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Rising Renters Stress – 2/3rds of Australians live in rent

March 23rd, 2013


According to the Australian Bureau of Statistics (ABS) ‘rental stress’ is a term often used to describe households at risk of experiencing difficulty meeting their rental costs. High levels of rental stress mean that affordability may be low and, as a result, those households experiencing rental stress may be less able to rent housing that meets their basic needs.

Last year the Australians for Affordable Housing Association reported that more than double the number of people in Brisbane were suffering from renters stress rather than the more well-known mortgage stress. The AAHA reported that 14,318 people were suffering mortgage stress while 34,818 people – 28 per cent of households – were in the despair of renters stress. This was not limited to Brisbane, renters stress is an Australia wide problem.

Queensland Shelter CEO Adrian Pisarski said that with rising rents came impacts to budgets and that the problem would get much worse before it got better.

“Housing stress is most severe for renters,” he said.

“We seriously need to think about rental stress in terms of solutions to affordable housing.”

While the rate of renters stress in Brisbane was 28 per cent, in Gympie it was 45 per cent, the Gold Coast was 38 per cent and for the Sunshine Coast was 42 per cent.

AAHA campaign manager Sarah Toohey said a rising rents market, effectively unregulated, impacted so dramatically on budgets that many households did not have enough money left over for basic essentials such as food, transport and health.

“The high cost of housing in Queensland is not new, but (the AAHA) figures show where the pain is being felt.”

Ms Toohey said mortgage and rent were not a huge impact on budgets even as recent as 20 years ago but Governments had failed to check rising housing prices.

The ABS states that low income households in rental stress are more likely to be renting basic shelter. In contrast, higher income households have the economic resources available to allow them to choose to consume a wider range of housing services. The indicator on rental stress therefore relates solely to low income households.

According to the ABS, the proportion of low income renter households in rental stress has remained fairly constant over the past 10 years (36% in both 1997-98 and 2007-08). The proportion of low income private renter households in rental stress declined from 55% in 1997-98 to 44% in 2007-08. Over the same period the proportion of low income public renter households in rental stress increased from 5% to 17%.

In Western Australia renter Louise Fleay relocated from $400 a week Perth rents two years ago to the country town of Bridgetown – 270 km south of Perth and to a rent of $220 per week. But in consecutive years, she was hit with $50 hikes and is now paying $320 a week.

“When we put things in context, landlords are hitting us hard for rent trying to make as much out of their investment as possible at the expense of our quality of life and it is stressful because as I say in context there is less income down here, less jobs, and proportionately I’m paying just as much if not more of my total income in rent. There are not many full time jobs down here and I have two part time jobs to make ends meet,” said Ms Fleay.

“It is outrageous that even in a small country town landlords are milking us for everything they can – making money off anyone is a craze, one that does not look like it will stop.”

“I love Bridgetown, I love the Blackwood, I love the South West, and the people are great but they need to know, those who are investors that we (tenants) are doing it tough and all the more so with every increase in rent.”

One Bridgetown real estate salesperson who did not want to be named said the problem is endemic and that it is because there are no effective regulatory controls for rents. “The market is the investors unfortunately, and often we in reality are troubled by their asking prices however in the end it is their decision,” she said.

Half of West Australians receiving rent assistance remain in financial stress, the rental medians in Perth are now ridiculous and induce poverty, and when it comes to country towns the median increases are too high and not consistent and may actually be a higher quotient out of total income for renters there than in Perth.

AAHA has asked the federal government to increase Commonwealth Rental Assistance by 30%, which would amount to between $16 to $25 extra a week for households.

Housing stress, which includes mortgage and renters stress, refers to residents in the lower 30% of income earners who spend more than 30% of their income on housing.

“I spend over 40% of my income on rent to live in Bridgetown,” said Ms Fleay.

According to AAHA the steep rental market has seen the number of WA residents receiving housing-stress rent assistance rise to 43 per cent however AAHA spokeswoman Sarah Toohey said there were thousands of West Australians struggling to keep a roof over their head.

Ms Toohey said people who need a financial break the most are single parents and those on disability support pensions.

“The worst case scenario is that families can no longer make their rent and they will end up homeless. That really is what happens when people can’t afford to keep the roof over their head.”

“Surely the first priority in the Federal Budget should be people’s household budgets. Housing costs are the single biggest household expense in Australia, and an increase in Commonwealth Rent Assistance would provide immediate relief to those doing it toughest,” said Ms Toohey.

“The Government should be able to walk and chew gum at the same time on housing policy. New affordable housing supply is critical, but there are more than 450,000 renters in housing stress right now and they can’t wait for new housing to be built.”

“We know that cost of living is an issue for many households, and housing costs are the single biggest household expense. Rent assistance is an easy way for the Government to make a difference to household’s cost of living right now.

“Rents have risen at twice the rate of Commonwealth Rent Assistance in the last five years, leaving low income households out of pocket as they struggle to pay the rent and make ends meet.”

A renters rights movement is gathering momentum in Western Australia.

Many tenants are tired of being hit every six months with hefty rent increases which outstrip consumer price index rises and wage rises. Bridgetown renter, Louise Fleay has had two $50 rises in rent during a 2 year period, from $220 to $320 while she had no wage increase nor distinguishable benefits from Commonwealth and State assistance.

WA Renters Alliance coordinator, Lea Keenan said renters stress is worse than mortgage stress. “Renters are worse off financially, without equity and therefore without security.”

“There have been increasing complaints that many renters are only able to secure six month rents, and this is abominable – it erodes any sense of home security,” said Ms Keenan.

Realtors in Bridgetown, Donnybrook and other nearby towns have confirmed that they have become increasingly prone to pursing six month leases rather than one or two year rental leases in order to ensure “good clientele for the owners”. Ms Keenan said that there should be legislation against this practice.

“40% of Australians who are in private rentals, and I am not describing social housing, should not be discriminated against. Having to relocate is a stressful event, it is accepted as traumatic by a number of studies, and it comes at great financial cost especially for families who are the bottom 30% of income earners,” she said.

Associate Professor of Economics at the University of Western Sydney, Steve Keen, said Australia has created “one of the biggest housing bubbles on the planet.” The renter is carrying a disproportionate burden, and when the bubble bursts the renters will be left worn out. While housing prices escalate so do mortgage commitments. Most home owners carry a mortgage. But when house prices stagnate or drop the mortgage still remains. Landlords desperate to meet mortgage repayments maintain high rents and where they are able to raise them they do. Therefore a disproportionate burden is levelled on renters to carry the property owners’ mortgage repayments.

Australian Council of Social Service chief executive officer Clare Martin said housing stress must become the priority social policy challenge.

“Some 850,000 Australians are in housing stress, with rental costs gobbling up a high proportion of their income,” Ms Martin said.

“A third are low-income households. Add to that the 105,000 Australians who are homeless and you start to get a real idea of how big the problem is.”

The Renters Alliance is working on a schedule of rights, and various policies, for renters. “We must ensure reasonable security in terms of tenure for families, without diminishing the rights of investors in terms of the proper care of their property, however it must be recognised that where a house is rented it becomes someones home. We will be pushing that someone should only be moved out if the investor wants to move in themselves and make it their home. In some European countries this is the case, you can’t move out people unless you will live there, and if you sell the house the tenancy is protected. Renters do have to take care of a property, however inspections should be six monthly or yearly. There needs to be clear evidence why a landlord or agent needs to access the property any more regularly than say once a year.

Rent should be guidelined by CPI and by the size of the home, not by the rapacious greed of investors,” said Ms Keenan.

The Australian Institute of Health and Welfare Housing Assistance Unit’s David Wilson said, “The stresses are showing up even after assistance has been provided. For example, 35% of households receiving Commonwealth Rent Assistance are still, after assistance, paying more than 30% of their household incomes on their rent, which is a common measure for housing stress.”

South West, Blackwood-Stirling MLA, Terry Redman said he readily acknowledged that housing affordability, whether for renters or buyers, is the biggest cost of living issue for most Australians.

“Pressure on the Perth rental market is clearly having a flow-on effect in country areas including the Warren Blackwood region.”

“The Liberal-National Government’s Affordable Housing Strategy released last year is aimed at increasing the affordability of affordable housing in Western Australia and delivering 3,500 more social housing dwellings by 2013,” said Mr Redman.

“Increasing the supply of public housing is important but as housing stress is more evident in areas where incomes are low, it’s also important to focus on job creation to lift incomes in regional areas. This is why a major focus of the Royalties for Regions program is on stimulating regional economies to create more opportunities for both full and part time employment.”

“Royalties for Regions is also funding the Country Age Pension Fuel card and has put major funding into the Patient Assisted Travel Scheme to help offset some of the additional costs that regional residents face,” Mr Redman said.

Greens MLA Giz Watson, said that housing stress is one of the negative effects of WA’s mining boom and has been compounded by the Global Financial Crisis. “A housing market traditionally supplied a family house on a large block,” said Ms Watson.

“One of the reasons for rents rising is the lack of diversity of housing, forcing all types of household to compete for the same houses. Young singles are competing with families for the four bedroom, two bath homes.”

Ms Watson said the reason renters numbers are increasing is because of the high price of buying a first home.

“Housing diversity is critical to meeting the need for accommodation.”

“The Greens would like to see a better tax system to increase the availability of a diversity of housing supply, including small rentals.”

Ms Watson said providing more options for high density living is critical to meeting housing needs and reducing pressures on the environment. “This increased density in existing towns has to be achieved with community support and good discussion about how to deliver liveable towns.”

Collie’s Labor parliamentarian Mick Murray said housing needs are a main concern of his constituents, including rental prices and house prices. He said there was a demand for more social housing.

“Homeswest and affordable housing needs are not being met in Collie. At one stage there were 70 family groups waiting for public housing in Collie,” said Mr Murray.

Mr Murray’s office is contacted on a daily basis by people seeking affordable accommodation.

He said State-wide there were more than 24,000 outstanding maintenance requests lodged with Homeswest.

“The problem lies in that there are Homeswest properties sitting vacant because contractors are not being used because of the funding crisis,” said Mr Murray.

Mr Murray believes many private renters who are doing it tough have been forced out of their right to social housing. “The waiting lists are so long, four years or more, so they are taking the affordable housing that low to middle income earners who are not eligible for Homeswest housing would normally rent.”

Ms Keenan said what needs to be understood is that rents are too high for all types of homes, and they need to be brought down, and this in effect will go a long way to remedying the renters crisis and most housing stress issues.

Social researcher and author Colin Penter has long considered the housing crisis and he said that the Renters Alliance, Ms Keenan, and Australians for Affordable Housing are right on the mark and that the political parties need to do more, however all ways forward must be underlain with policies and guidelines.

“This is a huge issue that has been neglected and marginalised by all sides of politics and by the housing industry, and by non-government organisations who supposedly advocate for affordable housing,” said Mr Penter.

“The Renters Alliance can grow into something big.”

Ms Keenan agrees.

“Enough is enough with what renters go through and the hardship is only getting worse and not better with political parties geared to inherently supporting the interests of landlords and investors, who are actually fewer than the renters who are on the rise. Renters are the majority of the population.

The Renters Alliance said that nearly 70% of Australians live in rent or in social housing and that proportionate to population less Australians than ever before are able to step into home ownership, and that mortgaging was beyond most Australians.

Social researcher and Secretary of the Multicultural Union of Australia Reveli Affleck said that it is only going to get worse for renters unless politicians stop neglecting them.

“We are being hurt badly by rent rises and both Liberal and Labor have not shown any inclination to (push for) reducing rents,” said Mr Affleck.

“Policies for reducing rents would win the support of 67% of the people.”

67% of Australians currently live in rent whereas in 1975 67% of Australian lived in a home they owned outright or had mortgaged.

“Less than 33% of Australians are in the home ownership struggle, and 90% of those 33% are mortgaged, with most of them heavily mortgaged and requiring near a lifetime to pay off their home, however ten per cent of Australians are investors with more than one property with most of them bleeding renters to pay off or maximise their investment,” said Ms Keenan.

“Whereas forty and fifty years ago you could save hard and pay off your home in several years this is now impossible for the majority of Australians, and most renters have no hope of saving a deposit to put on a mortgage.”

“In the South West, in the Blackwood the property prices are still ridiculously high despite a declining market, despite less properties selling, and rent prices are on average, in our view, $100 per week too much, and in Perth $200 per week too much,” said Ms Keenan.

“Landlords and realtors in the South West should be looking at the regional social conditions, the local wages, the job market when considering what a fair rent should be. Many South West property owners are investors who do not live in the South West and live for instance in Perth, in the eastern states or overseas and are after maximum returns and do not have the mindset that their investment is someone’s home.”

“Life and society are a two-way street you know, it’s got to stop being about ‘me’ only.”

Mr Affleck said nearly one and half million West Australians are renters, and nearly 15 million Australians live in rent.



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