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Planning, regulation, the local state and the housing crisis in England

Posted by on February 8th, 2023 · Guest appearance, Housing

By Assoc Prof Ben Clifford, University College London. This post comes out of Assoc Prof Clifford’s September 2022 presentation in the City Futures Seminar Series.

In England, as in Australia, the housing crisis, and its links to planning reform debates, has remained high on the political agenda for many years. Recent months have seen tensions within the Conservative Party about housing targets in local development plans and an associated Parliamentary backbench rebellion. Much of this debate comes back to an over-simplified representation of housing unaffordability being due to planning systems unreasonably restricting new housing supply. Linked increasingly to so-called ‘YIMBY’ arguments, the solution to the housing crisis here appears deceptively simple: remove or reduce planning regulation and let the market do the rest.

Whilst there is a seductive appeal to this argument, and certainly planning regulation does play a role in restricting supply, it is overly reductive. As UCL colleagues have argued, the housing crisis is much more complex, involving issues not just of housing availability but also affordability, type, location and quality, and with an important factor of demand as well as supply: housing has increasingly become an investment vehicle and a variety of initiatives such as buy-to-let mortgages have fuelled this trend. At the same time, ever since the Thatcher administration in the UK, local government has hardly built any housing, when prior to that it was often responsible for around a third of new supply each year, as affordable council housing. This complexity is overlooked, particularly by politicians of the right but seemingly also increasingly by politicians of the left, in favour of a mantra of reducing planning control as the ‘solution’ to the housing crisis.

In the UK, such deregulatory approaches have been particularly pushed by right wing think tanks as influential players in planning reform debates over the last decade. One instructive example has concerned the deregulation of the change of use of commercial buildings to residential use.

In short, ever since 1948, the change of use of existing buildings in the UK has generally required planning permission from the local state. In England, in 2013, the government deregulated so that changing an office building to residential use was considered ‘permitted development’ not requiring full planning permission. In 2015 this was extended to cover retail and light industrial buildings being converted to residential use, and in 2021, further expanded to cover a yet wider range of building uses including restaurants, gyms, clinics and day centres.

With colleagues, I studied the implications of this deregulation through key reports in 2018 and 2020. Comparing conversions allowed under the deregulated permitted development route with those allowed under a traditional full planning permission revealed a number of problems. Firstly, there was the absence of any requirement for the commercial buildings to be actually be empty first, leading to examples of tenants being kicked out to allow for conversion to residential use, and in some cases then struggling to find suitable alternative premises, impacting the mixed use and viability of urban economies. Secondly, since schemes required no planning permission, the traditional routes to secure planning gain such as affordable housing and infrastructure contributions, could not be levied, harming local communities.

The most concerning outcomes were, however, around housing quality. Much of the ability to require decent design for housing has been secured through planning regulation. Without it, we were finding tiny units, e.g. 15 square metres for a studio flat compared to a government recommended minimum of 37square metres.I In 2020, we found just 22% of the housing units created under permitted development would meet recommended national space standards. There was a predominance of studio and one bed flats (77% of the units we considered in 2018), as developers tried to maximise the number of units per scheme for profit even when mixed communities might better be established by including some family sized units in a scheme and when this may be a key part of unmet local housing demand.

There were examples of flats with no windows at all (rare but some existed) or, more commonly, flats with little natural light or no windows you could easily see out of. Flats were far less likely to have dual aspect windows (29.5% of the units we examined allowed under permitted development had these, compared to 72% allowed under full planning permission), to have access to outdoor space (just 3.5% of the units we examined under our 2020 study had such private amenity space) and were sometimes in unsuitable locations such as the middle of industrial estates or business parks cut off from suitable amenities and without provision of things like play space for children. In some cases, the issues were so bad that we suspected they were having a negative impact on the health and wellbeing of occupiers.

The government did introduce some additional safeguards in 2020 and 2021, such as a requirement for adequate natural light to all habitable rooms and a requirement to comply with government space standards. Other issues, such as access to outdoor space and possible locational issues and issues related to thermal comfort as well as affordable housing provision remain, however. The whole experience has served to show that planning regulations are not just an unnecessary burden restricting new supply of housing but can have a vital role to play in actually ensuring housing is fit for habitation.

There is also an interesting question about whether this deregulation was even necessary in the first place. It has certainly boosted the number of housing units developed through conversion of commercial buildings (now more than 100,000 across England since 2013), but it was not unknown before. A comparison with the Netherlands showed an equal uplift in conversions achieved not through deregulation but rather a proactive role for local government, identifying possible buildings for conversion, acting to help developers navigate planning regulations, and with central government producing best practice guidance to promote the possibility of such conversions to landowners and developers.

People deserve decent housing, and if the only way to increase market supply is to reduce requirements that uphold a decent minimum standard, then perhaps that points to the fact that market supply alone is not sufficient to resolve England’s housing crises. Indeed, local authorities in England have increasingly come to realise this. At the same time as central government has been further reducing the ability to exert influence through the planning system, the local state has been reengaging with direct delivery of housing itself. With my colleague Janice Morphet, I have studied this with reports charting our findings published in 2017, 2019 and 2021. From a base of almost complete disengagement through the 1980s to 2010s, we are now at a point where 80% of English local authorities report they are directly engaged in delivering housing again.

This activity responds to a number of different motivations and is being conducted through a range of different mechanisms. Some local authorities have considered housing development as a possible solution to the challenges of austerity, with the ability given them to have what are in effect private companies in which they are the sole shareholder. Some 55% of local authorities now report having such a ‘local housing company’ which may, for example, be using council owned land to develop market housing.

Those local authorities which retained some of their own housing stock, primarily built before 1980, are able to use this as an asset against which they can borrow to fund the development of new affordable housing, and this is becoming increasingly popular again. There are concerns with demonstrating the possibility for higher quality design through the council’s own activity than the market volume housebuilders are delivering in some instances, and a real drive for the council’s own activity to try to boost affordable housing supply (which is now specified as a corporate priority by 80% of local authorities in England).

This activity is often starting from a low base, with challenges around funding, land availability and the fact that local authorities have been unable to retain development skills in-house. There have been some challenges, particularly where development has most been focussed on profit motivations such as the Brick-by-Brick company in Croydon which effectively went bankrupt. Nevertheless, other local authorities such as Birmingham, Bournemouth, Brent and many others are more quietly getting on with things and making them work. The mantra seems increasingly that ‘planning is not enough’ in so far as central government has weakened planning through successive reforms, but also relying on the ability through planning gain to try and secure affordable housing purely as a residual of market housing delivery seems an impossible ask.

Reducing planning control is perhaps favoured by governments where it may align to ideological predispositions sceptical about the role of the state and might seem a zero-cost solution to increasing housing supply and so apparently resolving the ‘housing crisis’. In some cases, opposition to new housing development has been so extreme that it seems common sense that planning deregulation might be the solution. Densifying suburbs and converting surplus commercial space to residential use when there’s a need for additional housing, and considering the embodied carbon in buildings, all seems sensible. However, there’s an important question as to whether such positive goals are best achieved by planning deregulation. There are potentially positive reforms that can be made to the planning system but as the example of permitted development in England shows, a straight leap to deregulation may have a range of disbenefits (and doesn’t’ seem to have delivered more affordable housing).

Such apparently easy solutions to the very real challenges of housing affordability are something to be extremely wary of. The planning movement grew out of particular concern in the nineteenth century with the impact on health and wellbeing from the output of unregulated urban development. Such concern should still exist today, alongside the need to increasingly consider sustainability and the implications of the climate crisis. Those who think removal of planning control will enable everyone to be able to afford to live exactly how and where they want to live are promoting a fantasy which, when unrealised, will likely just drive calls for further deregulation, with the potential to cause further harms. Liveable future cities require a proactive role for local government, which might positively influence development both through regulatory levers such as planning control, but also through direct action such as developing housing directly.

How project marketers shape our cities

Posted by on December 14th, 2022 · Uncategorized

By Dr Rupa Ganguli, City Futures Research Centre. Originally published by The Fifth Estate.

In NSW, the Opal and Mascot Towers defects scandals have galvanised a wide ranging response on the issue of quality in apartment building. Together with the tragic fire in London’s Grenfell Tower, the shine has most certainly come off the so-called swing to urban living typified by high rise apartment buildings. 

The overwhelming focus in this reaction has been on exposing the failure of the apartment developers and builders, together with allied professions – engineers, architects, certifiers – to ensure build quality. But critical though these professions are, surprisingly little attention has been paid to the role of another major actor in the apartment market: the sales agents.  

This is all the more surprising given the central role sales agents – called project marketers in the jargon – play in the whole high rise apartment development process. These are the people who convince buyers to take the plunge to commit to buying into the developer’s vision of a new home, in most cases off-the-plan before anything has actually been built. 

But rather than being passive players in this transaction, new research – based on interviews in mid-2020 with over 30 professionals involved in the apartment development and sales sectors – has exposed the highly active role these sales agents play in mediating the process. In many ways, understanding their role also helps explain why it is possible to sell a lemon to so many consumers.  

While their fundamental purpose is to maximise sales rates and prices on behalf of the developer and the project’s financier, project marketers play multiple roles beyond just the sales process, acting as market matchers, information providers, and price influencers, constantly adapting to market volatility. This makes them a key institution in the apartment delivery process, influencing the prices paid and who gets to live in the apartment sector.

These findings are part of my recent doctoral thesis titled, Chameleons in the city: An institutional analysis of sales agents in Sydney’s new apartment market, completed at the University of New South Wales under the supervision of Professor Bill Randolph and Professor Hal Pawson. 

Market matchers

So, what are the key roles of the project marketer?

Firstly, the market matcher role involves convincing buyers to purchase off-the-plan using face-to-face or on-line communication and creating hype and FOMO (or a fear of missing out), when the apartment exists only as a display suite or computer generated image. 

Well-established views on buyer typologies and pre-sales success underpins their approach to buyers. For example, investor purchasers are believed to be more common in a market boom and viewed as an easier target buyer group. They are seen as quick decision makers, often relatively well-placed to obtain a purchase deposit from financiers, making them less risky for a developer. Advertising and marketing costs were considered to be minimal in a market dominated by investor buyers, a positive for maximising sales revenue from the perspective of project marketers and their fee-paying developer clients. 

In contrast, the downsizers or empty nesters among the owner-occupier buyer groups who became more dominant in the bust are perceived to be a more challenging target group, in need of more hand holding in the sales journey.

This means more expensive advertising and marketing campaigns, including high-quality computer generated imagery, drone photography, and display suites. This could be offset by this buyer group’s ability to pay high prices compared with the first home buyers or investors.  

In this way, marketers become a gatekeeper by enabling or constraining purchase opportunities to certain buyer groups and in doing so controlling access to apartment ownership. 

Information providers

Project marketers are also information providers to developers, architects, and consultants, which can affect what is eventually built and sold.

The information includes advice on the target buyer market at the land purchase and project feasibility stage, as well as asking prices and sale rates, design features, and competing projects. 

But they also provide information to buyers. When advising off-the-plan buyers, research participants spoke about different types of information shared between investors and owner-occupiers. For example, investors were seen to be more interested in characteristics which positively affected capital appreciation and rental yield prospects. 

There was no connection made to the issue of poor construction quality and this sales mindset. During the boom of 2012 to 2018, few buyers asked about the profile and track record of the developer or builder. But these questions have become more frequently asked following the defect scandals with marketers adopting a quality assurance role to reassure buyers of product quality.

In contrast, there was little mention of information being requested or shared with buyers on the environmental sustainability of projects. This issue had clearly not filtered through to developers or their project marketers.

Price influencers

Thirdly, the price influencer role involves advising developers on expected off-the-plan sales prices. 

Importantly, these may be incorporated into project feasibility, informing the price payable for the land and eventual sales goals, and asking prices. This role is performed within the context of limited information transparency for buyers, with marketers employing different off-the-plan sales strategies for investors versus owner-occupiers. 

In one reported instance, pre-sale prices were kept five per cent below the market level for the first third of the stock released for sale, with prices ratcheted up as sales continued until a target pre-sale rate was reached. Thereafter, prices were kept to five per cent above market for the last third of sales stock. The objective here was to attract investor purchasers in the initial stages and owner-occupying downsizers in later stages as the latter were keener to see a project’s physical progress. Of course, buyers remain completely unaware of such price manipulation.

Implications for cities 

These research findings have global implications for all urban centres experiencing rising housing density. 

Far from responding to a hidden hand, the high rise apartment market is actively shaped by project marketers whose job it is to maximise returns and sales rates. 

In a hyper-commodified market context, the project marketer acts as a central conduit through which information on new apartments reaches potential buyers. In this process, they actively manage to whom pre-sales are targeted and at what price. 

In such a one-sided transaction, the possibility of on-selling a product of inferior quality becomes not only possible, but compelling.

Homeless numbers have jumped since COVID housing efforts ended – and the problem is spreading beyond the big cities

Posted by on December 5th, 2022 · Housing

By Hal Pawson (CFRC) and Cameron Parsell (University of Queensland). This article is republished from The Conversation under a Creative Commons license. Read the original article.

Homeless numbers have risen sharply across Australia, with soaring housing costs emerging as the biggest driver of the increase. The Australian Homelessness Monitor 2022, released today, reports that the average monthly number of people using homelessness services increased by 8% in the four years to 2021-22. That’s double the population growth rate over that period.

Just as in other countries, the 2020 COVID-19 emergency accommodation programs achieved sudden reductions in rough sleeping in cities such as Sydney, Melbourne and Brisbane. But these remarkable gains were only temporary.

In the first major homelessness analysis spanning the COVID crisis years, we also show numbers have been rising in some parts of the country at rates far above the national trend. The problem has been growing especially rapidly in non-metropolitan areas. This trend is consistent with the boom in regional housing prices and, more especially, rents sparked by the pandemic.

Figure 1. Changes in homelessness service caseloads over 4 years

Percentage changes in specialist homelessness service case numbers in capital cities and regional Australia from 2017-18 to 2021-22

Figures based on monthly average figures for the two cited financial years

The homelessness that has long been a sad feature of our biggest cities has clearly spread to regional and rural Australia.

Many other patterns in the changing scale and nature of homelessness in Australia are ongoing trends that pre-date the 2020-21 public health emergency. This period appears to have had relatively little effect on these trajectories, which include a growing proportion of older adults, as well as First Nations peoples and those affected by mental ill-health.

As the chart below shows, unaffordable housing is playing an increasing role in people becoming homeless.

Figure 2. Reasons people seek homelessness services help

Breakdown of homelessness services caseloads (persons) by “reason(s) for seeking assistance” from 2017-18 to 2021-22.

Note: Baseline value from 2017-18 is 100. Service users may select more than one ‘trigger factor’. Figures based on average monthly service user numbers for each financial year.

Social housing programs are welcome but overdue

The pandemic triggered significant and welcome commitments to social housing programs by the new federal government and some state governments. The recent federal budget confirmed funding for 20,000 new social housing dwellings over five years.

Several states had already announced a set of self-funded programs of a similar scale as part of their post-COVID economic recovery measures.

Social housing offers secure tenancies at below-market rents. It’s a crucial resource for both preventing and resolving homelessness.

Together, these new programs will – at least temporarily – halt the long-term decline in social housing capacity. The sector’s share of the nation’s housing stock has been shrinking for most of the past 25 years.

By our reckoning, the government programs should deliver a net increase of about 9,000 social rental dwellings in 2024. This will be the first year for decades in which enough dwellings will be built to maintain the sector’s share of Australia’s occupied housing stock.

But sustaining this achievement will require more funding beyond the current commitments. Otherwise, the decline will resume.

Affordability is the big issue, but some need other help

As a recent Productivity Commission report acknowledged, homelessness is primarily a housing problem. In its words, “fundamentally, homelessness is a result of not being able to afford housing”.

Figure 3. Increases in advertised rents and inflation, 2018 to 2022

Year-on-year percentage change for each quarter based on national averages

While other reasons do contribute to some people becoming homeless, most people experiencing homelessness have no long-term need for personal support. And many who do have high support needs can access and keep tenancies when suitable affordable housing is available.

At the same time, the most disadvantaged rough sleepers may require a great deal of help to overcome their problems. The widely acclaimed “housing first” model successfully does this. As other recent research emphasises, for many chronic rough sleepers helped into secure housing, withdrawing such support – even after three years – markedly increases their risk of becoming homeless again.

Australian governments need to better recognise the case for expanding the supply of permanent supportive housing. This involves integrating long-term affordable housing with ongoing support services where required.

Only a few such projects operate in Australia. There is no general framework to fund them, especially the support services.

Lengthy rough sleeping is typically a symptom of societal failure. All too often, for those affected, this failure starts from infancy.

Housing the chronically homeless pays for itself

The Productivity Commission report advocated a “high-needs-based [social] housing subsidy to ensure housing is affordable and tenancies can be sustained”. Logically, since this is essentially a social work (not social security) responsibility, it is the states and territories, and not the Commonwealth, that should bear the cost.

This may sound like a big ask for underfunded governments. But state and territory budgets stand to benefit from avoiding the costs that recurrent and chronic homelessness imposes on departments such as health and justice. As our previous research shows, we spend enormous amounts of public money responding to the consequences of leaving people in a state of chronic homelessness.

A model for funding permanent supportive housing needs to be developed. Ideally, this process should involve all Australian governments, perhaps as part of discussions to advance the National Housing and Homelessness Plan. Federal Labor pledged this project will take shape in 2023.

More broadly, these deliberations must be underpinned by recognition that our current ways of developing, operating and commodifying housing produce homelessness. A plan to end homelessness requires a plan to overhaul our housing system so it produces enough suitable and affordable housing for all Australians.

The authors acknowledge research funder Launch Housing.

Do tenancy reforms to protect renters cause landlords to exit the market? No, but maybe they should

Posted by on November 29th, 2022 · Housing, Law

By Chris Martin, UNSW Sydney; Milad Ghasri, UNSW Sydney; Sharon Parkinson, Swinburne University of Technology, and Zoe Goodall, Swinburne University of Technology. This article is republished from The Conversation under a Creative Commons license. Read the original article.

More Australians are renting their housing longer than in the past. But they have relatively little legal security against rent increases and evictions compared to tenants in other countries. When state governments suggest stronger protections for tenants, landlords and real estate agents claim it will cause disinvestment from the sector, increasing pressure on already tight rental markets.

In research for the Australian Housing and Urban Research Institute (AHURI), published today, we put the “disinvestment” claim to the test. We looked at the impacts of tenancy reforms in New South Wales and Victoria on rental property records over 20 years, as well as surveying hundreds of property investors. We found no evidence to support this claim.

We did find a high rate of turnover as properties enter and leave the sector. This happened regardless of tenancy law reforms. It’s a major cause of the unsettled nature of private rental housing for tenants.

We suggest that if substantial tenancy reforms did cause less committed landlords to exit the sector, that might not be a bad thing.

How did we test the disinvestment claim?

We analysed records of all rental bond lodgements and refunds in Sydney and Melbourne from 2000 to 2020. From these records we can see properties entering the rental sector for the first time (investment) and exiting the sector (disinvestment).

We looked for changes in trends in property entries and exits around two law reform episodes: when the 2010 NSW Residential Tenancies Act took effect, and the start of a tenancy law reform review in Victoria in 2015.

We found no evidence the NSW reforms affected property entries (investment). And property exits (disinvestment) were slightly reduced – that is, fewer properties exited than expected.

In Victoria, we found property entries reduced slightly when the law reform review started – perhaps a sign of investors pausing for “due diligence”. We saw no effect on property exits.

So in neither state did we find evidence of a disinvestment effect.

We also surveyed 970 current and previous property investors, and got a similar picture. When deciding to invest, investors said prospective rental income and capital gains were the most important considerations, but tenancy laws were important too.

On the other hand, tenancy laws were the least-cited reason for disposing of properties. Many more investors said they did it because they judged it a good time to sell and realise gains, or they wanted money for other purposes, or because the investment was not paying as they had hoped.

A state of constant churn

Our research also gives new insights into the private rental sector, which has been growing relative to owner-occupied and social housing.

Small-holding “mum and dad” landlords dominate the sector. Some 70% of landlords own a single property. Multiple-property owners own more properties in total, but still relatively small numbers (rarely more than ten) compared to corporate landlords in other countries who have tens of thousands of properties, or even more. Australia now has some large corporate landlords, but their properties are a tiny fraction of the total rental stock.

Beneath its gradual growth and persistent small-holding pattern, the private rental sector is dynamic. Properties enter and exit the sector very frequently. In both Sydney and Melbourne, our analysis shows, most properties exit within five years of entering.

Chart showing private rental properties, Sydney and Melbourne, 2000–20, by year of first observation in rental bonds data and at five-year intervals
Numbers of private rental properties in Sydney and Melbourne at five-year intervals from 2000 to 2020. Properties are categorised by year of first observation in rental bonds data. The authors

More than 30% of tenancies begin in a property that’s new to the rental sector. And more than 25% of tenancy terminations happen when the property exits the sector.

Our investor survey also shows the sector’s dynamism. Many investors made repeated investments, owning multiple properties and some interstate. They indicated strong interest in short-term letting, such as Airbnb, and significant minorities had used their properties for purposes other than rental housing.

Australia’s rental housing interacts closely with other sectors, particularly owner-occupied housing, as houses and strata-titled apartments trade between the sectors. The tax-subsidised property prices paid by owner-occupiers heavily influence investors’ gains and decision-making. Rental is also increasingly integrated with tourism, through governments’ permissive approach to short-term letting.

In short, the Australian rental sector is built for investing and disinvesting. As properties churn in and out of rental, renters are churned in and out of housing.

This presents problems for tenants.

A new agenda for tenancy law reform

Australian residential tenancies law has accommodated the long-term growth of the rental sector and its dynamic character. With no licensing or training requirements, it’s easy for landlords to enter the sector. It’s also easy to exit by terminating tenancies, on grounds they want to use a property for other purposes, or even without grounds in many cases.

Over the years tenancy law reform has fixed some problem areas, but with virtually no national co-ordination. Laws are increasingly inconsistent on important topics, such as tenants’ security (for example, some states have restricted, but not eliminated, no-grounds terminations), minimum standards and domestic violence. Reforms have overlooked significant problem areas, such as steep rent increases and landlords’ liability for defective premises.

It is time to pursue a national agenda that goes further than previous limited reforms. The focus should be on the rights of tenants to affordable housing, in decent condition, that supports autonomy and secure occupancy.

Where landlords say it is too difficult and they will disinvest, this should not be taken as a threat. Indeed, it would be a good thing if the speculative, incapable and unwilling investors exited the sector. This would make properties available for new owner-occupiers and open up prospects for other, more committed landlords, especially non-profit providers of rental housing.

Similarly, if we had higher standards and expectations to discourage private landlords from entering the sector, that would open up scope for new owner-occupiers and investors who are less inclined to churn properties and households.

While past tenancy law reforms have not caused disinvestment, maybe the next reforms should.

The authors acknowledge the contributions of their research co-authors, Professor Kath Hulse, Professor Eileen O’Brien Webb, Dr Laura Crommelin and Liss Ralston.

Most older Australians aren’t in aged care. Policy blind spots mean they live in communities that aren’t age-friendly

Posted by on October 31st, 2022 · Wellbeing

By Edgar Liu, UNSW Sydney; Bruce Judd, UNSW Sydney, and Mariana T Atkins, The University of Western Australia. This article is republished from The Conversation under a Creative Commons license. Read the original article.

In response to the horror stories of abuse and neglect from the Royal Commission into Aged Care, the new federal Labor government has made legislative changes. Prior to this, Australia’s most recent aged-care reforms were enacted a decade ago. The focus, however, is still largely on residential care homes, so what about older Australians in the broader community?

More older Australians are still living in their own homes. How do our policies and cities support them? We have published an analysis comparing 85 policy documents across all three levels of Australian governments against World Health Organization (WHO) guidelines on age-friendly cities.

We found these policies reflect outdated views of old age. They neglect many important aspects that contribute to happy and fulfilling lives in older age.

The policy focus is overwhelmingly on care and support services. There are decreasing levels of attention to housing, transport, walkability and, least of all, cultural diversity.

WHO guidance on making age-friendly cities

The WHO first published its Global Age-Friendly Cities: A Guide in 2007 to support the active ageing policy framework it proposed back in 2002. Described as “the centrepiece of WHO’s age-friendly cities approach”, the guide became a major point-of-reference for age-friendly policymaking around the world.

In 2010, the WHO launched the Global Network of Age-Friendly Cities and Communities. The network aims to help governments and other organisations build age-friendly cities through evidence-based guidance and knowledge exchanges. Australia’s members include two states, 34 local councils and one regional organisation.

Our research, however, found little to no difference between Australian members and non-members in making direct policy references to these guides. For example, more of South Australia’s (a non-member) policy documents referred to the guidelines than Western Australia’s (a member), as the table below shows.

There were also discrepancies between the tiers of government. State and territory governments were more likely to take on such guidance than federal and local governments. Yet local governments are the intended audience of the framework and the guide.

Previous research in Canada blamed this on “the minimal state powers of municipal governments”. In Australia, too, our federated system has left local councils with limited authority and resources.

An outdated view of old age

In analysing the 85 policy documents, we adopted a “traffic light” system to highlight whether they acknowledged ageing-related challenges and proposed corresponding actions.

Our analysis focused on five policy areas:

  1. care and support services
  2. cultural diversity
  3. housing
  4. transport
  5. walkability.

These areas broadly align with the WHO’s age-friendly domains.

The skewed policy focus is on care and support services. This reflects decades of aged-care reforms in Australia and their take-up at all levels of government. It also potentially reveals a stereotypical view of old age as being a time of frailty, decline and disengagement.

In contrast, many Australian and international movements advocate positive ageing. Their approach recognises the important contributions people make in later life.

Our analysis also reveals a failure to recognise how diverse circumstances impact the ageing processes. The result is a neglect of the broader spectrum of older Australians’ support needs.

This was most obvious in the failure of policies to recognise diverse cultural needs. There is almost a complete blindness to their impacts on ageing and other social determinants of health.

A mismatch between resources and services

In Australia’s three-tiered government system, each level has its own authority and resourcing ability. Previous Australian research shows local governments have limited ability to raise the resources they need to design and implement policies and programs for their ageing residents as the WHO guidance intended.

Our analysis shows a reliance on national programs instead. These may not be as nuanced in responding to local needs and conditions.

In related work, our fine-level spatial analysis also highlights a mismatch between the growth of ageing populations across Australia and where aged care services are being offered. This is due largely to inequitable eligibility criteria. These effectively favour home owners living in standalone suburban houses over others such as renters.

The latest proposal to revamp a residential aged-care sector that is no longer fit-for-purpose must be applauded. Policy should aim to provide these residents with all the attention and dignity they deserve. But as the population ages, there’s an ever greater need to provide support across all the domains that enable older people to live healthy, fulfilling lives.

People want age-friendly communities

We must look more broadly, to the many more older Australians who live in the community. It’s an option our governments have long encouraged. And it’s what most people prefer for themselves.

Local authorities would know local residents and their needs most intimately. But our analyses show they are hamstrung in supporting the needs of older people in the community.

Continued reform must aim to ensure local councils have the powers and resources required to serve these needs. This will go some way towards responding better to Australians’ changing needs. Importantly, it will also help to reframe the dialogue of ageing away from frailty and debilitation.

1 million homes target makes headlines, but can’t mask modest ambition of budget’s housing plans

Posted by on October 27th, 2022 · Government, Housing

By Hal Pawson, UNSW Sydney. This article is republished from The Conversation under a Creative Commons license. Read the original article.

Housing took centre stage in Treasurer Jim Chalmers’s first budget this week. Relatively modest but positive steps were made towards tackling Australia’s worsening shortage of affordable social housing, as well as the broader challenge of housing affordability. But parts of the package cast some doubt on the new government’s analysis of the problem and its ambitions to tackle it.

The most substantive aspect of budget housing plans was the confirmation of promised funding for 30,000 new social and affordable rental homes over five years via the new Housing Australia Future Fund. This will involve a A$10 billion, debt-funded, equity investment. Resulting annual returns will be ploughed into building subsidised housing available at below-market rates.

The 2022 ALP election platform had outlined this initiative. The budget added a bonus in the form of federal funding for another 10,000 affordable rental homes under a newly minted National Housing Accord with state and territory governments.

As part of that deal, the states have pledged to enable construction of “up to” 10,000 affordable homes on top of Commonwealth commitments. One way they would do this is by making well-located state land available for the purpose.

How achievable is the 1 million homes pledge?

To help make housing more affordable for Australians in general, the accord also commits Australian governments to enabling at least 1 million new homes over five years from 2024.

A million homes has a good ring to it, but how ambitious is it really?

Critics have pointed out that 985,000 homes were built over the past five years. However, in Australia’s notoriously volatile housing system, that was a period of peak activity unlikely to be repeated soon. In the five years to 2014, for example, the total was only 860,000 homes. And official and industry forecasts suggest only about 180,000 housing completions per year on average over the next three years.

By these measures, the million homes target could be quite challenging. So how can it be achieved?

Firstly, if governments directly fund 50,000 social and affordable rental homes, that will be a good start.

Secondly, according to the budget statement, it’s hoped measures such as stepped-up rezoning of non-housing land for housing and higher-density redevelopment near transport hubs will boost market housing output. These moves could lead to better-sited house building.

This approach also follows from the analysis that unreasonably high prices and rents are largely a result of “constrained housing supply”, in turn largely due to excessive planning restrictions.

Planning simplification can never be a bad aspiration. However, it’s questionable whether market players would ever boost construction rates enough to significantly lower new house prices – and therefore existing property values too.

A one-sided view of the housing system

The real problem here is that the budget and Labor’s election platform focused solely on the supply side of the market. They turned a blind eye to the policy settings that affect housing demand such as migration, tax, social security and financial regulation.

It would be hoped the more holistic analysis of Australia’s housing problems and solutions that’s essential to address these issues will underlie the government’s forthcoming National Housing and Homelessness Plan.

Positively, the budget allocated funds for the plan’s development. But that task has been assigned to the Department of Social Services. This seems to raise the risk of an unduly narrowly defined conception of what’s needed. The concern is it might focus exclusively on homelessness and affordability at the lower end of the market.

Certainly, these are crucial aspects of the wider housing policy challenge. But to examine them in isolation risks misdiagnosis and the prescription of palliative solutions.

Budget downplays need for institutional reform

The budget papers also imply a substantial downgrading of another ALP election pledge – to emulate countries such as Canada by setting up a national housing agency. Just $500,000 a year is allocated to this task. In my book, Housing Australia should be leading on the national plan, as well as accommodating the re-established National Housing Supply and Affordability Council.

With the right mandate, Housing Australia could create a much-needed permanent body of housing expertise within government, co-ordinating policy development and implementation across departments and levels of government. It could help to insulate housing policymaking from the short-term political dynamics that have plagued it for decades. This is an area where long-term thinking comes at a premium.

Negotiating the multi-party Housing Accord within months of taking power is an impressive government achievement. More broadly, though, these developments seem to speak to a disappointingly lukewarm commitment to essential institutional reforms.

The governance structure for housing policy in Australia is outdated, fragmented and underpowered. It’s badly in need of an overhaul.

The decayed state of this framework, and the long-term erosion of housing policy capacity within government, help to explain the problems of the housing system itself.

After nearly a decade of Commonwealth neglect, the Albanese government has moved fast to flesh out its main housing commitments. Yet an administration with serious long-term ambition to restore the health of our housing system would also be embracing the challenge of wider policy governance reform. It’s a fairly low-cost undertaking, but a precondition for progress beyond this term of office.

What makes a great footpath? The answer is key to our happiness and wellbeing as we age

Posted by on October 26th, 2022 · Wellbeing

By Fatemeh Aminpour, UNSW Sydney. This article is republished from The Conversation under a Creative Commons license. Read the original article.

As people age, they often become less confident about walking. Fear of falling can limit the activity of older people, leading them to become isolated.

So what, exactly, makes for a great footpath to walk on?

My colleagues and I explored this question in a recent paper. We used an evidence-based tool to measure the walkability of urban roads – assessing not just the footpath itself, but the features around it.

The results can help urban designers make our cities more walkable, especially for older people.

older man on mobility scooter behind woman walking

What makes a footpath ‘walkable’?

Only about 42% of people in Sydney and Melbourne live in neighbourhoods with above-average walkability. This compares poorly with people in Lisbon (99.2%), São Paulo (97%) and Hong Kong (96%).

Generally, features that determine whether a footpath is walkable fall into one of two categories.

Neighbourhood-level features refer to a neighbourhood’s general environment, such as:

  • how well connected streets are to each other. Do they offer a variety of available routes for daily trips?
  • how densely dwellings are built and how amenities are distributed. Are there parks, train stations, cafes or shops within walking distance?

Footpath-level features refer to the safety, comfort and attractiveness of a footpath, such as:

  • obstacles such as tree roots and short poles
  • the width of the path
  • convenience of crossing facilities
  • green belts (such as grass and shrubs) and fences that separate pedestrians from traffic lanes
  • areas of shade
  • street furniture
  • bicycles travelling along the path
  • vehicles parked on the path
  • noise from cars and other sources
  • diversity of streetscapes such as building facades, trees and grasslands.
man in high-vis stands next to roped-off footpath with sign saying 'use opther footpath'

Previous studies on walkability have mixed these two levels of features. But our research separated them, to help urban designers identify which features are most important and which should be improved.

We focused on neighbourhood walkability for senior citizens. By 2050, one in six people in the world will be aged over age 65 – almost double the number in 2015. Australian census data paints a similar picture.

Research shows older adults who perceive their neighbourhood as walkable are happier and more satisfied with life, and less lonely.

Walkable cities help senior citizens – especially those with physical restrictions – be more physically active, and promotes stronger and more regular social connections.

So it’s particularly important to identify how to make our streets more appealing for this age group.

What we found

Our research focused on the city of Shenzhen in China. Over the past 40 years, Shenzhen has grown into a megacity, and urban planners have historically prioritised the needs of motorised traffic over pedestrians and cyclists.

Among the methods involved in our study, we asked 256 senior citizens to rate footpath features to help us understand how much each one affects their walking.

Respondents told us bikes on footpaths and vehicles parked on footpaths were the biggest factors in reducing walkability. They reported that cars parked on footpaths made the space too crowded and increased the risk of being injured by bikes travelling on the footpath.

Convenient crossing facilities were rated as the second most important feature of footpath walkability. This includes formal crossings – such as zebra crossings and underpasses – as well as informal crossings such as quiet streets.

A street scene in Shenzen showing vehicles parked on footpaths and pedestrians using informal crosswalks.

We employed two auditors to quantify how well each feature appears in 11 sample footpaths. The results showed that the way researchers quantify the quality of a footpath can differ to the views of senior citizens.

For example, we measured the quality of a green belt based on the ratio of the length of the belt to the length of the footpath. But for the pedestrians we spoke to, no matter how wide a green belt is, it’s effective as long as it separates them from traffic lanes.

We need walkable neighbourhoods, too

Our research shows what makes a good footpath, but neighbourhood walkability is also important. If people don’t have destinations to walk to, or streets are not well connected, then they will be deterred from walking even if the footpath is good quality.

And we must remember, people experience footpaths differently. An able younger adult may consider a footpath walkable when a senior citizen or a younger child struggles to navigate it.

Every citizen has an equal right to use and enjoy public space – and footpath design should reflect this.

The market has failed to give Australians affordable housing, so don’t expect it to solve the crisis

Posted by on October 14th, 2022 · Government, Guest appearance, Housing

By Hal Pawson, UNSW Sydney; Bill Randolph, UNSW Sydney; Chris Leishman, University of South Australia; Nicole Gurran, University of Sydney; Peter Mares, Monash University; Peter Phibbs, University of Sydney, and Vivienne Milligan, UNSW Sydney. This article is republished from The Conversation under a Creative Commons license. Read the original article.

The federal Labor government has promised to craft a national housing and homelessness plan and to fund new social housing, returning Canberra to a field it all but abandoned for a decade. A new Productivity Commission report is scathing about current arrangements and calls for far-reaching change.

Yet some of the report’s key recommendations rest on faulty assumptions and outdated economic thinking. It relies on a misplaced belief that the market will respond to low-income households’ need for affordable housing. Its faith in deregulation as a cure-all is misguided.

The experience of recent decades and a wealth of research evidence instead point to the need to increase government investment in public and community housing.

Failed policies must change

The National Housing and Homelessness Agreement provides $1.6 billion a year in federal funding to the states and territories. It’s meant to improve Australians’ access to affordable and secure housing.

However, in its review of the agreement, the commission judges it ineffective and in need of a major shake-up.

With rents rising and vacancies falling, low-income private renters “are spending more on housing than they used to”. Some “have little income left after paying their rent”. Almost one in four have less than $36 a day for other essentials.

The supply of social housing – with rents capped at 25% of tenant income – has virtually halved in 30 years. Waiting lists have surged to 176,000 households. Many more are estimated to be in need.

More people are seeking emergency housing support from homelessness services. And, as the report acknowledges, more are being turned away.

The commission declares “homelessness is a result of not being able to afford housing” and governments must “address the structural factors that lead to housing unaffordability”. As experts in housing policy, economics and urban planning, we agree. Far-reaching reform is long overdue.

The report concludes, for example, that first home-buyer grants and stamp duty concessions are counterproductive and push up prices. It advocates spending these billions on preventing homelessness instead.

The report endorses a “housing first” approach to tackling homelessness – this means housing people unconditionally as the first priority before dealing with their other needs. The report also calls for early intervention programs for “at risk” cohorts, such as people leaving hospitals, prisons or out-of-home care.

So what’s wrong with the report?

The review’s terms of reference, set by the previous government in 2021, meant the commission did not consider how easy credit, negative gearing and the capital gains tax discount drive real estate speculation, inflate prices and lead to inefficient use of housing and land. Coupled with the commission’s embedded faith in market forces, these omissions skew its recommendations, especially on social housing.

Instead of more public investment to provide more social housing, the commission urges Canberra to convert its $1.4 billion-a-year support for social housing running costs through the national agreement into Commonwealth Rent Assistance. It wants to up-end the current system by replacing income-based rents with market rents across social housing.

But most of these renters would be much worse off unless there is a large rent assistance increase across the board. Recognising this, the commission advocates a top-up payment “to ensure housing is affordable and tenancies can be sustained”. Without estimating the cost, it optimistically suggests the states should pick up the tab.

The commission argues this approach would be more equitable for social and private renters. The implicit subsidy from capping social housing tenants’ rents at 25% of income typically exceeds the rent assistance paid to private tenants. Yet reducing social housing tenants to the same level of precarity as private renters seems an odd way to eliminate unfairness.

Enabling low-income Australians to secure decent private rental homes would require a dramatic rise in rent assistance payments, perhaps even to a level equating to the implicit subsidy social housing tenants receive.

Broader benefits of social housing overlooked

The commission has neglected the broader benefits of social housing investment that delivers good-quality, well-managed homes that low-income earners can afford.

Decades of mounting rent assistance expenditure have failed to fill the gap created by the lack of a sustained national program of social housing construction since the 1990s. Research shows the shortfall in private dwellings affordable to low-income renters ballooned from 48,000 in 1996 to 212,00 in 2016.

Simple comparisons between the costs of rent assistance and building affordable homes also ignore the wider community benefits of social housing. SGS Economics recently found the return on social housing investment is “comparable to, or better than” major infrastructure projects. And economics professor Andi Nygaard estimates the “large, but avoidable, annual social and economic costs” of the affordable housing shortage will top $1 billion a year by 2036.

Why planning reform is no panacea

Underlying much of the commission’s thinking is the idea that the main cause of unaffordable housing is outdated land-use planning rules that restrict new housing supply.

This contention ignores two decades of state planning reforms, including higher-density housing near transport and town centres, simplified rules and accelerated decision-making.

The commission estimates a 1% increase in overall housing supply (implicitly achievable through planning deregulation) could deflate rents by 2.5%. But what makes this scenario implausible is the development industry’s time-honoured – but entirely rational – practice of drip-feeding new housing supply to keep prices buoyant. Even if planning relaxation could enable ramped-up construction, it’s hard to imagine that being sustained in the face of any resulting market cooling.

However, the commission argues all private real estate development, regardless of cost, will eventually trickle through to those in need. As properties are traded over time, pricier homes will “filter down” through the market at progressively lower rents.

This view defies evidence that many factors other than planning have profound impacts on housing costs and supply. New Australian research strongly suggests “filtering” alone will not make homes affordable for lower-income earners.

None of this is to deny that the planning system could be improved. But if solving housing unaffordability were simply a case of “unleashing planning reforms”, other countries would have managed it long ago.

Australians struggling to pay the rent, or even find a home, deserve a much better response from Australia’s premier economic policy agency, and one that actually reflects the dynamics of the housing system.

Hal Pawson, Professor of Housing Research and Policy, and Associate Director, City Futures Research Centre, UNSW Sydney; Bill Randolph, Professor, City Futures Research Centre, Faculty of the Built Environment, UNSW Sydney; Chris Leishman, Professor of Property and Housing Economics, University of South Australia; Nicole Gurran, Professor of Urban and Regional Planning, University of Sydney; Peter Mares, Lead Moderator, Cranlana Centre for Ethical Leadership, Monash University; Peter Phibbs, Director, Henry Halloran Trust, University of Sydney, and Vivienne Milligan, Honorary Professor – Housing Policy and Practice, City Futures Research Centre, UNSW Sydney

The elephant in the room: to broaden home ownership access, governments must tackle housing affordability head-on

Posted by on September 20th, 2022 · Affordability, Housing

By Prof Hal Pawson. Originally published at Red Brick, the UK housing policy blog.

Boosting home ownership: an overriding housing policy objective for many decades, not only in Britain but the world over. And yet, as also seen in many countries, the past 10-20 years have witnessed owner occupancy rates static or falling – see graph. 

Figure: Changing home-ownership rates (owner occupiers as a percentage of all households) in selected countries indexed to 2003 (2003=100) – for sources see Figure 19 in our report

Home ownership levels among young adults have widely plunged in much more dramatic fashion. In the UK, for example, the 25-34 age group owner occupancy rate declined from 51% in 1989 to only 28% in 2019. And, in another concerning dimension, both in the UK and Australia, within each age cohort, ownership rates have declined disproportionately among lower income households. Given the range of inherent benefits believed associated with home ownership, these trends present a major housing policy challenge.

It is not as though official endorsement for home ownership can be dismissed as purely rhetorical. Quite the contrary. As demonstrated by our recent research comparing approaches across eight countries including the UK, a highly diverse array of first-time buyer assistance interventions have been, and are being, pursued around the world. 

Demand-side and supply-side interventions

In Britain this has lately involved schemes such as the Help to Buy shared equity model, where government effectively takes an equity stake in the value of an acquired home via a (time limited) interest-free loan, thus reducing the size of a purchaser’s necessary mortgage. Significant stamp duty concessions and government-backed low deposit mortgages have also been recently offered for first time property acquisition.

Since these types of help effectively enhance consumers’ ability to pay for housing, they can be classed as ‘demand-side’ instruments. Supply-side measures, by contrast, involve government support for home ownership targeted through housing suppliers (developers) or through the below-market-value disposal of publicly owned assets. 

UK examples include grant funding for housing association shared ownership dwellings and the effective subsidy offered to council tenants exercising the Right to Buy, as well as developer contributions to affordable home ownership mandated through land use planning. 

In Australia, while supply-side interventions are nowadays virtually absent, government-commissioned build-for-sale schemes formed an important instrument for boosting home ownership in the early post-war period. Direct state involvement in land and housing development to generate ‘entry level’ homes for sale meanwhile remains significant in both Germany and the Netherlands, and extensive in Singapore. 

All demand-side and supply-side models identified in our research feature among seven distinct forms of first-time buyer assistance identified in our generic policy typology – see Table 1 in our published report.

Political potency

Generally speaking, anglophone countries (e.g. Australia, Canada, Ireland, New Zealand, UK) have in the past 10-20 years tended to see growing deployment of demand-side first-time buyer assistance measures. 

Approaches of this kind chime with the neo-liberal preference for governments to act as ‘market enablers’ rather than to play a more direct role in provision. They also tend to be politically attractive because of their media appeal and electoral resonance. 

However, especially where they take the form of cash grants or tax concessions, demand-side measures are widely criticised by economists and public policy experts as inequitable (because the beneficiaries tend to be moderate income rather than low income households) and ultimately counter-productive since, by boosting purchasing power for a commodity with inelastic supply, they contribute to house price inflation. 

Those losing out under this type of approach – because of the higher prices consequently faced – include all aspirant first-time buyers failing to qualify for such assistance. The main beneficiaries, on the other hand, are existing home owners, whose properties consequently appreciate in value without any effort by property holders themselves. 

Nonetheless, the political potency of home ownership affordability was notably highlighted in recent national elections in both Australia and Canada where rival demand-side first time buyer assistance measures were pushed high among contested issues by the leading rival parties.

Broadening access to home ownership?

How far do first-time buyer assistance schemes in fact broaden home ownership across the income spectrum, as sometimes claimed? From our own work we would largely endorse the conclusion of UK researchers who concluded in 2017 that:

‘[Low cost home ownership] schemes are not expanding … social mobility by opening up home ownership to new groups of lower income households. Rather they are being used by households who would most likely buy anyway’.

Instead, the main effect of models such as shared equity (e.g. Help to Buy) or low deposit mortgages is to bring forward home purchase for moderate income earners otherwise destined to buy some time later. Alternatively, beneficiaries are enabled to buy a home somewhat bigger, or better located, than in the absence of assistance.

Arguably, regarding the scope for broadening access to home ownership, the discounted sale of council housing to sitting tenants could be something of an exception to the rule, since many scheme participants have indeed been relatively low-income households. Nevertheless, considering the eye-watering value of the effective subsidy receivable via discount entitlement (currently up to £100,000 per buyer), the true program cost to government is, and has been, colossal.

Because such costs have been historically incurred without direct government expenditure (but, rather, by accepting a below-market price for a state-owned asset), they have had low political visibility. However, if the Conservative government was serious about its recently declared intention to promote housing association Right to Buy sales, this would change because the associations concerned would expect Treasury compensation for the value of discounts approved. 

Some more recommendable first-time buyer assistance measures include:

  • Mandating developers to include below-market price housing for sale (as well as affordable rental) in residential developments is recommendable on the grounds that the discount is effectively financed by taxing land value
  • A strength of the shared equity model (e.g. Help to Buy) is its potential for lowering both the income and wealth threshold for home ownership access, to the benefit of lower income households.
  • Enabling development of for-sale housing by state agencies or housing associations offers a means of providing dwellings that can be sold to qualifying applicants at cost price (i.e. no need to factor-in profit), while also expanding overall housing supply to the benefit of the wider market.

Housing unaffordability – the elephant in the room 

Well-chosen measures to assist first-time buyers are a desirable element of a wider housing strategy. But their potential for expanding access down the income spectrum remains very limited if other key policy settings remain sacrosanct. Overall home ownership growth demands systemic change to tackle the much tougher challenge of easing broader housing affordability. 

Yet this objective calls for the dampening of property values, an objective in tension with the dominant theme of home ownership policy: to facilitate wealth accumulation through asset ownership. 

Some will argue that this demands land-use planning de-regulation to ‘free up supply’. In our view, however, the volume of new housing output is primarily influenced by developer response to market conditions, not by the planning system. Rather, the key problem lies in the taboo status of key tax and/or social security policy settings that in many countries encourage people with spare money – or credit capacity – to plough it into housing. In the UK context this could refer to the unlimited exemption from capital gains tax for the principal home, the weakness of the inheritance tax regime and the absence of a broad-based land tax.

A serious commitment to expanded home ownership demands consideration of phased reforms in areas like these.

Is it time to talk about rent control in Australia?

Posted by on August 29th, 2022 · Housing

By Ben Knight, UNSW Sydney. Originally published at UNSW Sydney Newsroom.

The rising cost of everyday essentials has most people feeling the pinch. But if you’re a renter and haven’t already been hit with a rent increase, there’s a good chance you’re especially worried.

Property data sources like CoreLogic show rents in Australia are climbing across capital cities and the regions. Meanwhile, vacancy rates are also at record lows – below 1 per cent in some areas – as the demand for rental housing continues to drive up prices.

While landlords have benefited from these stunning rent increases, the real impact is felt by households – many on low incomes – relying on rental housing, says Dr Chris Martin, Senior Research Fellow from the UNSW City Futures Research Centre.

“If there’s a supply response, it just can’t come fast enough,” Dr Martin says. “In the meantime, it’s causing pain to households, many of whom are already in rental stress, and it can displace them from the communities they want to be in or have been in for a long time.”

Currently, tenancy laws regulate the frequency of rent increases – usually no more than once every six or 12 months, depending on the jurisdiction. Tenants can also challenge a rent increase for being excessive to the general market level of rents for comparable premises.

“We currently have very light regulation of rents during tenancies, in terms of frequency of increases and ‘excessive to market’ provisions, and there’s no regulation of rents at the beginning of tenancies at all. It’s just whatever the market will bear,” Dr Martin says.

But greater use of rent regulation, including capping the amounts rents can increase during tenancies, could be one way to help relieve pressure on renters’ pockets and keep them in their homes.

“Proper rent control hasn’t been discussed for a while in Australia, but it’s something that should be on the research and policy agenda,” Dr Martin says.

The argument for controlling rents

Dr Martin says housing is often treated as a means to grow wealth rather than a fundamental need. He says there’s no reason housing shouldn’t be considered, and regulated, like many other essential goods or services are.

“There should be regulation of rents in principle because everyone needs housing, and the consequences of not having it are dire,” Dr Martin says.

Regulating the price of rents would help ease a significant cost of living pressure for households, Dr Martin says. It would better enable renters to stay in their homes through more affordable pricing, while preventing landlords from taking windfall gains at their expense.

“Rents are increasing but not the quality or output of the housing service. This is the problem with property investment: it promises that you can make a lot of money doing absolutely nothing,” Dr Martin says. “A landlord just happens to have acquired property in a place that has become more desirable. In almost all cases, the dwelling quality is declining while they make more gains.”

“There should be regulation of rents in principle because everyone needs housing, and the consequences of not having it are dire.”

In the absence of rent regulation, Rent Assistance paid through the social security system is the principal policy intervention for housing affordability in Australia. However, Dr Martin says it isn’t effective enough because many households in need are ineligible, and the amount is insufficient to make market-level rents affordable for many.

“There are about a quarter of a million low-income renters who don’t receive Rent Assistance at all and are paying unaffordable rents,” Dr Martin says. “And for more than a third of people who do receive it, even after accounting for all their Rent Assistance going towards the rent, they’re still in rental stress.”

The other alternative to private rental is the social housing sector. However, the construction of new social housing has stagnated for decades, and what little stock is available can’t keep up with demand.

“While social housing does provide more affordable rents, there’s not nearly enough to meet the needs of everyone who needs it,” Dr Martin says.

Regulation of rents could be pro-housing development, Dr Martin says, as it encourages landlords to increase land use intensity, increasing the availability of rental housing.

“If you’re the owner of land and rents are properly regulated, the way to increase your rental income would be to develop it further. So, rent regulation could be consistent with or even encourage rental housing development.”

Read more: Report highlights post-pandemic housing affordability pressures and rapid rent inflation

Making rent control work in Australia

While you might think rent control in Australia would be innovative, many states – particularly New South Wales – already have a history of rent control measures during economic crises.

Rents were regulated as part of the Fair Rents Act during the First World War, and a form of control was also reintroduced in 1931 during the Great Depression to help make housing more affordable. Rents were also regulated nationally throughout the Second World War, where rents were capped at the 1939 levels.

“To this day, there are still a handful of properties that would be covered by post-war rent control regulations in New South Wales that have kept them well below the market level,” Dr Martin says.

But there are also other forms of rental regulation in many countries today.

Most Canadian provinces have guidelines that stipulate the maximum percentage increase in rent that can be charged in the next year. Ireland introduced location-specific rent regulation where rents are capped at 2 per cent a year in designated ‘rent pressure zones’. Some properties in the United States are also subject to regulation where rents are benchmarked and adjusted to historic price levels.

Dr Martin says capping rent increases in line with the Consumer Price Index could be one of the ways to implement rent control in Australia. The rationale would be that it maintains the real value of the landlord’s return on their investment. In the interim, though, we could return to a temporary freeze on rent increases to alleviate the pressures on renters immediately.

“During the early days of the COVID-19 pandemic, some states introduced six-month rent freezes, which helped to keep households in their homes,” Dr Martin says. “We should be looking around the world to see how other countries have successfully implemented rent control for the long term, without being too prescriptive now about any particular method.”

Read more: Cost of living: more low-income households face the prospect of homelessness

Eliminating no-grounds eviction

Another fundamental reform in tenancy law is needed to make any rent regulation work – strengthening the legal security of tenants. In particular, eviction laws must be reformed for any rent regulation measures to be effective, Dr Martin says.

“If rents are regulated, but you’re not also providing reasonable security for tenants, landlords can threaten tenants with no-grounds evictions to put their properties back onto the market,” Dr Martin says.

Victoria has tightened their tenancy eviction laws recently – no-grounds evictions can only be served at the end of the first fixed term – while Queensland and Tasmania still allow no-grounds termination at the end of any fixed term. All other Australian jurisdictions still allow no-grounds terminations at the end of fixed terms and periodic leases.

Dr Martin says reforms need to go further to ensure landlords can’t unreasonably terminate tenancies without grounds, including at the end of fixed terms, as it undermines every other tenancy right such as challenging a rent increase.

“The legal insecurity of being a renter in Australia is routinely exploited by landlords,” Dr Martin says. “Getting rid of no-grounds terminations is something all jurisdictions should be looking to do right now to better protect renters.”