were in 2011. To put this into context, that's almost double the increase we saw between 2006 and 2011. It also means our renting population has gone up in percentage terms since 2011, too - from 30.1% to 31.8% in 2016. There are more owner-occupiers, too, but as a percentage they've gone backwards. Households who own outright have gone from 33.2% to 32.2% of the population, while households who own with a mortgage have gone from 33.4% to 32.3%. That means home ownership across New South Wales has declined overall since 2011, from 66.6% to 64.5%. It also means that more people are renting for longer.

Finally - it will come as no surprise that making the rent is a growing struggle. The median rent across New South Wales has risen from $300/week in 2011 to $380/week in 2016. More telling is the number of renters whose rent takes up more than 30% of their income - that's gone up from 11.6% to 12.9% of the renter population. On the other hand, the number of home owners with a mortgage who find themselves in similar financial circumstances, paying more than 30% of their income towards their loan, has decreased from 10.5% to 7.4%. In case it wasn't already clear, low interest rates are great for those who already own a home, but they're not so good for anyone hoping to join their ranks in the foreseeable future. As much as they might appreciate grants and stamp duty discounts, what prospective homeowners need most is to be able to save.

So, here's our take-home message for policy makers at all levels: there can be no housing affordability without fixing the rent.

Monday, June 19, 2017

Joining the dots on affordability

This week is Budget Week for New South Wales. There's still time for the Berejiklian Government to announce the forgotten part of their housing affordability package - the one that tackles Sydney's high rents. So far they've covered tweaking taxes and grants in favour of first home buyers over investors, and fast-tracking supply. But they've left off any policy that would directly affect the rent.


As we've noted before, the shift of incentives from investors to first home buyers is designed to have the strongest impact in the market for newly built properties. We've also previously noted that while the majority of investors do not purchase newly built properties, there has been a significant increase in investor driven demand lately for off-the-plan units. It is worth considering how this change will impact demand for new dwellings over the next few years.

Understanding your standard first home buyer is no easy task. We can go back to the ABS Feature Article from 2012, First Home Buyers in Australia, which tells us that just prior to the height of Australia's post-GFC first home buyer boom there were about 430,000 of them over the three years to 2010. Driven by stamp duty concessions and the Rudd Government's First Home Owner Boost that put either $14,000 and $21,000 into their hands depending on whether they bought an established or new home, slightly less than one-fifth of them bought a newly built property during that time. In the three years prior to that, when the grants were not quite so generous, there were around 320,00 of them with less than one-tenth buying off-the-plan.

This tells us that first home buyers do seem to respond to stamp duty concessions and direct grants, but just like their investor counterparts they are much more inclined to buy established properties than newly built ones. Of course, this is based on how they behaved in the bad old days when property prices were merely exorbitant, but the latest Digital Finance Analytics' Property Imperative Survey suggests these numbers remain in the ballpark - they've identified 330,000 first time buyers in their March report, noting that 80% are buying or intending to buy an established dwelling. But we must note here that an increasing proportion of these first timers identified by Digital Finance Analytics are investors, so they are buying another person's home rather than their own.

Now that prices are scandalous, it remains to be seen if anything much will change after the tweaking of stamp duties and grants. It is possible that 100% of Sydney's first time buyers will rush to the new apartment market to see what they can afford, since the houses they'd evidently prefer to buy are still likely to cost too much. But it's just as likely many will continue to rent the homes they want (or can afford) to live in. Either way, the removal of incentives for investors to buy off-the-plan is likely to see them withdraw from the new apartment market, and this wont be completely offset by any increased demand from first home buyers. Construction activity may well start to fall away in response. If that happens, no amount of rezoning to fast-track supply will save us from the plague of rising rents - assuming it ever could.

This brings us back to the forgotten part of the NSW Government's housing affordability package. Given the recent Federal Budget foreshadows a new Affordable Housing and Homelessness Agreement requiring the states to consider affordable housing targets, along with an Affordable Housing Finance and Investment Corporation that will provide a funding mechanism for the supply of new sub-market dwellings, the Berejiklian Government would do well to adopt planning and zoning reforms along similar lines to those announced by the NSW Opposition a couple of weeks ago. In the face of their own affordability package that might otherwise reduce demand for their services, this could be just the tonic our developers will need - to say nothing of our neighbourhoods and communities who are already crying out for some downward pressure on rents.


Tuesday, June 6, 2017

It was like leaving my family: Postscript



(Thanks to Eva Bee and Design Juices)
You will recall our earlier blog called 'It was like leaving my family'.

Professor Alan Morris has written a second article about Millers Point, this time in Urban Policy and Research. It was published online on 2 June 2017 and is called 'The Removal of Millers Point Public Housing Tenants in Inner-Sydney by the New South Wales Government: Narratives of Government and Tenants'.

Professor Morris's article draws on government media material and in-depth interviews with tenants. He examines the removal process and contrasts the government’s narrative with that of the tenants. He argues that, when instrumental rationality is dominant in policy-making, then little or no attention is paid to the human cost, so long as the policy is viewed as effective. He concludes that, with the ascendency of an instrumental rationality , the mass displacement of other public housing tenants to areas not of their choosing is an ever-present possibility.

Read the full article here.

Well, the pressure is very intense on the remaining residents of Millers Point ... with more residents before the NSW Civil and Administrative Tribunal facing imminent eviction.

The Attorney-General, Senator the Hon George Brandis QC, announced an Inquiry for the Australian Law Reform Commission on 'Protecting the Rights of Older Australians from Abuse' on 24 February 2016. It released an Issues Paper in June 2016 and a Discussion Paper in December 2016. It is required to report by May 2017 … watch this space! Here are two submissions on the Discussion Paper. They both argue that the actions of the NSW Government in Millers Point constitute systemic elder abuse. Check them out: The Millers Point Community Working Party (221) and Tenants Union of NSW (238).

It's worth checking out Luke Foley's speech at the NSW Heritage Act 40th Anniversary. Top of the list of his current threats is the fight to save the Sirius Building. He talks of an area where we have working class people being cleansed from the city. That is consistent with Professor Morris's articles and it certainly fits with what tenants and former tenants of Millers Point are saying.

Friday, June 2, 2017

NSW Government's affordability pledge

Hot on the heels of the NSW Opposition's announcement, Premier Berejiklian has brought forward the Government's own plan to improve housing affordability.


Announced yesterday, the policy has three different components: incentives for first home buyers/disincentives for foreign investors; fast-tracking development at higher densities; and building more infrastructure to support communities. Careful observers will note that tenants continue to be the real forgotten people, as rental affordability doesn't even rate a mention.

Tenants who are well-off enough to be pursuing a first home purchase will be pleased, as stamp duty exemptions will apply to all first home purchases up to $650,000 from July this year. That's a big change from the current scheme, which sees exemptions apply only to newly built homes up to $550,000, or land up to $350,000. Further concessions will apply all the way to $800,000, rather than the current $650,000. Additionally, a first home owner grant of $10,000 will apply to the purchase of a newly built dwelling up to $750,000, or an existing dwelling up to $600,000. That's a change from the current scheme that only offers a grant for first timers if they buy a new dwelling.

So, depending on what you're buying, first timers' up-front costs could be reduced by around $30,000. Of course, you'll still have to come up with a substantial deposit before you can borrow the balance, so you'd better keep up with your savings plan just to be on the safe side... and cross your fingers that the market has peaked, so that prices don't go up by another 50 or 60 grand before you can take advantage of those extra incentives. Then again, if you're already that close to buying into this market perhaps a correction, and protracted negative equity, is the last thing you want to contemplate right now... To which we say not to worry, with an army of reanimated first home buyers ready to let loose upon the market - each with a $30,000 spring in their step - it shouldn't take long for prices to start climbing again.

First home buyer incentives are only half the story, as changes to taxes and grants will also impact upon investors. Foreign investors will bear the brunt of it as they'll have to pay an increased surcharge on their stamp duty - doubling from 4% to 8% - as well as an increased surcharge on land taxes - increasing from 0.75% to 2%. But all investors will lose the New Home Grant, which was introduced in 2012 to encourage investors to increase supply by purchasing off-the-plan instead of established dwellings. And investors will no longer be able to defer their stamp duty liabilities when purchasing off-the-plan. The new policy could be an attempt to shift domestic investors back to trading in second hand stock - or perhaps it simply acknowledges that this is really what they're most interested in after all - while trying to keep new supply up by encouraging first timers to jump in off-the-plan. We'll need to keep on eye on the impact of this.

As for new supply, we'll take a look at the second and third aspects of the Government's housing affordability plan - fast-tracking supply and delivering more infrastructure - as soon as we can.