City Futures Blog

News and research in housing and urban policy, from Australia’s leading urban policy research centre.

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Rising house prices are no cause for celebration

Posted by on November 7th, 2023 · Uncategorized

Last week’s news of Australian house prices rising to a new record this month is notable, although with significant inflation affecting the country for the past 18 months, that won’t be a new peak in real terms. Even so, a 7.6% since January 2023 means a resumption of real terms price growth. That seems surprising at a time when interest rates have been rising and could rise further, and many recent FHBs are under severe financial pressure as a result.

Latest ABS data shows investor landlords coming back into the market. But first home buyer demand has dropped to the low level seen for most of the past decade and is unlikely to rise again in the near future – especially if prices continue to rise and/or interest rates remain around the current level.

Most famously personified in comments by former prime minister John Howard, Australian governments have historically tended to welcome rising house prices as signifying consumer confidence. Even academic researchers and government analysts have cited house prices as a sign of the regional economic ‘success’.

Nowadays, though, as demonstrated in our 2021 research, most economists in the field would say that rising house prices are not something to celebrate. Not only are they a problem because they lock more young people out of home ownership, but because of their damaging economic effects for Australia as a whole. This is an issue for everyone, not only for those hoping to grab onto the bottom of the property ownership ladder.

As explored in depth as part of City Futures Research Centre work led by Visiting Professor Duncan Maclennan, there are three key issues:

Inequality – disproportionate house price inflation has been a key driver of rising wealth inequality in Australia over recent decades.

People owning property, and people whose parents own property have gained – with the biggest gainers being those with the most expensive homes or the most valuable rental housing portfolios. Young people without home owning parents are increasingly disadvantaged in their chances of ever achieving this status themselves.

Rising inequality is also damaging to economic productivity – so say the OECD, the IMF and many leading economists.

Indebtedness and financial stability: Australia is one of the most mortgage indebted countries in the world. Measured according to mortgage debt to GDP. This makes our economy vulnerable to financial instability. Reserve Bank wariness about house price booms is motivated by this concern.

Diversion of investment away from productive activity: over-expensive housing – both house prices and rents – swallows up too much household income, crowding out scope for spending on goods and services that generate more of an economic return. The result is a hit to GDP, and therefore population welfare.

For all these reasons, it’s essential that the Commonwealth Government’s forthcoming National Housing and Homelessness Plan calls out excessively expensive housing as a problem to be tackled head on; committing to the fundamental reforms needed to address the issue. And, while these must include measures to enable expanded housing supply to parallel population growth, more affordable prices and rents cannot be simply achieved by ‘de-regulating planning’.

Given the complexity of Australia’s housing affordability challenge, a much wider range of actions will be needed, actions that also encompass tax and other changes that similarly call for visionary national leadership.

As emphasized by City Futures colleague, Dr Chris Martin, for the NHHP we need, fixing market failures and filling unprofitable gaps in the market will be insufficient. Rather, the Plan must break with neo-liberal orthodoxy by embracing the need for a stronger market-shaping and market-participating role for government itself.

This post was originally published by The Fifth Estate. Read the original post here.

Weighing the significance of Labor’s social housing investment fund

Posted by on September 22nd, 2023 · Uncategorized

By Hal Pawson

After more than six months of Parliamentary wrangling, the ALP’s flagship housing future fund bill finally cleared the Senate last week. For Australia’s neglected social housing sector, this presages a welcome revival of federally-supported capital investment, absent for most of the past quarter century. But, in a longer-term perspective, the resulting program will be significant only if it forms an initial downpayment on a much larger and broader housing reform and investment program.

How far will $10 billion stretch?

Under the Housing Australia Future Fund (HAFF), government will invest $10 billion on the capital markets to generate income hypothecated to social and affordable housing development subsidy. Resulting expenditures are officially anticipated as enabling construction of ‘30,000 new social and affordable houses in [the HAFF’s] first five years’.

Thanks to Senate crossbench advocacy, any shortfall in fund earnings due to capital market volatility will be topped-up from general revenue to guarantee $500 million in annual disbursements.

I’ve attempted elsewhere to explain simply how the HAFF model may work in practice. I say ‘may work’ because, while initially unveiled in 2021, Labor has remained coy on the scheme’s costings and mechanics. Therefore, a degree of speculation is unavoidable.

As Peter Mares has suggested, official reticence here probably reflects reluctance to expose the reality that the HAFF model, as inferred, will quickly exhaust its capacity to underpin new development dedications. Having committed to the initial tranche of investment contracts with housing providers (summing to 30,000 new units), program expansion will be therefore halted.

Only after HAFF-generated annual housing subsidy payments pledged in years 1-5 (but ongoing beyond that) have enabled the full repayment of construction debt by contracted housing providers will it be possible for government to dedicate subsequent HAFF returns to a follow-on tranche of newly contracted projects.

Under the small-scale NSW housing future fund, believed to have inspired the HAFF, standard contract terms are 25 years. However, according to the Grattan Institute’s Brendan Coates, it might be possible for subsidy-recipient housing providers to extinguish construction debt in as little as 15 years, implying that a new round of social and affordable development contracts could be struck from year 16.

Equally, IF 6,000 homes per year is what can be supported by a capital stake of $10 billion, IF government believes this an appropriate annual scale of construction, and IF ministers insist on funding social and affordable construction under this model, government would need to commit at least another $20 billion to the HAFF to enable a continuation in the initial flow of new development commitments in years 6-15. If subsidy contracts, in fact, need to run for 25 years, the ‘gap’ would implicitly call for a $40 billion HAFF top-up (i.e. $10 billion more every five years).

Why does all this matter?

All of this matters because, as many have rightly noted, the HAFF subsidy commitment as announced will underpin a program equating to only a very small fraction of Australia’s total unmet need for social and affordable housing.

Even if re-funded to form a continuous program of new commitments extending beyond year 5, the scale of activity envisaged under current HAFF plans is modest relative to, for example, the 175,000 qualifying households registered on state/territory public housing waiting lists. And our own census-based estimate that also factors in households on slightly higher incomes but still in rental stress puts total unmet need for social and affordable housing at 640,000 units.

Therefore, a 30,000 program (of which only 20,000 will be social housing affordable to those on the lowest incomes) is going to make only a small dent in the problem. And that’s before you factor in the growing housing need that accompanies a growing population.

These are the reasons that some advocates call for 25,000 new social housing units per year. Beyond this, one of Australia’s largest unions has recently put forward a reasoned – and funded – case for an annual program of 53,000 homes.

Even the smaller of these numbers appears huge relative to the current HAFF plan but, for context, it would account for around 12-13% of Australia’s total housebuilding – somewhat below the 16% represented by public housing construction in the period 1945-70. In England, meanwhile, not-for-profit housing associations today contribute around 25% of total housebuilding, albeit that this includes homes for market sale as well as for social rent.

What else is Labor offering – and where is it falling short?

To be fair, the Albanese government has also committed to several initiatives directly relevant to social and affordable housing supply over and above the HAFF. Firstly, under the National Housing Accord, mainly concerned with enabling expansion of overall housebuilding, the Commonwealth is pledged to fund 10,000 new affordable rental homes in addition to the HAFF 10,000.

Secondly, apparently thanks to pressure exerted by the Senate crossbench, Minister Collins in June committed to a $2 billion social housing accelerator fund directly funded from general revenue. This might generate 5,000 additional new dwellings over a couple of years.

Thirdly, as part of the parliamentary deal that eventually secured the passage of the bills through the Senate last week, government pledged another $1 billion to supplement the existing National Housing Infrastructure Facility. However, while NHIF assistance may be provided via grant, it is largely a financing and not a funding vehicle – i.e. a source of cheap debt to enable social and affordable housing development.

More broadly, delivering on other elements of its 2022 election platform, Labor has also implemented significant enhancements to national housing policy architecture; in particular, the re-establishment of a National Housing Supply and Affordability Council and the upgrading of a national housing delivery agency, Housing Australia.

What is badly needed at this point is a framework to lend coherence to the initiatives already delivered since the election and – more importantly – to provide a roadmap for the much wider and more ambitious housing reforms Australia badly needs.

Being already committed to a 10-year national housing and homelessness plan (NHHP), it would be hoped that this kind of framework is something Government already has in hand. However, while its development process is still at a relatively early stage, there are serious concerns that the NHHP could fall far short of what’s needed. To consolidate its housing policy progress to date, and to lock in a positive trajectory for the future it’s vital that this process is put back on track.

This story was first published by John Menadue’s Pearls and Irritations. Read the original story here.

How does the HAFF add up? Unpacking Labor’s $10 billion Housing Australia Future Fund

Posted by on September 14th, 2023 · Uncategorized

By Ben Knight, UNSW Media

Social housing in Australia has been in neglect for more than two decades. With a growing shortfall, ballooning waitlists and exploding queueing times across the country from minimal investment, the sector desperately needs a way to fund the construction of new below-market rent dwellings, and quickly.

With Federal Parliament sitting once more  after winter recess, the Housing Australia Future Fund (HAFF) has finally passed the Senate. This will usher in a new funding mechanism enabling publicly subsidised, privately financed, social and affordable housing development.

“Superfunds and other institutional players are looking for new investment opportunities, and governments are looking for to boost social housing construction while minimising new debt on the public balance sheet,” says Professor Hal Pawson, Associate Director at UNSW’s City Futures Research Centre. “With the HAFF framework legislated at last, Australia has a new national match-funding mechanism to enable institutional investment, which will help expand much-needed social housing production.”

How will the HAFF enable social housing investment?

Under the HAFF, the Australian Government plans to borrow A$10 billion to invest in equity markets, generating an estimated $500M annual return to subsidise housing development that, being backed by investment income, will be accounted as ‘off balance sheet’ expenditure. That is, formally sitting outside of the annual budget. 

Emulating similar, but much smaller frameworks established by several states including NSW, it is understood that community housing organisations will then secure private (debt) finance from institutional investors like superannuation funds to develop 30,000 units in the program’s first five years, underpinned by government contracts for annual subsidy payments for 25 years.

“Crudely ignoring inflation, the maths of this will see subsidy paid out at $500 million a year for 25 years, summing to $12.5 billion over the period, and therefore implying a per dwelling subsidy totalling $417,000 across the 30,000 unit program,” Prof. Pawson says.

Along with tenants’ rents, these subsidy payments will enable the housing providers to meet finance costs – interest and repayment on institutional debt – as well as ongoing housing management and maintenance. In other words, institutional investors will be financing a program, ultimately largely funded by government subsidy.

“The upside of this mechanism is that, for a given annual amount of public subsidy, it effectively enables government to bring forward social housing investment,” Prof. Pawson says.

Expended more conventionally, through capital grants, a given annual subsidy spend (say $500 million per year) would generate far fewer dwellings over the first few years of a program, Prof. Pawson says.

“If the subsidy needed to build each new social housing unit is $417,000, a $500 million capital grant program would give you only about 6,000 in the first five years, not 30,000,” Prof. Pawson says.

As Prof Pawson explains, however, there is also a HAFF downside. “Once the 30,000 homes have been contracted near the start of the program, the income stream generated by the $10 billion HAFF investment is fully committed for the next 25 years”.

“In isolation, 30,000 new units will make only a very modest start towards redressing Australia’s far greater social and affordable housing shortage. But if governments insist on this form of procurement, extending and expanding the program beyond this tranche will be possible only by boosting the value of the HAFF itself – for example by pledging another $10 billion equity investment stake,” Prof. Pawson says.

Leveraging institutional investment

Institutional investors, like Australia’s superannuation funds, regularly invest in infrastructure assets, like roads, ports and tunnels, but few have a direct stake in social housing – or, indeed, in any form of rental housing.

“There’s potential for social housing to attract institutional investors like superannuation funds, but up until now, Australia has generally lacked the right government policy settings to ensure the returns are comparable with competing risk-adjusted investment options,” Prof. Pawson says.

Importantly, the returns on social housing as an asset class are predicated not on capital gains via property sales, but a steady cashflow from rent revenue ensured via long-term government contracts, such as those expected to be struck under the HAFF. From the investor perspective, it’s a low-yield, low-risk stake that can form part of a diverse, balanced fund portfolio.

“In this model, the institutional investor is providing debt, not equity. Their financial input doesn’t buy them an equity stake in the building,” Prof. Pawson says. “Instead, with debt repaid after, say, 25 years, the properties are eventually outright owned by the community housing organisation for retention as low-rent homes in perpetuity.”

Large corporations having a stake in social housing might prompt anxieties, but if structured in this way, should be benign. Indeed, as Prof Pawson argues, this arrangement could in fact bring added benefits. 

“For the ‘big end of town’, it would give them some skin in the game, in a part of the housing market they haven’t had much interaction with before,” Prof. Pawson says. “From a strategic point of view, it means those companies will have a vested interest in the vitality and sustainability of social housing and will be motivated to protect and defend it into the future.” 

This story was first published by UNSW Newsroom here.

Embedding Indigenous advice in government policy key to real change

Posted by on September 8th, 2023 · Government, Housing, Indigenous

By Hon Prof Vivienne Milligan, City Futures Research Centre. Originally published at Pearls and Irritations, John Menadure’s Public Policy Journal.
In discussions of the upcoming referendum on establishing an Aboriginal and Torres Strait Islander Voice, a question often raised is how will it make a difference? This has been difficult for advocates to address because instances of governments’ empowering First Nations peoples are few and far between.

There is, however, a valuable example in NSW of the demonstrable benefits of having Aboriginal advisers working closely with government. This year marks 25 years since the Aboriginal Housing Office (AHO) took control of the provision of social housing for Aboriginal people in NSW.

The AHO model is not the same as the proposed model for the Voice, but it offers some relevant insights into the value to be gained from governments’ tapping into Indigenous knowledge and understanding. It has shown that having Aboriginal guidance at a high level in government (as well as regionally and locally), can provide many practical, often nuanced, benefits.

The AHO and its all-Aboriginal Board were established by an Act of the NSW Parliament in 1998. The AHO’s main roles include funding new housing, developing culturally appropriate housing services, building the capacity of Aboriginal organisations to deliver and maintain rental housing (with wrap-around support where needed), and improving tenant pathways to home ownership.

Under the Act, Aboriginal Regional Housing Advisory Committees also provide an effective means to pinpoint different needs and priorities between and within regions, to forge links between local service agencies, and to promote accountability to local communities.

The AHO came into being at a time when Indigenous housing policy was failing. Multiple Commonwealth and State-funded programs operated in different and confusing ways in local communities, new housing was being built to general standards that were not fit-for-purpose, rent collection rates were poor adversely impacting housing maintenance, and under-resourced local organisations were struggling to support their tenants and prevent tenancy failures. There was also poor transparency around the use of Aboriginal housing funding – the NSW Government had been sanctioned for failing to comply with funding requirements in the early 1990s.

Under the 1998 reform in NSW, Commonwealth and state funding was pooled and the AHO was given overall responsibility for managing Aboriginal housing policy, resource allocation, asset management and service standards. The AHO’s governance means that AHO Directors and staff, through their Aboriginal Chief Executive, are directly accountable to the Minister for Housing, who in turn is accountable to the NSW Parliament for meeting the objects of the Act. This approach illustrates a point made recently by Noel Pearson: that partnership models involve First Nations people sharing responsibility with government.

In June 2022 the AHO had a property portfolio of over 6,000 dwellings valued at $2.8bn. In 2021-22, 87 new homes were built (a 13% growth rate) and over 6,300 AHO- and community-owned properties were upgraded. While there is a lot more to be done, much has already been achieved under the AHO’s authority and impetus.

When most other jurisdictions went backwards, over the last 25 years NSW has retained a strong network of regulated Aboriginal housing organisations. This has averted the mainstreaming of all housing service delivery, providing more options for Aboriginal people. Today around 40% of all Aboriginal social housing tenant households in NSW live in Aboriginal-run housing.

Aboriginal employment has been strongly enhanced. The AHO has consistently maintained high numbers of Aboriginal employees: currently over 60% of its staff identify as Aboriginal. This helps to ensure that culture and lived experience shape programs and services and strengthens the relationship between officials and the communities they serve. AHO-funded programs have enabled economic development through engagement of Aboriginal businesses and tradespeople, especially in the fields of housing construction, maintenance and upgrading, and tenancy management. Today around 30% of all jobs created through AHO investment are going to Aboriginal people.

The work of the AHO includes many examples of service innovation that may not have arisen in a normal bureaucratic environment where a ‘one-size-fits-all’ model tends to dominate, and new ideas are too risky or too expensive to pursue at scale. Examples include the AHO’s award winning program to install hydro-panels that supply in-home pure drinking water in remote towns and their use of prefabricated housing pods as a rapid response to overcrowding and homelessness. In Western NSW, to reduce tenant electricity costs, 970 AHO properties have recently been fitted with solar panels delivered by two Aboriginal-owned companies.

The AHO model has demonstrated how embedding advice from Indigenous Australians in government processes can make a real difference – in this case to address distinct housing needs and to reduce homelessness. It has also facilitated long-term cultural learning and adaptation within the public service.

As a senior AHO official once put it, ‘why wouldn’t governments want Indigenous knowledge and advice close at hand?’

Labor offers new help for renters and first homebuyers, but PM must aim higher

Posted by on August 21st, 2023 · Uncategorized

By Hal Pawson

Along with a new scheme for first home buyer assistance, Federally-led rental reform is now on the PM’s agenda. But this week’s National Cabinet and Party Conference housing announcements badly need to be integrated into a coherent and ambitious long-term strategy.

Anthony Albanese has signalled backing for ‘harmonising’ tenants’ rights, country-wide, importantly including enhanced security of tenure and minimum property standards. With growing numbers of Australians renting, many of them perpetually, and with state/territory tenancy regulation generally among the lightest in the developed world, such changes cannot come soon enough.

Admittedly, Victoria and the ACT are well ahead of other jurisdictions on reforms of this kind. Extending these nationwide would be a significant win for renters elsewhere, fulfilling part of the renters rights agenda championed by the Australian Greens.

But because this week’s National Cabinet agreement largely rebuffed calls for firmer rent regulation it seems unlikely to resolve the Government’s Parliamentary stoush with the Greens, a Senate dispute that has stalled the ALP’s flagship housing investment legislation for six months already.

Not only did the meeting unsurprisingly reject the Greens’ demand for a two-year national rent freeze; it even baulked at the ACT’s ‘light touch’ model for regulating rent increases. This involves a legislated ‘guideline’ – set at 1.1 times the CPI Rent series. A landlord wanting to increase rent above the guideline they must seek tribunal approval and show that it is not excessive to the general market level of rent for comparable premises.

As more fully argued in our recent Parliamentary submission, within-tenancy rent increase restrictions – widely operated in comparator countries – mainly function to protect tenants from the risk of large rent hikes that could precipitate serious financial stress. For example, while sector-wide rent increases averaged only 5% in the year to February 2023, nearly a quarter of rents were hiked by more than 10%.

Placing faith in planning deregulation

In seeking to confront housing affordability stress, the new National Cabinet agreement instead places faith in boosting overall housing supply; that is, stepping up housebuilding.

Interestingly, along with the usual associated warm words about Australian governments’ mutual commitment to relaxing land-use planning restrictions and streamlining procedures, the communique also announced new Federal funding in the form of the $3 billion New Home Bonus to ‘incentivise states and territories to undertake the reforms necessary to boost housing supply and increase housing affordability’.

This appears to emulate recent initiatives in both the UK and Canada. Indeed, as introduced in 2011, the UK progenitor is even named the New Homes Bonus. Under that scheme, it is local authorities which are ‘incentivised’ to facilitate more housebuilding. However, an officially-commissioned evaluation found that ‘whilst many local authorities understood the bonus as a potentially powerful incentive, very few felt it had any effect on decision-making’. Assessments have also judged it difficult to conclusively quantify housing construction additionality attributable to the scheme.

Whether the Australian version of the model will have a more decisively positive impact remains to be seen, but we should be sceptical about any strategy to enhance housing affordability inferring a belief that market housebuilding activity is primarily determined by regulatory constraints.

In reality, the prime consideration for private developers and their financial backers is expected market conditions when constructed homes are saleable. Even if a construction boost could be evoked by planning de-regulation, it is unlikely that this would continue in the face of the stabilising or falling property prices that policy proponents would hope for as a result. Such behaviour is not in any way malevolent; it is simply rational business logic for a profit-making entity.  

A ramped-up housing supply target

In any event, by whatever means it might be achieved, National Cabinet also ramped up the existing official aspiration to facilitate construction of 1 million homes over five years; instead, Australian governments have now committed to a 1.2 million target. Considering that this would represent an output increase of around a third on current activity levels, its achievement would be no mean feat.

Current Government plans envisage some 40,000 of the 1.2 million homes being social and affordable units part-funded by Federal subsidy – via the Housing Australia Future Fund (HAFF) and the National Housing Accord. That is, of course, if the HAFF is eventually passed in the Senate – more of which later.

If he is serious about meeting the 1.2 million target, the PM may need to ponder more direct government involvement in housing production. Ideally, this would include the commitment to substantial additional social and affordable housing investment in any case required to seriously address the scale of unmet need. He might even consider the recently proposed CFMEU scheme for a hugely ramped-up construction program funded by a corporate super-profits tax.

Of perhaps equal radicalism, other Australian governments could also emulate NSW in looking to revive the government-commissioned build-for-sale programs of the 1950s and 1960s. That is, homes built for sale at cost price on land owned by government or potentially acquired for the purpose through compulsory acquisition powers.

A way forward for the housing legislation

Measures of the kind floated above might even be sufficient to woo Greens Senators to relent on their opposition to the ALP’s housing bills so that the HAFF-subsidised social and affordable housing program can be finally got under way. Short of that, as previously argued, Federal Labor needs to more clearly signal that the current housing bills and recent announcements represent only the initial elements of a more coherent and ambitious long-term housing investment and reform agenda.

The obvious vehicle for this should be the promised National Housing and Homelessness Plan. As part of a vision for a better functioning housing system, the Plan should, for example, envisage a better (more strongly) regulated rental sector to the liking of the Greens Party. However, the recently issued NHHP Discussion Paper suggests that the Plan may fall totally flat.

The paper, for example, lacks any analysis of housing system performance, a weighing of relevant evidence and at least provisional set of overarching goals or ‘missions’ which could be further refined via consultation. While its commentary is generally anodyne in the extreme, some sections of the paper are highly dependent on contentious Productivity Commission assertions on the inherent superiority of market forces and the benefits of deregulation, all of which are uncritically cited.  

As a basis for an initiative that should be the Government’s housing policy flagship, the Paper is a woeful failure. It only vindicates previous warnings that this assignment should have been delegated to the new Housing Australia agency and not to the Department of Social Services. Or, if the PM would prefer, why not take up Ken Henry’s kind offer to lead an underpinning housing system review?

Ministers must get a grip of this process, and fast. Beyond re-allocating responsibility for NHHP development, they should affirm its importance by legislating its remit, broad objectives and review schedule. And if they are seeking inspiration on the scale and breadth of the task at hand, the Australian Housing and Urban Research Institute has only recently published the very blueprint needed.

This post first appeared in John Menadue’s Pearls and Irritations. Read the original article here.

Australian residential tenancies law reform: a new agenda for 2023 and beyond

Posted by on August 1st, 2023 · Tenancy

By Chris Martin. Originally published in ‘Reforming Residential Tenancies Acts’, a special issue of Parity magazine, by the Council to Homeless Persons.

On 28 April 2023, Australian governments, meeting as the National Cabinet, agreed to develop a new law reform agenda to ‘strengthen renters’ rights across the country’. Housing ministers are now tasked with drafting proposals to take back to National Cabinet in the latter half of the year.

Although no details have yet been produced, the announcement of the national reform agenda is remarkable for two reasons.

First, the agenda is being developed in collaboration by states and territories, co-ordinated through a national forum. This contrasts with the experience of recent decades, when states and territories have almost always gone it alone when reviewing and revising their residential tenancies legislation.

The result is tenancy laws that are increasingly divergent, while gaps have gone unaddressed. The divergences include key topics, such as security of tenure and whether landlords can give termination notices without grounds. The ACT has recently amended its legislation to remove provision for without-grounds terminations, both at the end of the fixed term of a tenancy and during a periodic tenancy, while Victoria allows them only at the end of the first fixed term of a tenancy, but not for subsequent fixed terms or periodic (‘month-to-month’) tenancies. Queensland and Tasmania allow without-grounds terminations at the end of a fixed term, and not periodic tenancies, so tenants can be on a string of fixed terms and still face without-grounds termination. Other jurisdictions still allow terminations without grounds at the end of fixed terms and for periodic tenancies, although the new government in New South Wales has promised to remove them.

Figure 1. Without-grounds terminations across Australia: notice periods, where allowed

End of fixed term60 days2 months28 days60 days90 days*30 daysNot allowed14 days
Periodic90 daysNot allowed90 daysNot allowedNot allowed60 daysNot allowed42 days

*60 days if the fixed term is less than 6 months. End of first fixed term only.

Another area of divergence is family and domestic violence (FDV). Until relatively recently, residential tenancy laws did not make any provision for tenants experiencing FDV. Over the past decade, all states and territories have amended their legislation to address FDV, but taken different approaches. Tenants seeking to stay and remove a FDV perpetrator can do so through FDV order proceedings in New South Wales, Tasmania and the NT, but elsewhere must apply separately to the tenancy tribunal to end the perp’s tenancy. If they want to leave a tenancy early and end their liability, they can give a notice certified by certain professionals in New South Wales, Queensland and WA, but must apply for court or tribunal orders in other jurisdictions. Three states have made changes the rules about tenants’ vicarious liability for damage and other breaches in FDV situations; in other jurisdictions, the usual rules still apply.

Figure 2. Family and domestic violence provisions across Australia

T stays, removes perpFDV order may terminate perp’s tenancyApply to tribunal, satisfy as to FDVApply to tribunal, satisfy as to FDVFDV order may terminate perp’s tenancyApply to tribunal, satisfy as to FDVApply to court, satisfy as to FDVApply to tribunal, satisfy as to DVFDV order may terminate perp’s tenancy
T leaves, ends liabilityT may give notice with evidence/
T may give notice with evidence/
Apply to tribunal, satisfy as to FDVFDV order may terminate tenancyApply to tribunal, satisfy as to FDVGive notice with evidence/
Apply to tribunal, satisfy as to FDVFDV order may terminate tenancy
Vicarious liabilityTenant not liable for FDV damageTenant not liable for FDV damagePer usualPer usualTenant may apply to dismiss FDV-related termination proceedings  Per usualPer usualPer usual

It is not only on substantial issues that laws are diverging: residential tenancies legislation looks and reads differently across jurisdictions. For example, Victoria’s Residential Tenancies Act is about seven times the length of Tasmania’s, and only a little shorter than Melville’s Moby Dick. Although recent amendments have mostly improved the law for Victorian tenants, they have also made the Act a complex, difficult-to-navigate piece of legislation.

The second reason why the National Cabinet’s decision is remarkable is that it expressly states that the reforms should ‘strengthen renters’ rights’. This contrasts with the theme of ‘finding the right balance’ between landlords’ and tenants’ interests that has marked most state- and territory-level reviews, and which has tended to produce only modest improvements while bigger issues of housing justice go unaddressed.

Australian residential tenancy laws are generally very accommodative of landlords and their interests. They present no barrier to landlords entering the rental sector: no training, registration or licensing requirements – all you need is a dwelling to let. (All states and territories require that the dwelling must be fit for habitation, but the onus is on applicants and tenants to police this.)

Tenancy laws also generally allow landlords to exit the sector when it suits them to do other things with their properties, whether that’s selling, or using the property for their own housing or other purposes (e.g. Airbnb). Even those states that have removed or restricted the use of without-grounds terminations still allow termination on grounds such as preparing the premises for sale (Victoria and Queensland).

And as long as they are in the rental sector, landlords can increase rents in line with the general market level of rents for comparable premises. Most jurisdictions have limits on the frequency of rent increases (once in 6 or 12 months), but none limit the amount or rate of increase. The ACT has a legislated ‘guideline’ (1.1 times the rate of the rent index for Canberra in the Consumer Price Index), and landlords seeking rent increases above the guideline must apply to the tribunal and show the increase is not excessive to the general level of rents for comparable premises. This procedural step probably discourages increases above the guideline (which is a good thing), but it is not a firm cap on rents. The issue of rent increases has been conspicuously absent from state- and territory-level reviews.

Research commissioned by the Australian Housing and Urban Research Institute (AHURI) shows how accommodating Australian tenancy laws are of landlords.[2] In a survey of just under 1,000 landlords, a significant portion (44%) said tenancy laws were a ‘very important’ consideration in their decision to invest; however, of landlords who had disposed of a property, only 14% nominated dissatisfaction with tenancy laws as ‘very important’ to their decision – placing tenancy laws last among a range of possible factors in disinvestment decisions. By far more commonly cited ‘very important’ reasons for disposing of a rental property were ‘it was a good time to sell and realise capital gains’ (50%) and ‘I wanted money for another investment’ (47%).

The research also put to the test the claim that tenancy law reform causes landlords to disinvest. Analysis of rental bond records found no statistically significant increase in properties exiting the Sydney and Melbourne sectors around law reform events in those states (the commencement of the Residential Tenancies Act 2010 (NSW), and the start of the Victoria’s laws reform review in 2015). In fact, Sydney property exits were slightly lower after the New South Wales reforms.

The most striking finding of the research was how frequently properties enter and exit the rental sector – whether the law is changing or not. In both Sydney and Melbourne, more than half of properties exit within five years of entering the rental sector. Properties churn rapidly through the sector, as it suits their owners – and as a result tenants are churned out of their homes.

While past law reforms have not caused landlords to disinvest, a stronger law reform agenda that is less accommodating of landlords’ interests might have that effect – and that would be no bad thing. Among other reforms, the new agenda should strengthen tenants’ security by getting rid of without-grounds termination, narrowing the scope of termination grounds, and ensuring tribunals can decline termination where it is not justified or would result in homelessness. It should also regulate rent increases, by caps or an ACT-style guideline. Landlords can either meet these standards or leave – and if they do leave, that’s more room for would-be homeowners or for a different, better type of rental housing provider.

The Senate is currently conducting an inquiry into the worsening rental crisis, including issues of renters’ legal rights. To make a submission to the inquiry, see the inquiry website. Submissions close 4 August 2023.

National housing strategies – the time is right

Posted by on July 13th, 2023 · Uncategorized

Hal Pawson and Chris Martin writing for the UK’s leading housing industry magazine, Inside Housing

In what feels like the dying days of an exhausted government, Michael Gove’s Social Housing (Regulation) and Renters (Reform) Bills look like last gasp attempts to breathe life into a housing reform agenda barely on life-support.

True, many of the measures that strengthen regulatory oversight in social housing and tenant security for private renters will be widely welcomed. But, as Matthew Bailes and Charlotte Carpenter point out in their recent story for Inside Housing, these moves lack a grounding in any overarching vision or reform agenda for the wider housing system.

The last such official analysis and position statement for England, ‘Fixing our broken housing market’, is now more than six years in the past. Thus, Bailes and Carpenter rightly echo the National Housing Federation’s recent call for the next government to urgently instigate a more formal and long term national housing strategy for England.

This chimes with policy developments in Australia where, after a decade of federal complacency and inaction, housing stresses have similarly escalated to historic highs. Rent inflation is at record levels, while homelessness has continued to climb, all against a backdrop of ongoing homeownership decline.

Complementing the NHF pitch, our new report calls for Australia’s federal government to chart a coherent national road-map for housing and homelessness reform. With many of our recommendations also relevant to the UK, we outline the goals, scope and institutions an ambitious national strategy needs to succeed in the domestic context.

Unlike both England and Australia where such a project would be without precedent, substantive national housing strategies do, in fact, exist in other countries. As analysed in our report, there is much to be learned from strategy-making experiences in nations such as Canada, Austria and Finland.

Closer to home for Inside Housing readers, there is a lot to be said for the Scottish Government’s ‘Housing to 2040’ policy blueprint. Importantly, this continues a Scottish housing strategy-making tradition incorporating public consultation, goal setting, evaluation and revision.

‘Housing to 2040’ also bears the hallmarks of any meaningful strategy: analysis of problems to be addressed, clear and measurable goals for gauging progress in tackling those problems, identified actions to achieve those goals, and plans for mobilising resources to implement specified actions.

Following Australia’s 2022 general election, the country has a new national government with a degree of housing ambition and an initial suite of policy and investment initiatives to match. Whether Prime Minister Albanese fully recognises the need for a far-reaching long-term strategy of the kind we propose, remains to be seen. But British readers will be envying the scenario where that question can at least be asked.

Towards an Australian Housing and Homelessness Strategy by Chris Martin, Vivienne Milligan, Julie Lawson, Chris Hartley, Hal Pawson and Jago Dodson is published by the Australian Housing and Urban Research Institute (AHURI)

This story was first published in Inside Housing. Read the original story here

Vertical schools are increasingly common. This is what students want in ‘high’ school design

Posted by on June 22nd, 2023 · Cities

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

The traditional idea of a one-or-two-storey school, spread over a vast campus is no longer an option for some new schools. Population growth and a lack of land in urban areas mean some schools have to go up.

This has seen vertical schools become increasingly common. These are schools that tend to have more than four storeys.

Some academics argue vertical schools are not well suited to children’s need for space and learning. But what do children want?

I asked students for their opinion

My study published this week surveyed students at three vertical schools. The schools had between five and ten storeys and were in Brisbane and Melbourne. They enrol students from the first year of schooling to Year 12.

I interviewed 38 students in years 3 to 7 through walking tours. They led me around their school, telling me what they liked and didn’t like about their environment.

Children still want space to play

Students told me they wanted access to outside and inside play spaces, even when the weather was bad. They said covered terraces, rooftop gardens and wide hallways allowed students to play in rainy weather.

This is where vertical schools can have an advantage over regular schools. Regular schools often have limited indoor play spaces or their covered outdoor learning areas are easily flooded. As one 9-year-old student said:

We play out here [on the terrace] a lot […] when there’s a wet day […] It’s very good to get fresh air when you’re stuck inside.

While vertical schools generally have limited space on school grounds, they are usually built in central urban locations with parks or green spaces close by. These provided children with access to a variety of outdoor environments within walking distance, an opportunity which is not necessarily available in a suburban school.

A roof-top garden, partially covered and can be used during rainy days. Author supplied.

They don’t want to spend breaks climbing stairs

Children had to travel via the stairs multiple times a day, for recess or lunch breaks or to change classes.

Students said having to line up to walk up or down the stairs during the peak recess or lunch time wasted their breaks. This was particularly a concern for the primary school participants in years 3 to 5 who found climbing the stairs “tiring” and said it “hurt [their] legs”.

Children tried to limit their use of stairs by using learning and recreational facilities close to their home rooms, if permitted.

Some common facilities in one of the schools were located on intervening floors, a design feature that children described as “really convenient”. As one 12-year-old student said:

You just need to walk up one or two levels […] and you are at where you want to be.

Play spaces close to home classrooms mean students don’t have to climb stairs. Author supplied.

They don’t want too much noise

Open-plan classrooms and atrium stairways, where the stairs hug the edges of an atrium, are common features in vertical schools.

Students said they were major sources of noise pollution. They complained “the stomping [on the stairs] could be really loud” and “could interfere with [their] learning”. As one 9-year-old student told me:

if someone drops something on level one, you can hear it from level four.

This particularly happens when the learning areas are open to the atrium and the main staircase and therefore the noise travels between the levels.

Research suggests building stairs in the corners of the building and separating them from the atrium can minimise noise. This way vertical movement won’t interrupt any central learning spaces.

A school with stairwells located in the corners and separated from the atrium. This can help reduce noise. Author supplied.

But they want to be able to bump into each other

Children said they wanted ways to meet their friends informally. They did not want to feel closed off in their class groups.

Atriums, wide stairs, and expansive views both inward and outward can promote a sense of community at school. As a 9-year-old student described:

[Kids] can see what’s going on down there and if they see someone, they can knock on the glass and wave. And sometimes kids can watch their friends go to choir on those steps down there and they wave to them.

This type of interaction is important as research shows a sense of community increases children’s emotional attachment to school, resilience and overall sense of wellbeing.

Wide stairs create opportunities for children to interact. Author supplied.

They also want a choice over the use of outdoor spaces

Children would like to choose their preferred outdoor space during breaks, whether they are terraces close to the learning spaces, school grounds or neighbourhood parks. As one 13-year-old student said:

I wish we could sit on [the terraces of] all of the levels […] You’re not allowed to go past level one in your lunch breaks because there is no supervision up here.

While all these opportunities might be present in a vertical school, using them all at the same time poses a challenge to the adult supervision.

Schools struggling with staff shortages may not be able to supervise students in multiple floors and the neighbourhood park during breaks. But this can make spaces overcrowded.

Additionally, vertical movement is strictly programmed in primary schools. Children rely on the teachers taking them upstairs or downstairs before and after the break.

Despite attractive architectural concepts anticipating stair landings for informal interactions, children were unable to pause at their leisure and connect with their environment or each other.

Keep talking to students

Vertical schools provide new opportunities and new challenges for the way students play and learn.

My research shows the importance of including children’s perspectives in the initial stages of school design. While architects may offer innovative visions, they will not be the ones eventually using the spaces they create.

To deliver enough affordable housing and end homelessness, what must a national strategy do?

Posted by on June 20th, 2023 · Government, Housing

By Chris Martin. This article is republished from The Conversation under a Creative Commons license. Read the original article.

The Albanese government came to office promising action on housing. Its A$10 billion Housing Australia Future Fund is now stuck in the Senate, with the Greens demanding more ambitious funding and reforms. The government is also working on its promised National Housing and Homelessness Plan.

In research published today by the Australian Housing and Urban Research Institute (AHURI), we make the case for a housing and homelessness strategy to be an ambitious national project. Its central mission should be to ensure everyone has adequate housing.

We outline the goals, scope and institutions the strategy needs to succeed. The housing numbers it should deliver to meet demand – including 950,000 social and affordable rental dwellings by 2041 – dwarf current government targets.

Our report draws on new thinking about the need for “mission-oriented” governments to tackle complex problems, as well as policy-making approaches here and overseas.

Why a strategy?

Strategies help to clarify the purpose of action for everyone. They bring together information and expertise that inform and stimulate public discussion. They help define priorities.

This is important for housing and homelessness problems because they are complex. They cross over different policy areas and levels of government. They have diverse causes and broad effects.

By the same token, solving these problems can produce diverse benefits.

The goal of “adequate housing for everyone” – the first target of the United Nations’ Sustainable Development Goal 11 – states the challenge clearly.

To meet that challenge, it is useful to think of governments and stakeholders being engaged in a mission that requires government to lead the deliberate shaping of markets and direction of economic activity. Fixing market failures and filling unprofitable gaps in the market isn’t enough.

It’s also useful to think about the special status of governments in financial systems. The Australian government is the issuer and guarantor of money. It can use this status to finance missions for the public good.

For example, for two years of the COVID-19 emergency, the Reserve Bank of Australia bought bonds issued by federal, state and territory governments totalling $5 billion per week. That’s equivalent to one Housing Australia Future Fund every fortnight.

Fragmented approach causes problems

Because Australia is a federation, the federal government must work with state and territory governments to implement policies. Most intergovernmental activity has involved housing and homelessness conceived of as welfare issues.

Responsibility for housing and homelessness policy is divided. The National Housing and Homelessness Agreement guides policy, but is clearly deficient. Development of other policy levers, such as Commonwealth Rent Assistance, has languished.

The National Housing Finance and Investment Corporation (NHFIC) finances and supports efforts to increase the supply of housing, particularly affordable housing. The NHFIC is becoming increasingly important as its functions expand. It’s getting a new name, Housing Australia, to match its remit.

The financial regulators, the Reserve Bank and the Australian Prudential Regulatory Authority (APRA), are arguably conducting housing policy of their own.

Housing policy responsibilities at the state and territory level are similarly fragmented.

Lessons from other national strategies

We examined Canada’s National Housing Strategy. Its rights-based approach, statutory basis and accountability agencies are important innovations.

However, the Canadian strategy is narrowly focused on affordable rental housing. Key issues of tax and finance are beyond its scope. Looking to European housing policy leaders, such as Austria and Finland, we can see the value of broader national strategies and dedicated housing agencies.

We can also learn from other national approaches to policy in Australia, such as Closing the Gap and Australia’s Disability Strategy.

The first lesson is that making a strategy is itself a strategic exercise. Reformers need to develop the capacity to take on and influence established institutions, vested interests and entrenched ways of thinking.

A dedicated lead agency may be needed to coordinate strategy development and implementation. Accountability is crucial. By this we mean more than accounting for the spending of public money. It is also about demonstrating commitment to the reform process and the people it serves.

What should the strategy’s goals be?

The strategy should have a clear mission: everyone in Australia has adequate housing.

The strategy should be comprehensive, with a set of secondary missions:

  • homelessness is prevented and ended
  • social housing meets needs and drives wider housing system improvement
  • the system offers more genuine choice – including between ownership and renting
  • housing quality is improved
  • housing supply is improved
  • housing affordability is improved
  • the housing system’s contribution to wider economic performance is improved.

And what policy areas are covered?

The diagram below shows the strategy’s scope and stages. It begins with the familiar core policy areas covered by the National Housing and Homelessness Agreement (bottom left). As the scope of the strategy expands (up and to the right), the intensity of housing policy leadership varies accordingly.

Graphic showing the policy areas to be covered by an Australian Housing and Homelessness Strategy. It indicates  'established core policy areas', 'new core policy areas', 'policy areas for alignment with housing missions', and 'policy areas for articulation with housing missions'.
The policy areas to be covered by an Australian Housing and Homelessness Strategy. AHURI, Author provided

Social housing and homelessness are core policy areas for the strategy. To meet current and future need, it should aim to add 950,000 social and affordable rental housing dwellings by 2041. That’s about 50,000 new dwellings a year – a lot more than the 8,000 a year over five years that the Albanese government has promised so far.

The most cost-effective way to finance this growth is a mix of NHFIC bonds and capital grants from government. State and territory governments should make plans to regularly reassess need and delivery.

Housing assistance, residential tenancies law and building quality should be new core policy areas. The National Cabinet’s recent decision to develop a tenancy law reform agenda to strengthen tenants’ rights is a welcome step.

Housing-related taxation, housing finance and planning and development regimes should be aligned with Australia’s housing and homelessness missions.

Existing national strategies for First Nations and people with disability need strengthening on housing and homelessness as a matter of priority.

The strategy should be laid down in law. The legislation should enshrine the right to adequate housing, nominate Housing Australia as the lead agency, and establish regulatory and accountability agencies.

The author acknowledges his report co-authors, Associate Professor Julie Lawson, Honorary Professor Vivienne Milligan, Chris Hartley, Professor Hal Pawson and Professor Jago Dodson.

A sustainable Australia depends on what happens in our cities – that’s why we need a national urban policy

Posted by on June 5th, 2023 · Cities

By Robert Freestone, UNSW Sydney; Bill Randolph, UNSW Sydney, and Wendy Steele, RMIT University. This article is republished from The Conversation under a Creative Commons license. Read the original article.

Australia has not had a national urban policy since the Rudd government. A troika of Liberal PMs followed. Tony Abbott wasn’t interested. Malcolm Turnbull didn’t quite live up to the hype but delivered cross-governmental City Deals and the Smart Cities and Suburbs Program. Scott Morrison at best presided over a business-as-usual approach lacking any resolve, urgency or innovation.

Will this Labor government do any better? Australian cities and regions were not front and centre in the 2022 federal election campaign. But there were signs a Labor government would reinstate a concern for urban policy issues.

The federal budget confirmed the government’s focus on urban policy. It set aside funding for a “national approach for sustainable urban development” and a “cities program”. Last week the government appointed the expert members of the Urban Policy Forum announced in the budget.

These are vehicles for delivering a promised National Urban Policy. The government says this policy “will bring together a vision for sustainable growth in our cities”.

Why focus on cities?

Two in three Australians live in a capital city. Our 21 largest cities are home to 80% of the population.

Cities account for 80% of economic activity in Australia. As globally connected hubs, they are crucial sites for community, commerce, infrastructure, biodiversity, governance and democratic processes. Our cities are central to meeting the challenges of a changing climate.

Map of Australia's 21 largest cities
Our 21 largest cities, with 80% of the population, have a huge role to play in achieving a sustainable future. Australian Urban Observatory, CC BY

Prime Minister Anthony Albanese has skin in the game. He was the minister for infrastructure and transport in the Gillard government. He oversaw the first truly national urban policy, Our Cities, Our Future, in 2011.

In 2021, Albanese declared that “cities policy has been one of the abiding passions of my time in public life”. He foreshadowed a new national policy framework.

The budget papers specifically refer to the National Cabinet agreement on April 28 on national priorities. Among these is “Better Planning for Stronger Growth reforms to support a national approach to the growth of cities, towns, and suburbs”.

The budget commits nearly A$400 million over four years in new grants and investments in “Thriving Suburbs” and “Urban Precincts and Partnerships”. Some $11 million goes to a Cities and Suburbs Unit to deliver a National Urban Policy. The policy is required to:

address urgent challenges facing our major cities – from equitable access to jobs, homes and services, to climate impacts and decarbonisation.

Looking down the street of an outer suburban development
Outer suburbs distant from services and workplaces create problems for the sustainability of our cities. R. Freestone, Author provided

An overdue development

Urban development has been “undervalued in national discussion” globally, not only in Australia. But in recent years various bodies, inquiries and forums have pushed for a new-look national urban policy.

The Planning Institute of Australia has long called for a coherent governance framework for spatial plans, infrastructure, growth management and urban renewal. Without a national cities plan, a 2018 report by the institute said, “all jurisdictions will be disadvantaged when making resource allocation decisions and planning for basic enabling infrastructure”.

In the same year, a federal parliamentary inquiry into the Australian government’s role in city development called for “a national plan of settlement, providing a national vision for our cities and regions across the next 50 years”.

In 2019, Future Earth Australia, based at the Australian Academy of Sciences, advanced a ten-year national strategy for sustainable cities and regions. This strategy is aligned with the Australian achievement of the UN Sustainable Development Goals.

New ideas for Australian cities and regions

We must take seriously the economic, social and environmental impacts of long-term population growth and development. To become a more equitable and sustainable country, action on the uneven experiences of Australian cities and regions must be a government priority.

In 2021, an Australian Academy of Social Sciences workshop on Australian Urban Policy: Achievements, Failures, Challenges was undertaken jointly at the City Futures Research Centre, UNSW, and Centre for Urban Research, RMIT University. More than 50 researchers and practitioners explored the many issues competing for urban policy attention at the national level.

Key areas included water, climate change, Indigeneity, transport, migration, population settlement and new cities. Urban green space, biodiversity, digital technologies, economic productivity, social inclusion and affordable housing supply were also identified as issues that cut across national policy agendas.

Constitutional constraints mean states must play a leading role in national urban policy. Fortunately, these constraints don’t rule out inter-governmental partnerships. There are many, often poorly integrated policies, programs and initiatives across all levels of government.

There was consensus at the workshop on the need to transcend the political ideology and expediency that have led to fragmented urban policies. A different kind of national politics focused on sustainability, resilience and regeneration is required.

The “secret” to sustainability lies in an integrated national framework of policies and strategies for city-regions. All three tiers of government need to buy into it.

Graphic of the 17 UN Sustainable Development Goals
Coordinated urban policy action across Australia is needed to achieve the UN Sustainable Development Goals. United Nations

National urban policy redux

There is a “back to the future” quality in some of the Albanese moves. They re-invent Rudd-Gillard initiatives, and Turnbull’s City Deals remain. Action on affordable housing supply and urban inequalities has been less forceful to date.

Sitting alongside what seem like far-reaching environmental actions, including a new Net Zero Authority, the revival of urban policy at the national level is welcome. So too would be the discussion, consultation and research required to secure a resilient and sustainable future.

A national urban policy offers opportunities for cities, towns and regions. It’s also essential if Australia is to meet its national and international obligations, notably the UN’s 2030 Agenda for Sustainable Development.

Australian Urban Policy: Prospects and Pathways is a report on the UNSW-RMIT workshop edited by the authors and with over 30 contributors. It will be published by ANU Press in late 2023.