Australia’s rent ‘bomb’ risk means countless renters could face eviction | Housing

Hundreds of thousands of renters could face eviction when moratoriums end around Australia, an advocacy group’s new report says.

In the report, released on Wednesday, Better Renting analysed publicly available data on rent deferrals and negotiations to estimate how many tenants are experiencing rental debt throughout Australia.

The group estimated 5% to 15% of tenants Australia-wide may be in rental debt, which would equate to 324,000 to 973,000 people, it said.

According to the low-end estimate, that would mean 106,000 people in New South Wales, 84,000 in Victoria, 73,000 in Queensland, 30,000 in Western Australia and 19,000 in South Australia were in rental debt. The ACT and Tasmania were estimated to have 5,000 people in rental debt each and the Northern Territory 3,000.

“These are people who could lose their current home if they remain in rental debt and landlords begin issuing termination notices as moratoriums are lifted,” the report said.

The estimates drew on data from Better Renting’s own surveys and other data from the Australian National University, Ahuri, the University of NSW, the Consumer Policy Research Centre and the property management platform MRI. Overall, Better Renting said it analysed survey data from 20,000 renters.

Eviction moratoriums were put in place in all states and territories to varying degrees from the start of the pandemic but the safeguards are now being withdrawn.

Queensland ended protections for residential tenants on 30 September, while moratoriums in other states will end early next year, mostly in March.

The potential rent bomb stems from tenants who were unable to secure rent reductions in negotiations with their landlords. Instead, they received a rent deferral, meaning debt continued to accrue.

A previous survey by the Better Renting group found only 9% of the 1,000 renters surveyed asked for and received a “satisfactory” rent reduction.

Citing research from the Consumer Policy Research Centre, the Better Renting report argued there were other tenants who did not owe their landlord but had “debt in the mailbox”. That meant they had prioritised paying their rent but had instead racked up debts to credit card or utilities companies.

The Consumer Policy Centre found two in five renters have credit card debt or debt to a “buy now pay later” company.

Joel Dignam, the executive director at Better Renting, said governments had a “responsibility to do something about this threat”.

He blamed the situation on “government inaction and property investors refusal to provide rent reductions” and called on governments to “acquire the debt from landlords”.

No state government has so far indicated an intention to go any further than the moratoriums and rental grants that have been offered in some states.

The Better Renting report also noted there was “inadequate government monitoring of rental debt”.

It said governments should collate statistics on the processing of bond submissions and refunds, the nature of cases reaching tribunals, the quantity and type of lease terminations, and the quantum of rental debt.

Guardian Australia reported in July that despite the approach of a financial cliff for renters, even the federal government was unaware of how many renters were accruing a liability, how many were behind in their rent and how many had managed to negotiate a cut.

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Affordable housing essential for key workers

Housing affordability is a major political issue at a national and inter-generational level. This is particularly evident in the UK. Between 2001 and 2004, a range of programs directed specifically at key workers were put in place, which included both ownership and rental options.

The government’s current home ownership policies share some features with the earlier key worker schemes, but are open to anyone, subject to income tests. Key worker-specific programs tend to be localised and ad hoc, and are often more focused on rental than on home ownership.

In many cities, key workers occupy a housing affordability gap.Credit:Chris Hopkins

Aware Super (formerly First State Super) announced early this year that it is investing in 55 new key worker affordable rental units six kilometres from Melbourne’s CBD. The rental properties will be available for healthcare, aged care, disability services, teachers, law enforcement, emergency services, childcare and associated industries personnel to rent at 80 per cent of the market rate for the area. This is following Aware Super’s first pilot investment in key worker affordable rental housing in Epping, NSW, in mid-2019. While such investments are positive and welcomed, more policy focus and investment is required to ensure that home ownership in our cities is possible for key workers.

One lesson from the pandemic is that cities should maintain a deployable, scalable, locally based pandemic workforce. Priority roles include nurses (especially ICU-capable nurses), paramedics, medical technicians and contact tracers. Housing or tax incentives, or cash stipends, could be made available to suitably skilled individuals who maintain pandemic training and can be deployed if required, similar to the army reserve.

While a ‘pandemic reserve’ is not directly aimed at addressing affordability, by giving these workers extra income or other incentives, their buying power is improved. In this way, the community can maintain as-needed access to workers who choose to pursue higher incomes.

Another likely post-pandemic trend is ‘decasualisation’ of healthcare workforces. Predominantly casual workforces have been problematic during the pandemic, including due to increased risk where people work at two or more facilities. Healthcare workers are facing significant risks, and demands for greater employment stability – and higher wages – should be expected as a result. In turn, this improves buying power.


Compared to other occupation categories, key workers are more likely to maintain stable employment during a pandemic. The safe investment features of key worker housing are amplified when the economy is disrupted. If pandemic lockdowns become semi-regular events, the investment characteristics of key worker housing will diverge from other housing development projects, for example student housing. There are a number of existing and emerging models which seek to address housing affordability for key workers.

Despite the current focus on our key workers, it seems unlikely that housing affordability policies at a central government level will shift from affordability generally to key worker housing affordability specifically. This is partly because key workers haven’t suffered the same economic distress as workers in other occupations during the pandemic.

If cities want to localise and future-proof their most essential workforce, innovative local solutions will be key. Governments and developers should work together to support transaction structures which will encourage development of affordable key worker housing in appropriate areas. For developers and investors, key worker focused developments may be among the safest, most bankable projects as we head into the new normal.

Natalie Bryce and Julie Jankowski are partners at law firm Herbert Smith Freehills.

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Council backs affordable housing plan on flood prone land

A PROPOSAL to transform a council-owned block of land in Mullumbimby is progressing.

The matter, involving land known as “Lot 22”, located at 156 Stuart St, went back before Byron Shire Council last Thursday, when staff had recommended an amended planning proposal be prepared and sent to the state planning department for Gateway determination.

Lot 22, which includes the Mullumbimby Community Gardens, is one of four sites that make up the Saltwater Creek Precinct, an area identified for investigation for future affordable and diverse housing.

Mayor Simon Richardson reserved the matter not specifically to debate it, but to endorse the staff recommendation and speak to the merits of the project.

“My vision is clear: to create diverse housing types that meet the needs for our locals,” he said.

He said the idea was for housing there to be available to those needing low-cost housing and for Aboriginal members of the community who want to live on country.

He said his vision would also see the nearby Saltwater Creek enhanced.

“The vision’s for a space that allows connection to town, the community gardens,” he said.

“Profit is no motive; we simply seek a cost-neutral outcome.

“We’ll be guided by the ongoing and further studies to see how many lots.”

He said while the land was flood prone, it’s expected this can be managed.

Also in its favour is that it is walking distance to the Mullumbimby town centre, he said.

“The bottom line is unless we create smaller, lower-cost housing, we’ll become more gentrified, we’ll become more expensive and we’ll become less surrounded by locals,” Cr Richardson said.

“I’d rather a great housing opportunity on imperfect land … (than something) that will never come.”

Cr Sarah Ndiaye said the project would “take commitment and resilience”.

“It’s the next step on what could be a really transformative journey for us,” she said.

The staff recommendation was unanimously supported.

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Federal Government to assess superannuation, housing recommendations from Retirement Income Review

Australians could be encouraged by the Federal Government to draw down on their superannuation balances and use equity in the family home to fund their retirement, rather than rely on increases in compulsory super contributions.

The Coalition is considering the findings of the wide-ranging Retirement Income Review, which was compiled by former senior Treasury Department official Michael Callaghan and covered the age pension, compulsory superannuation and voluntary savings.

The review was handed to the Federal Government in July and is set to be publicly released by Treasurer Josh Frydenberg on Friday.

It is likely to fuel suspicions the Liberal Party intends to defer the planned incremental increase in the super contribution from 9.5 per cent to 10 per cent due in July 2021. That rate is then set to increase to 12 per cent in 2027.

Limited excerpts of the review provided by the Government focus on the potential effect the compulsory super contribution increase could have on wages.

“The weight of evidence suggests the majority of increases in the [superannuation guarantee] come at the expense of growth in take-home wages,” the review states.

“If the superannuation guarantee stayed at 9.5 per cent rather than increasing to 12 per cent, [retirees] would also have higher incomes during their working life.”

The review also suggests that keeping the super guarantee at 9.5 per cent would increase incomes for most people across their working years by 2 per cent.

Housing could take on ‘even more important role’ in retirement income

The review finds the age pension provides a strong safety net and reduces income inequality, but notes the complexity of the superannuation system and low financial literacy means many retirees aren’t making the most of their assets.

It suggests an efficient way for Australians to enjoy a more comfortable retirement is by accessing the equity in their homes and drawing down on their superannuation balances.

“Home owners also have the opportunity to access the equity in their home to supplement retirement income and manage longevity risk, although few currently do so,” the review said.

“If this potential were realised, housing would take on an even more important role in the retirement income system.”

The report also identifies “a major misunderstanding” that sees retirees relying only on the return from their superannuation investments, rather than “drawing down those balances to fund living standards in retirement”.

The family home, which represents the largest share of net wealth for Australians aged 65 and over, is already regarded as important as it reduces accommodation costs in retirement.

But the corporate regulator ASIC has previously warned against “reverse mortgages” — where a loan is taken out using the family home as equity with no repayments made until the house is sold or the owner moves out or dies — because many borrowers had a poor understanding of the financial risks involved.

Josh Frydenberg and Mathias Cormann speak to the media.
Josh Frydenberg says the report “will play an important role in better informing future public policy”.(ABC News: Ian Cutmore)

In a statement, Mr Frydenberg said the review made it clear Australia’s retirement income system is “effective and sustainable” and “will continue to deliver for Australians in their later years”.

“While the report doesn’t make recommendations, its key observations will play an important role in better informing future public policy and the retirement outcomes delivered to Australians,” Mr Frydenberg said.

“The report also reaffirms the need to simplify and enhance the efficiency of the superannuation system and lift home ownership rates as a driver of higher incomes in retirement.”

Speaking ahead of the release of the review, Labor’s Shadow Assistant Treasurer Stephen Jones said Mr Frydenberg needed to guarantee the scheduled increase in the super contribution to 10 per cent will happen.

“The Government has to stick to the promise that it made to the Australian people before the last election … this is a structural change to ensure Australians over multiple generations are set up with the right level of retirement savings,” Mr Jones said.

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Investing in public housing will help the homeless and the economy

Governments looking to stimulate the economy aim to create jobs, boost consumer confidence, support industries, or deliver support to our most vulnerable. Sometimes, there are investments and initiatives that do all of the above.

The Andrews government’s announcement last weekend that it will invest $5.3 billion to construct more than 12,000 new homes throughout Victoria – including 8200 new social housing homes and replacing 1100 old public housing units – is a historic announcement that will not only create jobs and stimulate our economy, but one that will change thousands of lives.

Homelessness groups say COVID-19 has provided an opportunity to end rough sleeping.Credit:Pat Scala

The reality is that for some in our community, the ebb and flow of the private rental market is simply too brutal.

Social housing provides security of tenure and rent set at a level that allows people to rebuild their lives. It provides a vital safety net, and offers people the dignity, stability and opportunities they need to fully participate in their community.

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NSW property tax: what are the proposed changes to stamp duty and how would they affect you? | Housing

The New South Wales government has announced a plan to change the way tax is paid on property in the state.

The new arrangements will give people the option to choose between the current system of paying stamp duty when buying a house, or instead paying a small annual property tax for as long as they own the house.

Here’s what you need to know about the proposed changes.

Why does the government want to make the change?

Critics believe stamp duty, which dates back to 1865, is an outdated, inefficient system which places a prohibitive cost on moving home.

For example a $1m property currently attracts stamp duty of just over $40,335, or about 4%. The reform would mean people could avoid the $40,000 impost, making them more willing to move, and thus improving productivity and boosting economic growth. Stamp duty is thought to discourage older people from downsizing, creating too much spare housing capacity.

Stamp duty is also volatile. This year’s dramatic drop in housing market activity has reduced the amount of stamp duty flowing into the state’s coffers and has highlighted the need for reform, advocates say. So the NSW government hopes the changes would give the state a much more reliable, long-term revenue stream and make it cheaper and easier for people to move home. They also want to give people the option of not paying the existing land tax, which is paid on large commercial properties and residential investment properties over a certain value. It has set out the plans in a consultation document.

Sounds reasonable, but will it actually work?

NSW has chosen the optional route because it doesn’t want people to be subject to double taxation whereby they’ve paid stamp duty but then have to pay property tax on the same house as well. But most advocates of the property tax idea say it would be better to abolish stamp duty outright. The mixed approach could create a moral hazard whereby buyers planning to live in a home for a limited period would opt to pay the tax, while those planning to stay in a house for the long-term would opt for the stamp duty. It could also create a large short-term budget shortfall if many more buyers opted for the land tax. Decades down the line, it could mean that half the homes in the state are subject to the property tax and half of them are not, calling into question whether or not the reform would be budget neutral.

“Doing it this way is the path of least resistance for the government because the political saleability of the property tax has always been a big problem,” says Brendan Coates, an economist at the Grattan Institute who wrote a paper on the need for reform in 2019. “This way, no one is being forced to pay a property tax unless they choose to. But on the flip side, the government won’t get the big benefits of the tax for years to come and it could result in a budget shortfall.”

How would the government cover a shortfall?

Advocates of the reform believe that the federal government would have to step in to cover any budget gaps if a change like this was to be attempted. The NSW treasurer, Dominic Perrottet, has indicated as much and to give greater political cover for this, he would like to see every state and territory move towards reforming stamp duty.

But despite the widely anticipated economic benefits for the commonwealth from increased productivity, the federal treasurer, Josh Frydenberg, is not in favour of the change and no doubt wary of messing with tax and the property market in the way that Labor’s Bill Shorten did at the last election.

Another way to fund the likely budget gap would be to find tax revenue from other sources, but this would create moral hazard of a different kind, especially if it came from increases in the new property tax. Lindsay David, an independent economist and founder of LF Economics, says there is a risk of homeowners being subject to increases in the rate of property tax down the line. “In a way this is protecting existing homeowners at the cost of new homeowners. There would be nothing you could do to escape property tax increases, whereas those who have paid stamp duty would not have to pay.”

What would it do to house prices?

As ever in Australia, this is the big question. Those in favour of maintaining the status quo think that it would increase prices because would-be buyers would be able to use the money they save in stamp duty to throw at sellers, thus bidding up prices. But advocates say that in the short term there wouldn’t be much change because any increase in spending power would be offset by the impact of recurrent property taxes.

However, in the long term the average price of houses would fall, especially for larger family homes, because it would make the market more efficient – for example by incentivising retirees to downsize and thereby increasing the supply of family homes. “In the long run, a better allocation of the housing stock would lead to lower prices, particularly for larger dwellings,” Coates wrote. “Overall, the average price of housing would fall a little.”

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Social housing commitment deserves praise

Some years ago, an inmate at the Fulham prison near Sale was asked on community radio station 3CR what the one thing was he needed to turn his life around once he was free. “A roof over your head,” was his immediate answer. “If you haven’t got that and you’re living house to house and you don’t feel safe out there, of course you’re going to come back.”

Victorians from many different walks of life struggle with mental and physical health issues, domestic violence or an income that is too low for them to live near their place of work. For far too long, they have found that the absence of social housing and affordable housing has kept them “coming back”, either to entrenched poverty brought on by housing that consumes the bulk of their income, or to severely stretched support services. For some, it can mean life on the streets or even jail.

Our avowedly progressive state has the lowest proportion of social housing in the country – only 3.2 per cent of housing stock, compared with an already meagre national average of 4.2 per cent.

At the same time, the number of Victorians who need social support to acquire a home has grown with our expanding population, rising rents and house prices, so that in September the number of households on the waiting list was 48,529 – more than 100,000 people.

In this context, the Andrews government’s decision to put an unprecedented $5.3 billion into building more than 12,000 homes within four years deserves the applause it has received from many quarters. Economists have advocated construction of social housing both as a fillip for the construction industry and a way of getting thousands of people back into productive lives as the COVID-19 pandemic recedes. The Victorian Council of Social Service welcomed the package as a “game changer” and the Property Council said it wanted the program to go ahead as soon as possible. Others hoped the move would encourage the federal government to come to the party.

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Housing market grows as people leave cities for suburbs

FILE – In this Feb. 12, 2020, file photo, a housing development stands in El Dorado Hills, Calif. (AP Photo/Rich Pedroncelli, File)

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UPDATED 8:33 AM PT – Saturday, November 14, 2020

With working-from-home becoming the norm, the housing market is growing due to low mortgage rates and a surge in housing demand.

The Federal Home Loan Mortgage Corporation, known as Freddie Mac, reported this week that despite recent bumps following news of a possible vaccine, rates are still about one percent lower than they were a year ago.

This comes as the Mortgage Bankers Association found mortgage applications to purchase a home are up compared to the same time last year. According to the National Association of Realtors, the increase in demand has been reported across the country and is leading to an increase in home prices.

“We’re at the early stages of really a monumental rise in home prices that we think is going to be tremendous for the builders, particularly for their margins,” explained Stephen Kim, an analyst at Evercore ISI. “And I think we are actually pretty much on the end of this.”

Specifically, the biggest jumps in pricing were seen in the suburban areas outside of major cities like the 27.3 percent jump in Bridgeport, Connecticut, which is just north of Long Island.

A third-quarter report by gig-work site Upwork found that between 14 to 23 million people are considering moving due to working remotely with one-in-five of them moving away from their current homes in major cities.

As a result, landlords in major cities are desperate to lure back tenants with New York City real estate appraiser Miller Samuel reporting Friday the rise in apartment vacancies in the five boroughs has lead to one of the most dramatic drops in rent in recent years.

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Victorian Government aims to create 43,000 jobs with $5.3 billion public housing spend

The Victorian Government has announced it will spend $5.3 billion to build more than 12,000 public housing homes over the next four years.

Construction will start immediately on what is being described as the largest ever investment by a state government in public housing across the country.

The project is estimated to create 43,000 jobs.

Premier Daniel Andrews said it was “the biggest boost to social and affordable housing in the history of our country”.

“This is all about securing livelihoods, many, many jobs and giving that construction industry the certainty they need after a very challenging year,” he said.

“Each of those 10,000 workers a year, for each of the next four years, with the certainty of that pipeline of work, can spend, can invest, that’s all about creating economic activity and economic benefit for every single Victorian.”

Mr Andrews said 1,000 public housing dwellings would be set aside for Indigenous Victorians, another 1,000 for victims of domestic violence and 2,000 would be provided to people with a mental illness.

“We know from the work of the royal commission, Australia’s first and only royal commission into mental health, that insecure housing can be a massive obstacle to staying well,” he said.

The Government plans to move away from the high-density tower blocks which have historically been built for public housing.(ABC News: Simon Winter)

Housing Minister Richard Wynne said the Government had already identified nine sites where construction could begin in Melbourne.

“Many of those are adjacent to existing public housing sites,” he said.

“It’s all state government land and we’ll be getting on with the big build.”

Mr Wynne said 25 per cent of the homes would be built in regional Victoria.

The first six tenders will be released this month, and the Government hopes 6,000 homes will be under construction within 18 months.

The Premier said 11,000 dwellings should be completed by June 2023, with another 1,300 completed by June 2024.

“This is all about quick action,” Mr Andrews said.

“Tradies, firms large and small, knowing that they’ve got a secure and a massive pipeline of work over these next four critical years as we not only repair the damage of this pandemic, but deal in a really meaningful way with some of the weaknesses that it has exposed.”

Public housing build responds to a ‘desperate need’

The Victorian Government had been flagging an intention to fund large infrastructure projects in the state budget, to be handed down on November 24, to help Victoria recover from the nation’s longest coronavirus lockdown.

Victoria has the lowest proportion of public housing per capita compared to other Australian states.

Public housing makes up just 1.9 per cent of Victoria’s total housing stock, compared to a 4.6 per cent average across the OECD.

According to the Australian Productivity Commission, Victoria spent the least amount on public housing per head of population out of all Australian states and territories last financial year — $75 per person, compared to NSW’s $135.

The Northern Territory spent the most at $341 per person.

Mr Wynne acknowledged the Government had “unfinished business” in the public housing space.

“We are rectifying that without a doubt,” he said.

Victorian Council of Social Service (VCOSS) chief executive Emma King said today’s announcement was “genuinely unprecedented”.

“We’ve been calling for this for as long as I can remember,” she said.

“We’ve not seen investment of this scale before … we have a desperate need for it in this state. I don’t think any other state or territory in Australia is investing to this magnitude, nor is our Federal Government.”

On an overcast day, you view a bright topaz tower situated next to a series of post-war public housing towers.
In North Melbourne, aging public housing units sit beside a new private apartment complex.(ABC News: Simon Winter)

Ms King said providing safe housing would be a game-changer for thousands of families.

“We know that housing is a springboard to a good life and a life of wellbeing so this announcement is going to change thousands of lives,” she said.

“It’s going to make people happier and healthier and much more able to engage in work, education and the community around them.”

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