Missing link in housing debate

10 May 2022

‘Rental prices have exploded, making it near impossible to find a new home and keep myself and my children in our community … It is extremely stressful not being able to feel secure in our home.’

Working in a grassroots tenants organisation, we hear these anguished accounts too often – this one is from a single mother in Gippsland. The other day, it was an office cleaner renting a modest annexe in Melbourne’s outer north, who was debating whether to cut off electricity or pay overdue rent.

The cost of living is rightly centre stage in the federal election campaign, and lately we’ve been hearing more about (some of) the challenges of housing affordability from our politicians.

At the recent Labor launch there was a big idea from the opposition leader, Anthony Albanese, for a shared equity scheme to help more people on moderate incomes to secure home loans, with the government taking a stake in the property. And the prime minister, Scott Morrison, had his recent foray on morning television while selling a federal budget mortgage support program when he declared the ‘best way to support people renting a house is to help them buy a house’.

If only.

When will our politicians launch a fearless public conversation about housing affordability for people who don’t have a skerrick of a chance of stepping on any rung of any mortgage ladder? When will they acknowledge that the aspiration for the increasing segment of Australians who rent in capricious private rental markets around the country is an affordable rental home with security of tenure?

Broadly, in the year to December 2021, rents across Australia spiked 9.4% while wages grew on average only about 2.2%.

Shortly before the Covid pandemic disrupted our lives, the Productivity Commission also shared some home truths about private renters in lower-income households – in particular, households with the lowest 40% of incomes. By 2018, more than 1 million relatively low-income households – home to 2.65 million of us – rented from private landlords. The figure has doubled in two decades and more retirees and families with children are renting privately.

Tellingly, the Productivity Commission found that a whopping two-thirds of these lower-income households spent more than 30% of their income on rent, which is the very definition of ‘rental stres’. Many spent much more.

At Tenants Victoria, a quarter of referrals to our financial counselling service in the past six months were people in rental situations that were already deeply unaffordable. Many come to us carrying debilitating rent arrears and were at risk of eviction. Key barriers they face in changing their living situations are the lack of affordable and available properties.

As an immediate step, lower-income households should be the prime target for a practical national policy response by any party that is serious about tackling housing affordability. That is, an increase in the Commonwealth Rent Assistance – the subsidy for people getting a Centrelink payment who don’t live in public housing. Many welfare and housing organisations agree that the increase should be by at least 50%.

Pegged to the consumer prices index, in March the maximum rental supplement for a solo renter in reality went up just $3 a fortnight – three cans of home-brand baked beans – to $145.80. Meanwhile, the Anglicare rental affordability snapshot found that of 45,992 properties advertised nationally in March just seven were affordable for a single unemployed person, even with the ‘top-up’ of the rental subsidy.

The housing affordability challenges for renters are systemic and won’t be solved in one term or by technocratic market solutions. The central government must also invest sustainably in social housing. It’s not just a state government responsibility, as the federal opposition acknowledged in its pledge to create a future fund to build 30,000 new social and affordable homes over five years.

The next federal government must also lead a coordinated national housing strategy involving all layers of government and addressing all aspects of housing tenure.

While issues of rental affordability are starkest for people on income support, the challenges are not confined to those in highest need. Almost a third of Australians now live in rented homes and their numbers are growing. Yet wage earners on middle incomes, including essential workers in healthcare, hospitality and retail, tell us that it’s become harder to find a suitable rental home for themselves and their families in the right areas close to jobs and services.

In the face of these realities, to frame political contests on housing affordability through the lens of homeownership and mortgages alone is the stuff of, well, the last century. For many people on low-to-middle incomes, their modest Australian dream is now a safe, secure, and affordable rental. Let’s not make it a nightmare.

Jennifer Beveridge, CEO of Tenants Victoria

This article first appeared in Guardian Australia on 4 May 2022.