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

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Dealing with apartment defects: a how-to guide for strata owners and buyers

Posted by on December 14th, 2020 · Housing, Housing conditions, Strata, Uncategorized

By Sian Thompson, UNSW; Bill Randolph, UNSW; Hazel Easthope, UNSW; Laura Crommelin, UNSW, and Martin Loosemore, University of Technology Sydney. This article is republished from The Conversation under a Creative Commons license. Read the original article.

If you own an apartment – or are thinking of buying one – the recent news about building quality has been worrying. There have been evacuations at the Opal and Mascot apartment towers in Sydney, cladding fires at the Lacrosse and Neo200 towers in Melbourne and the Grenfell Tower tragedy in London. While most buildings won’t have such serious defects, many do have significant problems, and owners must get these fixed so they aren’t a health and safety risk.

Even if the defect doesn’t affect their apartment, this is often the shared responsibility of all owners in the building. It’s essential they have access to good guidance on dealing with defects in strata properties – but this isn’t always easy to find. To help owners, we’ve worked with the Strata Community Association (NSW) to produce a free guide to rectifying defects.

This how-to guide takes current and potential owners through the steps of identifying and rectifying defects, with links to helpful resources. It includes advice on getting a defect report, whether the developer or builder might be responsible for fixing the issue, how to choose and manage building experts, and how to manage communication with owners and workers.

The guide has been developed for New South Wales, but may also be helpful if you have a strata property elsewhere in Australia.

So what key things should owners know?

Each building’s experience with defects will differ. But there are some key principles owners should always keep in mind – these underpin all the advice in our guide.

Ignorance isn’t bliss: as an owner, you are automatically a member of the owners corporation/body corporate. This means you have a legal responsibility to maintain and repair the common property, including dealing with defects.

Information is power: gather all the information you can when investigating defects. For buyers, a good strata report is essential. For owners of new buildings, getting a professional defects report is particularly important. It’s worth the cost.

Focus on potential fire, waterproofing or structural issues. These defects can be hard to see but expensive to fix. They also have major impacts on health and safety.

The early bird catches the worm: you can never start looking for and dealing with defects too early. Be aware of time limits on building warranties.

In NSW, for minor defects, you have two years to start the process of getting the builder or developer to fix the defect. For major defects, you have six years. If your building is outside the warranty period, you may have to fund rectification yourself.

Sharing is caring: make sure you report defects to people who need to know. This will include your owners corporation, but also your insurer(s) and Fair Trading (especially if the defect is major).

Keeping good records is also important. Records are needed in case there are disputes and to show future buyers the building is well-maintained.

Look after yourself: dealing with defects can be financially and emotionally draining. Conflict can occur, and collective decision-making can feel very slow.

To help navigate the process, you want the best experts by your side. They include lawyers, building specialists, strata managers and project managers. And always get a second opinion if in doubt.

What else can be done to improve the situation?

While our guide will help apartment owners and buyers to work through defect issues, state and territory governments could also do more to help out owners.

Since the Opal Tower evacuation, the NSW government has moved to tighten building laws to reduce future defects.

These legal changes are important, but they are unlikely to completely get rid of building defects. And buildings built before the new laws might still have problems down the track.

One way governments can help owners who face such issues in the future is to make it easier for them to get the information they need to deal with defects effectively and efficiently.

Currently, strata buyers and owners suffer from what economists call “information asymmetry” – they don’t have access to all the information they need to make informed decisions about building quality. For example, developers might not give new owners all the details about how their building was built, what materials were used, or which builders and tradespeople worked on it.

Developers should be required to give owners better information, as well as taking more responsibility for fixing defects.

Owners corporations should be encouraged to keep building records on defects up-to-date and make this information available to prospective buyers and relevant authorities.

And governments should support further professionalisation of the strata and building management industries, to make sure owners have the best possible support to navigate defects issues and care for their buildings.

$1 billion per year (or less) could halve rental housing stress

Posted by on November 2nd, 2020 · Affordability, Government, Guest appearance, Housing, Private rental
apichai kleechaya/Shutterstock

By Rachel Ong ViforJ, Curtin University; Chris Martin, UNSW; Hal Pawson, UNSW, and Ranjodh B. Singh, Curtin University. This article is republished from The Conversation under a Creative Commons license. Read the original article.

COVID has shown us what’s possible when it comes to alleviating poverty.

For six months JobSeeker payments were doubled and then maintained at a level 50% above normal.

When the bonus finishes at year end it is likely to be permanently increased for the first time in almost 30 years.

Commonwealth rent assistance could do with the same sort of attention.

Rent assistance is at present added on to other payments such as the pension and JobSeeker and is inadequate, with on our calculations one-third of the people who get it remaining in housing stress even when assisted, while around 18% of the low-income private renters who need it were excluded because they don’t receive one of the government payments to which it is tied.

Productivity Commission calculations suggest the number of private renters in housing stress has doubled over the past two decades, largely because rent assistance has failed to increase in line with rents.

Rent assistance is much lower than it should be

The Australian Council of Social Service wants a 30% in increase in the maximum rate of rental assistance. The Grattan Institute has called for a 40% increase.

Even the Productivity Commission wants a 15% increase to restore what’s been lost over the past decade.

The maximum rates paid are $69.80 per week for single person and $92.68 for a couple with three children.

As any renter knows only too well, these amounts represent only a fraction of the present cost of renting in most parts of Australia.

It’s also badly targeted

Our study for the Australian Housing and Urban Research Institute finds that (in 2017) an extraordinary 23.4% of the renters who received Commonwealth rent assistance weren’t in housing stress. At the same time 17.5% of the renters in housing stress didn’t receive Commonwealth rent assistance.

These calculations were made using the standard definition of housing stress for low income earners which is rent that exceeds 30% of gross income.

We examined three options to better match payments to housing stress:

  • raising the maximum rate of Commonwealth rent assistance by 30%
  • re-balancing the rent thresholds to address higher levels of housing stress among households with no children
  • changing the eligibility criteria to pay rent assistance to low-income private renters facing rents exceeding 30% of their income whether or not they were on other benefits

We found the first and second options would almost halve housing stress, cutting it from 848,500 households to 506,400 and 544,900.

The third option – extending rent assistance to all low income private renters and limiting it only to those fitting the standard definition of low income housing stress – would cut the number of households able to claim to 477,000.

We could cut rental stress and save money

The first option would cost $1 billion per year, the second would save $938 million and the third would save $1.2 billion.

That’s right, the best option would save money and would most accurately target payments to need.

But there’s a problem. Australia’s Constitution appears not to empower the federal government to make stand-alone rent assistance payments, which is why Commonwealth rent assistance is always tied to another payment.

To pay it to a wider group of low-income households, the Commonwealth government would need to either get a new source of constitutional power or to get state governments to administer it for them (as they do with first home owner grants).

And there are other potential hurdles.

Rent assistance acts as a de facto subsidy to community housing providers. Changes potentially affecting their tenants would need to be made carefully.

And there’s concern that increases in rent assistance will be captured by landlords in higher rents – much as appears to happen for first home owner grants.

Most landlords won’t pocket increased assistance

Our research found that in most areas and under most conditions this “subsidy capture” or rent inflation effect won’t be statistically significant.

The exception is disadvantaged areas, where our modelling suggests that a significant proportion of increases in rent assistance payments do flow through into rents, almost 33 cents in each rent assistance dollar.

This is likely caused by relatively unresponsive housing supply in low-value parts of the market. However, even in these areas the “capture” effect is smaller than in similar studies overseas.

This is probably because in Australia rent assistance is paid to tenants, rather than directly to landlords.

Despite these challenges, there are clear benefits to pursuing reform of Commonwealth rent assistance.

Indeed, it ought to be possible to both lift more Australians out of housing stress and save money.

The money saved should be diverted to supporting a broader housing affordability agenda that includes increased investment in public and community housing and tenancy law reform that improves security and other conditions.

This is especially important in more disadvantaged locations where private rental providers are less responsive.

COVID spurred action on rough sleepers but greater homelessness challenges lie ahead

Posted by on October 19th, 2020 · Guest appearance, Housing

By Hal Pawson, UNSW and Cameron Parsell, The University of Queensland. This article is republished from The Conversation under a Creative Commons license. Read the original article. Image by Nathan Larkin.

COVID-19 triggered multimillion-dollar commitments by state governments to tackle homelessness. Our research for the Australian Homelessness Monitor 2020, released today, reveals at least 33,000 rough sleepers and other homeless people have been booked into hotels and other temporary accommodation during the crisis.

Beyond this, several states have pledged funds and support to move beyond this short-term fix and ensure former rough sleepers find long-term housing.

These are commendable actions in a long-neglected policy area, even if largely inspired by public health anxieties rather than concern for the welfare of people without a home.

Still, our research also shows the burst of activity over the past six months builds on several years of stepped-up state government action to tackle street homelessness across Australia.

What prompted governments to act?

Three factors seem to have contributed:

  1. around 2016, rising inner-city rough sleeping apparently crossed a threshold of political embarrassment
  2. people experiencing homelessness challenged official complacency with direct action, including protest camps in Sydney’s Martin Place and outside Melbourne’s Flinders Street Station during the 2017 Australian Open tennis tournament
  3. a new level of activism, often inspired by developments overseas, led to initiatives such as the Everybody’s Home campaign, the Australian Alliance to End Homelessness, the Constellation Project and Adelaide Zero.

In response, several state governments boosted efforts to reduce street homelessness. Measures included expanded outreach services and offers of housing assistance, increased spending on rental subsidies and personal support for former rough sleepers, and leasing of private rental properties as temporary social housing.

Some states even set specific targets to reduce homelessness. New South Wales, for example, pledged to cut rough sleeping on Sydney’s streets by a quarter between 2017 and 2020. Statewide, the aim is to halve street homelessness between 2019 and 2025.

Such targets are a welcome sign of ambition. They could even spur other states and territories to make similar commitments.

Rough sleepers are just the visibly homeless

As our report explains, though, these aspirations raise tricky issues of definition and measurement. And they focus narrowly on rough sleeping. Though highly visible, it’s just one of the forms of homelessness.

This approach risks airbrushing the wider, and much larger, homelessness problem. Of the 116,000 homeless people counted by the 2016 Census some 8,000 were rough sleepers. Homelessness also includes experiences such as as couch surfing and living in badly overcrowded dwellings and short-term, unsafe accommodation like rooming houses.

Crucially, homelessness cannot be overcome purely through better management and co-ordination of existing services. Nor can it be seriously tackled by state/territory governments without federal support.

New wave of homelessness is looming

The most immediate concern now is an imminent surge in homelessness. This is likely in coming months as a result of JobKeeper payments and JobSeeker Coronavirus Supplements being scaled back and bans on evictions lifted.

These protections staved off a new, recession-induced, homelessness crisis through the winter months. But, since mid-year, rough sleeper numbers have been on the rise once again in cities including Adelaide and Sydney. This is almost certainly a problem deferred, rather than a problem avoided.

We know, for example, that many tenants who lost incomes and sought reduced rent have only been granted deferrals. They are building up big arrears.

For their part, many landlords have lost rental income – by negotiation or otherwise. They represent about one-third of the more than 400,000 mortgage accounts on which banks have agreed to defer payments.

The extent of any surge in homelessness will depend on the public health situation, the timing and vitality of post-pandemic economic recovery, and on how quickly eviction bans and income-support measures are withdrawn. However, if unemployment hits 10% as predicted, homelessness could rise by 21% according to one projection for NSW.

For state governments, housing the mid-2020 rough-sleeper cohort has been enough of a challenge on its own. Even with stepped-up assistance programs, the states lack the capacity to cope with a surge of households newly evicted from private rental housing.

The main problem is a lack of homes at rents that low-income tenants can afford. A large part of the reason is decades of official inaction that effectively halved Australia’s supply of social housing since the 1990s. On top of that, the shortfall of private rental properties affordable for low-income tenants grew by 54% in the decade to 2016, as detailed in our report.

What needs to be done?

Lessons from Australia’s success in tackling street homelessness during the pandemic must be integrated with ongoing services. We have to reduce reliance on band-aid interventions that are costly and, at best, only lessen the harm. Homelessness is bad for health and for our society at all times, not just during pandemics.

Governments at all levels must recognise that the growing homelessness problem of the past two decades calls for a comprehensive housing policy rethink.

Yes, governments have partnered with community organisations to get people off the streets during the pandemic, which is something to celebrate. But these successes do not resolve the underlying structural problems.

The federal government has a critical role to play in both policy and funding. It must be far more active in owning and tackling the issue. Essential first steps are to permanently boost JobSeeker payments and the rate of Commonwealth Rent Assistance. And the government should properly index these payments, as it does the Aged Pension.

Beyond this, the Commonwealth must use its greater budget capacity – more than the combined resources of the states and territories – to invest in building new social housing at scale. For almost the entire period since 1996 we’ve been building only 2,000-3,000 social housing units per year. Just to keep pace with a growing population, that needs to be 15,000 a year. It’s essential not just as a stimulus for post-pandemic recovery as proposed, but as a routine national program long into the future.

Such action should be part of a comprehensive national housing strategy to design and phase-in the wide-ranging reforms of taxes and regulations needed to rebalance Australia’s housing system and tackle homelessness at its source.

The authors are very grateful to Peter Mares for his input into this article.

Inquiry into integrated housing support for vulnerable families

Posted by on October 13th, 2020 · Government, Guest appearance, Housing, Indigenous, Social housing

By kylie valentine, Kyllie Cripps, Kathleen Flanagan, Daphne Habibis, Chris Martin and Hazel Blunden. This is an edited extract from the executive summary of the AHURI Inquiry Report. Read the executive summary, the full report and the policy evidence summary here.

Domestic and family violence (DFV), mental illness and problematic alcohol and other drug use are significant risk factors for homelessness. A range of policy responses has been devised to prevent homelessness among those affected by these issues, and to provide support to those who are experiencing homelessness. Evidence is emerging of promising practices that could be expanded. However, there are also indications of existing practices and policies in the housing field that may impede effective responses or worsen the hardships and injustice faced by vulnerable groups.

Vulnerability to homelessness and violence are produced by multiple causes, and integrated responses to address this vulnerability have been identified in a number of strategies and policies as a priority. This Inquiry investigated how policy and program responses are experienced by key population groups in different types of housing tenure. The research focused on how integration is actually operating in different contexts:

  • the integration of housing and other support for women experiencing DFV in different housing tenure
  • integrated support for Indigenous women experiencing DFV
  • the integration of social housing policy with policies to support women affected by domestic and family
  • violence and other especially vulnerable households.

Key findings

The housing and other needs of vulnerable families cannot be met by one sector. This is increasingly recognised in policy and program design. The National Plan to Reduce Violence against Women and their Children, for example, recognises that ‘all systems need to work together’ and aspires to ‘an unprecedented level of collaboration with the broader community and governments’ (Council of Australian Governments 2010: 11).

However, there are gaps in provision to vulnerable families across the housing system, and a need for improved responses in emergency accommodation, social housing, and private rental housing. The interactions between housing and human services, particularly child protection and family support, also work against policy aspirations to improve support for vulnerable families and reduce the risks of homelessness and other adverse events. While areas of strength and effective service delivery are evident, these are not uniformly available to all groups and in all areas.

Refuges, shelters and transitional accommodation remain a vital, albeit necessarily specialised and limited, part of the service system and provide valuable support for many families. However, the lack of secure, affordable and permanent housing is a systemic issue.

Indigenous women and children, especially in regional and remote areas, have very limited housing options and housing pathways in the aftermath of DFV. Acute shortages in crisis, transitional and long-term accommodation mean that Indigenous women and children are routinely turned away from refuges and safe houses because they are at capacity. In these circumstances they become trapped in a revolving door seeking shelter with family/friends or returning to an unsafe home. This is the case even in the context of a significant growth in awareness and resources to respond to families who have experienced DFV. The capacity of the service system away from metropolitan areas, and the cultural safety of services, remain areas where policy development, and resources to build workforce capacity and service quality are needed.

Social housing continues to be an important destination tenure for women leaving DFV. While it does not always offer an ideal living environment for women dealing with trauma or safety concerns, it does provide secure tenure and ongoing affordability. The marginalisation of social housing, through years of underinvestment, means not only is there insufficient housing for all who need it, but the little there is often comes in concentrations of disadvantage, and subject to sharply judgemental conditionality. Social housing legal responses to crime and to non-criminal anti-social behaviour conflict with other policies and practices to support vulnerable families in sustaining their tenancies. Although social housing landlords are generally strongly committed to assisting women leaving DFV, in social housing women are subject to unrealistic expectations about controlling the misconduct of male partners and visitors—and may be evicted because of violence against them. Tenancy termination is a blunt, heavy instrument that especially impacts on women, children, Indigenous persons and persons with problematic alcohol and other drug use.

Social housing was one hell of a missed budget opportunity, but there’s time

Posted by on October 8th, 2020 · Economy, Government, Housing, Social housing, Uncategorized
Yuttana Contributor Studio/Shutterstock

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

Tonight Labor will deliver its alternative budget and promise that if it was in government it would be investing A$500 million in fast-tracking repairs to social housing, and urging state governments to match it dollar for dollar.

The federal budget itself, delivered on Tuesday, offered nothing extra for social housing, even though when polled by The Conversation and the Economic Society of Australia more of Australia’s leading economists wanted money spent on social housing than any other stimulus measure.

They are right to place it above investment allowances, wage subsidies and tax cuts as a sure-fire way to boost economic activity and employment.


Conversation Economic Society of Australia survey, September 2020

Unlike those other measures, it has a track record.

The Rudd government’s social housing initiative, introduced as part of the package that staved off recession during the global financial crisis, delivered 20,000 new units on time and on budget while creating 14,000 well-paying jobs.

It was the only Commonwealth public housing or community housing initiative of any size since the Howard government effectively ended routine public home building in 1996.

Pre-tested, pre-prepared

On a per capital basis, social housing supply has halved since then.

At the same time, private rental housing has moved upmarket, making it even harder for low-income Australians to find a suitable and affordable home.

The Community Housing Industry Association put forward a $7.7 billion Social Housing Acceleration and Renovation Program (SHARP) that would have delivered an extra 30,000 homes and renovated thousands more over four years.

Calculations by SGS Economics and Planning in June suggested it would have supported between 15,500 and 18,000 full-time equivalent jobs in each of those years.

Why, in the face of this analysis, did Treasurer Josh Frydenberg turn the option down?

It’s hard to say, but the omission of social housing is consistent with the budget’s lukewarm attitude towards infrastructure investment more broadly.

Adding up everything the government is planning to spend on infrastructure over the next four years, the budget comes up with a total of $6.7 billion, which is rather small beer compared with the four-year spending plan before the crisis, which was $4.5 billion.

Lukewarm on infrastructure generally

It’s also small when compared to the business tax and other incentives, which amount to $26.7 billion.

Kick-starting the recovery via social housing or other infrastructure would have been out of kilter with a strategy focused on creating “private sector-led growth”.

The strategy, spelled out formally in the budget papers, is to, wherever possible, support markets rather than act directly.

It’s thinking that allows the government to distinguish itself from the Rudd response to the global financial crisis in 2008.

But – unlike direct action, such as through social housing investment – the favoured approach relies heavily on assumptions about how market players (firms and consumers) react to incentives.

Those reactions might help bring about the post-pandemic snapback the most optimistic forecasts envisage.

There’s time

If not, there’s an opportunity to try again, even reluctantly. SHARP is ready and pre-tested.

There’ll be an opportunity in the mid-year budget update, due in December (in two months’ time), and next year’s budget (due in seven months’ time).

Regardless, resumption of a routine national social home-building program is seriously overdue.

Australia’s housing system has become increasingly unbalanced – not just in the past six months, but over the past 20 years and more.

The crisis provides an opportunity to fix it.

Why social housing stimulus is a measure Morrison cannot ignore

Posted by on September 29th, 2020 · Uncategorized

By Hal Pawson (UNSW City Futures Research Centre). This post originally appeared on John Menadue’s ‘Pearls and Irritations’ site. Read the original story here.

‘Top economists back boosts to JobSeeker and social housing over tax cuts in pre-budget poll’ declared The Conversation’s Monday headline this week. But not only was social housing (followed by higher jobless payments) the most popular urgent investment choice of 49 top economists, it was far and away more widely favoured than accelerated income tax reductions. While the former was a top four pick from 13 options for 54% of those involved, only 20% chose the latter.

This is not to say that income tax cuts are supported by only a fifth of Conversation panellists. The point is that few leading economic thinkers are convinced by ministerial claims that this is a credible priority when it comes to boosting national recovery. Social housing, by contrast, is backed as the number one stimulus pitch.

Unlike tax cuts, all of the funds invested in social housing construction are directly absorbed in creating a ‘nation building’ asset. Unlike major infrastructure projects, development of this type can be rapidly rolled out in a geographically diverse program with near-instant employment effects. More than 6,000 units could be initiated within six months, using ‘shovel ready’ sites already-identified by not-for-profit community housing providers and state/territory governments.

Modelling by highly respected consultancy, SGS, shows that the 4-year program to build 30,000 social housing units advocated by affordable housing industry bodies would create on average up to 18,000 full-time equivalent jobs annually. And the employment effect would be focused on one of the very sectors likely to be hardest hit by the pandemic – thanks to currently collapsing demand for market housing.

But this not only a matter of an effective ‘bang for buck’ on employment creation, it’s a chance to make a start in redressing a social housing famine that has seen effective supply cut in half since the 1990s. The 52,000 public and community housing lettings made in 1991 equated to 30 for every 10,000 Australians. The 35,000 lettings in 2017 amounted to 14 per 10,000.

For decades after World War 2, public housing made up around one dwelling in every six constructed in Australia. In most years since John Howard effectively ended the national program in 1996, social housebuilding has barely exceeded one in 50 units built.

And the private sector has not stepped in to provide the low cost rental housing needed by millions of low earning Australians. Far from it: the national deficit in private rental units affordable to low income renters has ballooned from 138,000 to 212,000 since 2006. Is it any wonder that homelessness rose by 30% in the past 10 years?

As in its stellar pandemic management, Australia should look to New Zealand for inspiration on how to take decisive action here. In her 2020 budget Jacinda Ardern pledged investment in 8,000 social housing dwellings – a number which might sound modest on the face of it, but scaled to population would imply a program of 40,000 for this country.

An initiative on this scale would make at least modest inroads into our huge backlog of accumulated unmet housing need. The next advocacy challenge would be making the case for the value of an ongoing social housebuilding program as an economic stabiliser and generator of a social good – not just an emergency employment-creating lever to be pulled at a time of national crisis.

But, in the current crisis situation, the Conversation Economist Panel’s stimulus spending priorities are not just an ‘expert perspective’. As revealed by recent polling evidence the public’s economic recovery preferences appear uncannily close to those of the panellists in this respect.

Last week’s Essential Media report showed that ‘building more affordable housing’ was likewise the most popular measure among a range of stimulus options posed by the pollster to a cross-section of Australian voters. Asked to choose their top three Federal Budget priorities, 56% (54% of Coalition backers) opted for ‘build more affordable housing’, while ‘fast track tax cuts for higher income earners’ was supported by just 21%.

Given our Prime Minister’s famously well-honed skill of tapping into the public mood, as well as his claims to an economically hard-headed approach to policymaking, you would surely expect a social housing stimulus to be front and centre of his upcoming financial plan. If it isn’t, the ever-expanding coalition of social housing stimulus backers will need to ratchet up the argument still further.

After COVID, we’ll need a rethink to repair Australia’s housing system and the economy

Posted by on September 11th, 2020 · Affordability, Cities, Economy, Government, Guest appearance, Housing, Infrastructure, Productivity
Shutterstock

By Hal Pawson, UNSW; Bill Randolph, UNSW; Chris Leishman, University of Adelaide; and Duncan Maclennan, University of Glasgow. This article is republished from The Conversation under a Creative Commons license. Read the original article.

A new report from the New South Wales Productivity Commission (NSWPC) announces that “[higher] housing costs […] impose broader economic costs”. That chimes with our own newly published research. The implication is that Australia’s heavily capitalised housing market will weigh down economic recovery from the shocks of the coronavirus pandemic.

A niche group of economists and epidemiologists had warned the world for decades that a pandemic would have devastating economic and social consequences. When it comes to Australia’s housing, though, the COVID-19 crisis has only served to highlight deep and long-standing faultlines.

The housing system has produced triple crises of rising homelessness, growing queues for non-market, affordable housing and the pervasive affordability problems for middle- and lower-income households who depend on the private housing market. All these pressures were building well before the pandemic.

However, a particularly cruel COVID-19 effect has been the concentration of pandemic impacts on public-facing economic sectors and jobs. Younger people and female employees have been hit hardest. The fallout in the lower end of the labour market will only make existing pressures worse.

Australia is about to embark on an audacious economic and social experiment as it tries to wind back the JobKeeper and JobSeeker programs temporarily protecting about 3.5 million people. Treasury projections envisage a gradual withdrawal. In reality, especially if any eviction moratoria are allowed to lapse, the start of this process will likely trigger huge immediate challenges in managing the housing and homelessness fallout.

Beyond that, the recession will drive home the need for political leaders to more fully appreciate the integral role of housing in the economy. The housing system plays key roles in shaping economic productivity, stability and inequality.

How on earth did we get here?

For many decades economics-leaning policymakers have assumed the housing market is largely a well-functioning system driven by helpful economic forces. Most famously personified in comments by former prime minister John Howard, and very much in tune with dominant media messaging, Australian governments have generally welcomed rising house prices as signifying consumer confidence. Even academic researchers and government analysts have cited house prices as a sign of the “success” of cities and regions.

More recently, ever-rising house prices have finally been recognised as a driver of wealth inequality. The problem is linked to rising mortgage debt and increasingly recognised as likely to add to instabilities in the macro economy and financial system.

There are also growing policy concerns that city living is becoming too expensive. This in turn harms economic productivity. [OECD data] show Australia is on a similar path to the US, with the metropolitan share of national GDP per capita falling in recent years.

Chart showing metropolitan GDP per capita as percentage of national value
Metropolitan GDP per capita has been declining in Australia and some other countries. Data: OECD, Author provided

How has policy thinking become so blurred?

The NSWPC report recognises that the combination of excessive rents and insecure tenure can damage children’s educational attainment and prospects. Prices and rents are particularly unaffordable in Sydney, making it a more stressful place to live and work. Resulting migration to other parts of the country reduces employers’ access to the supply of willing and productive labour, thus damaging productivity.

But the NSWPC analysis of housing-to-economy interactions does not go anything like far enough. As our research shows, Australia’s dysfunctional housing system results in a battery of other economically harmful impacts. These include:

  • long-term policies that have diverted savings and investment into rising property and land prices, with minimal or no employment or productivity benefit
  • excessive rent and mortgage burdens diverting household spending from other consumption with greater productivity impacts
  • a dysfunctional housing system that reduces household savings for the longer term, as well as contributing to falling rates of home ownership and personal asset accumulation for future generations of older people.

Perhaps worst of all, the high private housing debt in Australia is among the worst in the world. The International Monetary Fund (IMF) and the OECD recognise this debt as a threat to financial and economic stability.

Economics students are taught the “paradox of thrift”: when an individual saves, it benefits them in the long run. When too many people save, it harms economic growth.

In a similar way, rising housing prices benefit owners of houses and/or investments. But when we scale up to the level of a locality, city, state or economy, rising prices have a profound negative impact.

Young couple in kitchen looking at household bills
The impacts of high rents and mortgage debt on people’s behaviour have significant consequences for the economy. Shutterstock

Setting a new agenda

With all this in mind, our report lays out a wide-ranging “housing and productivity” research agenda. The hope must be that the resulting evidence helps trigger the policy reboot needed to transform the housing system from being part of the problem to part of the solution.

Much more attention needs to be focused on how owners and renters adjust savings and spending as a result of excessive housing costs. Without knowing about these behavioural responses, it is impossible to design appropriate policies.

We must find ways to restore the housing prospects of younger and/or less affluent households. We must research the potential for schemes to help first home buyers with deposits, and assess how better credit scoring methods could reduce pressures on rental markets. This is particularly important because currently used credit scoring methods disproportionately reward access to wealth, and do not adequately capture important aspects of prospective borrowers’ consumption and saving behaviour.

Delayed home ownership entry or permanent exclusion have major long-term implications. Worryingly, the negative impacts on economic productivity and stability have been largely ignored to date.

The Grattan Institute estimates home-ownership rates for the over-65s will fall by 19% by 2056. The impacts on retirement incomes will be significant.

Policymakers haven’t planned for the inevitable rise in need for social housing from impoverished older private renters. The present system has glaringly failed to provide housing affordable for more than half of Australia’s low income tenant population. Acting on the mounting economic imbalances caused by the housing crisis could, at the same time, generate a more productive and stable economy.

Australian housing research and policy urgently needs a new economic conversation.

A brief history of Australian residential tenancies law reform: from the nineteenth century to COVID-19

Posted by on September 4th, 2020 · Housing, Law, Pandemic, Private rental, Tenancy

By Chris Martin. Originally published in Parity, the journal of the Council to Homeless Persons.

Australia is currently going through a period of unusual activity in residential tenancies law reform. New South Wales, Victoria and the ACT have recently concluded reviews and amended their legislation, and Queensland, Western Australia and the Northern Territory are currently in the midst of reviews. South Australia and Tasmania reviewed and amended their respective Acts a little before the current wave of reform, both in 2013. The federal government has also indicated its interest, nominating ‘tenancy reform that encourages security of tenure in the private rental market’ as a ‘national housing priority area’ under the current National Housing and Homelessness Agreement (Schedule A2). And breaking over the current wave of law reform are the COVID-19 emergency amendments, implementing eviction moratoriums and temporary regulations around rents.

This article considers the current wave of reform in the longer context of the development of Australian residential tenancies law since the nineteenth century – although, as we will see, the term ‘residential tenancies law’ really dates from the 1970s, when it signified a paradigm shift from previous ways of governing the relationship between landlords and tenants.

The nineteenth century

When the Australian colonies formally received English law in 1828, landlord-tenant law was very much a creature of property law, and concerned more with the formal requirements of valid leases (for example, a lease had to grant a right to possession of land, in writing, and for certain term), than with whether property was used for housing or other purposes. The content of leases was directed to tenants having ‘quiet enjoyment’ of the property, and landlords receiving rent – backed by the drastic remedies of ejectment (eviction) and distress. The latter allowed the landlord or agent to forcibly enter the property and take the tenant’s personal belongings to sell or ransom.

Over the course of the century colonial parliaments passed laws to expedite court processes for ejectment, standardise some common lease terms and, during the 1890s depression, introduce some restrictions on the use of distress. Landlords themselves developed the law too, particularly by adding lease terms against ‘nuisances’ and non-residential uses that reflected developments in sanitary regulation.

Twentieth century rent and eviction controls

In the early twentieth century – particularly during the First World War – numerous governments across the world began imposing further controls on landlords, particularly regarding rents and evictions. Rent and eviction controls reflected a new preparedness for states to directly govern economic processes – although they were often contested politically. In New South Wales, rent controls were first imposed by the Fair Rents Act 1915 (NSW), which limited rents to six per cent of a property’s value, followed by prescribed limited grounds for termination in 1926; these measures were partly lifted in 1928, and wholly lifted in 1937, with some short-lived emergency rent reduction and eviction postponement measures also introduced in the 1930s Depression. Rent and eviction controls did not, by themselves, change the pre-occupation of landlord-tenant law with property law formalities, and while in some respects they made specific provisions regarding residential leases, rent and eviction controls did not address important housing issues – in particular, repairs. A few housing-specific reforms were introduced by Australian jurisdictions around this time, such as prohibitions on discriminating against residential tenants with children, and abolition of distress (e.g. NSW, Western Australia).

In 1939, national rent and eviction controls were imposed for the duration of the Second World War, and some states continued to apply them in the post-war reconstruction period. In New South Wales and Victoria, in particular, controls continued longer, although through the 1950s and 60s they began to roll back their application such that increasing numbers of properties and tenants were excluded.

Generally, post-war governments looked to expanded homeownership and public housing, rather than tenancy law, as their preferred instruments for improving housing conditions and affordability. To this end governments subsidised finance for home purchase and directly built hundreds of thousands of dwellings – both for rent and sale to low-income working-class families. Where they applied, rent and eviction controls contributed to the growth of home ownership, by repressing investment by private landlords, while state housing authorities were exempt from controls and offered leases on the barest terms – public housing tenancies were relatively secure and affordable as a matter of policy and practice, rather than law.

Residential tenancies and the consumer protection paradigm

By the late 1960s and early 1970s, researchers, activists and policy-makers began to look more critically at the presumed affluence of the post-war period, and began to see sections of the community that had been excluded. In 1972, the federal government established a wide-ranging Inquiry into Poverty, which would include a report specifically on ‘Poverty and the Residential Landlord-Tenant Relationship’. Reviewing the existing patchwork of rent and eviction controls, older statutes and common law, the report found:

the law is sadly deficient in most of the relevant areas of tenant needs. No advice or assistance is provided for a prospective tenant by any governmental agency in any State, there is no legislation to ensure that the tenant is not bound by onerous and oppressive terms in a lease, and the means of solving any dispute between a landlord and tenant are far from fair and sensible and are based on conditions relevant to a bygone era in the United Kingdom…. The existing legislation also fails to satisfy fully the needs of the landlord….

It is not overstating the case to say that the current body of landlord-tenant law in Australia is a scandal….

Deliberately turning away from English property law doctrines and from rent and eviction controls, the Bradbrook Report instead looked to recent law reforms in North America and emerging principles of consumer protection for a new regulatory model specifically for residential tenancies. The main features of the model would be:

  • Prescribed contractual rights and obligations, including regarding repairs and maintenance, in standard form agreements;
  • Prohibition of most fees other than rent, utilities and bonds – the latter to be lodged in statutory accounts;
  • Market rents, subject to protections against increases excessive to market levels;
  • Ready but orderly termination of tenancies – including without grounds;
  • Dispute resolution by relatively accessible, informal tribunals;
  • Coverage of private and public housing tenancies alike; and
  • Provision of legal information for tenants by government and/or non-government organisations.

As much as this model was framed as consumer protection, it was also quite accommodative of Australia’s small-holding amateur-speculator landlords, particularly in the way it allowed tenancies to be terminated and properties traded between rental and owner-occupier markets.

It would take almost 25 years, but all Australian states and territories enacted residential tenancies legislation along these lines (South Australia was first, in 1978; the Northern Territory was the last, in 1999). Despite the broadly common features, there were significant differences in the details. Notice periods for rent increases and termination varied widely; some jurisdictions established specialist tribunals while others used their magistrates courts; some established government agencies to hold bonds while others required lodgement at banks; and the commitment to funding non-government tenants information and advice services was uneven.

The second wave of consumer protection

Before the last reforms of the first wave had passed, a second wave of reforms commenced in the 1990s and continued through the first decade of the 2000s. Mostly consolidating the consumer protection model, this wave had three notable themes. First, most jurisdictions extended consumer-protection style regulation to marginal sectors that had been excluded from the first wave: boarding and rooming houses, and residential parks. The approach in most jurisdictions was to legislate, either as part of the Residential Tenancies Act or separately, something like a miniature Residential Tenancies Act tailored for each of these sectors, with prescribed terms and standard forms, and accessible dispute resolution, subject to a defined scope that still left some renters excluded. A different approach was taken in the ACT, which legislated broadly-stated ‘occupancy principles’ for all renters otherwise excluded from the mainstream of the Residential Tenancies Act.

Secondly, residential tenancy databases, which had emerged in the early 1990s and became notorious as ‘tenant blacklists’, were eventually regulated in all jurisdictions. These regulations limit the circumstances and time periods for listings, and provide for dispute resolution, and are unusual in residential tenancies law in that they are almost the same across jurisdictions – the product of a process of intergovernmental co-operation to effect nationally consistent legislation that is so far unique in residential tenancies law reform.

Thirdly, and running against the original consumer protection ethos of residential tenancies legislation, jurisdictions began making amendments specifically relating to public housing and community – mostly to facilitate the termination of tenancies as a way of ‘cracking down’ on crime and anti-social behaviour in an increasingly marginalised sector.

The third wave

The current third wave of reform is taking place in quite different circumstances from the Poverty Inquiry that initiated the first wave. Home ownership, as well as social housing, is declining, with more households – both high-income, and low-income – living in private rental, and renting longer into their lives. Recent and current reviews have reflected these shifts, by highlighting questions of improvements to tenants’ security – through specific provisions for long fixed terms or through the removal of ‘without ground’ terminations – and greater tenant autonomy, such as in keeping pets. The jurisdictions that have already completed their reviews have concluded these issues differently, with Victoria amending its Act to almost completely remove without-grounds terminations and strengthen tenants’ position regarding pets, while the ACT did only the second, and New South Wales neither.

Another recent common theme in reform is domestic and family violence, with most jurisdictions having recently amended their legislation to address the housing implications of DFV. But even as they have prioritised this area of reform, governments have arrived at quite different positions regarding the processes and evidentiary requirements for survivors terminating tenancies early, or continuing and removing a perpetrator, and regarding vicarious liability.

It remains to be seen whether the ongoing reviews in Queensland, Western Australia and The Northern Territory produce a relatively strong reform agenda like Victoria’s, or a more ‘vanilla’ program of amendments like New South Wales’. The outlook is now complicated by the COVID-19 pandemic and recession, which also threw up their own specific emergency reforms.

COVID-19

Beginning in March 2020, Australian governments and individual persons responded to the COVID-19 pandemic by suppressing economic and social activity – by staying home. With household incomes suddenly reduced, and the prospect of rent arrears rising, the National Cabinet announced an unprecedented six-month eviction moratorium, and encouraged landlords and tenants to negotiate about rent liabilities, with the states and territories to give this formal effect.

As in other aspects of residential tenancies law, states and territories have taken a broadly common approach, with considerable differences in the details. The commonalities are narrowly defined protections, most of which apply only to tenants specifically affected by the disease or loss of income, and individualised negotiations about rent liabilities, which may result in temporary rent reductions, or mere deferrals – or no settlement at all. In some jurisdictions, provision has been made for arbitration of unsettled matters and binding rent reduction orders (e.g. Queensland and Victoria), while in others unsettled matters can result in termination proceedings, albeit with longer timeframes (e.g. New South Wales). In a situation that may have actually called for wide-ranging rent and eviction controls, it appears that this form of regulation is a lost art in Australia.

The future?

In the present uncertain moment, a longer historical view of residential tenancies law reform can help inform the way forward. One lesson of the past 45 years of reform in the consumer protection paradigm is that while common themes have been added to states’ and territories’ reform agenda, they are probably no more consistent in the details of their legislation than they have ever been – the residential tenancy database provisions excepted. The recent uneven landing of jurisdictions on the ‘national housing priority area’ of improved security may be the most significant instance of inconsistency, and a clue to the future of reform. Victoria’s reform agenda was fashioned as part of a wider response to the state’s Royal Commission into Family Violence, from which it took a strong sense that a home should be safe and secure. Maybe after 45 years the consumer protection paradigm has run its course, and it is time for differently articulated principles – perhaps of human rights and housing justice – to reinvigorate residential tenancies law reform.

A critical academic response to the evidence-free debate on planning reform

Posted by on August 20th, 2020 · Affordability, Government, Guest appearance, Housing, Housing supply, Planning

By Malcolm Tait and Andy Inch, University of Sheffield. Originally published on CaCHE Blog. Republished with an introduction by Bill Randolph, City Futures Research Centre.

This blog summarises ‘The Wrong Answers to the Wrong Questions‘, a major new report from the UK that brings together a veritable “who’s who” of UK academic planners and those involved in urban policy and research.  It offers a heavyweight critique and robust rebuttal of the now dominant ideology amongst governments, both in the UK and Australia, that the housing supply and affordability crisis which both countries are suffering is primarily the responsibility of the planning system. Under this formulation, as the report notes, planners are seen as the “‘enemies of enterprise’, blamed for overseeing a broken system that acts as a ‘drag anchor’ on the economy.”  As the authors of the main report argue – this is the wrong answer to the wrong question. 

Given the NSW Productivity Commission’s new Green Paper which simply repeats the neo-liberal mantra which frames the planning system as the problem, and the current more general push to clear away planning ‘blockages’ in the name of job creation, essentially to save an apartment sector now in free-fall, this paper could well help those of us concerned about the future of planning in Australia to mount a coherent counter-narrative.   Put simply, the current Australian housing system is broken and we urgently  need alternative approaches to deal with this failure.  This blog, and the substantive report that underpins it, offers a coherent way forward.  It deserves to be widely read by planners and anyone interested in actually making the housing system in Australia work for the benefit of all its citizens.

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This is the first blog in a series responding to the government’s proposed changes to the English planning system.

The Government has proposed some of the most far-reaching changes to the English planning system since 1947. The Planning for the Future white paper and the accompanying rhetoric suggests they view the planning system as a major impediment to housebuilding. In the recently published report, The Wrong Answers to the Wrong Questions, a group of planning academics has come together to challenge this view. This edited excerpt from the introduction to the report offers some critical perspectives on the thinking underpinning the proposals:

1. Urban change does not occur naturally or follow customs.

Influential think tanks like Policy Exchange claim that planning disrupts the ‘processes by which places naturally change’. But land-use change is shaped by those who own land and have the financial power to buy and develop it. Any claim to restore a more ‘natural’ order of urban change is really about substituting one form of (at least nominally democratic) control for a freer-market that affords power to the already privileged to pursue their own material interests, irrespective of whether this benefits the wider community. When it comes to land use, market forces are much more likely to reject than enhance custom and tradition.

Previous Conservative governments have learned the hard way that attempts to liberate markets will meet concerted opposition amongst shire county Tories who see the planning system as a means of protecting land from developers in the name of custom and tradition. Any ‘radical’ deregulatory agenda is likely to run into this politics again. However, the transformation of England’s political geography, allied with powerful imperatives to ensure economic recovery, mean the current government may be less reliant on such voters than any of its predecessors.

2. Planning is not responsible for the housing crisis

Planning is not solely responsible for the building of houses – housebuilders, landowners, and developers have leading roles.  Since 2010, the planning system has granted 1 million more permissions for houses than have been built.  It approves 88% of all applications, and nearly 90% of all applications are decided within Government-set targetsThe Letwin Review of build-out started to recognise this but the government remains intent on blaming the planning system for a housing crisis whose roots lie in the dysfunctions of the broader housing system, highly consolidated development industry and unreformed land markets.

3. Deregulation will not produce the outcomes we need.

Where planning is conceived as a hindrance on creative, productive ‘wealth creators’, the tendency is to not to ask ‘how might we build better places?’– but instead, how can we reduce costs and free entrepreneurs to build more, faster.  This is the wrong answer to the wrong question, and it will not produce answers that deal with the climate crisis and the need to radically transform how we build. If the government is serious about stimulating a green recovery, premised on the development of significant new infrastructure to ‘level up’, then we need to be talking about better public planning.

4. Planning reform has become an evidence-free zone.

As was evident in Boris Johnson’s baseless claim[8] that ‘newt counting’ was an impediment to development in the ‘build, build, build’ speech that announced the current planning reforms, the government’s approach seems to be driven by ideological distaste for the idea of a proactive planning system, rather than a real understanding of the kind of system we have, how it is working, and the ways it needs to change.

5. We need to develop a better understanding of the positive role planning could play

In addition, it is vital to enhance understanding of the nature and purpose of the planning system and the contributions it can and should make attempts to build back better. As Laurie MacFarlane has recently suggested, for too many people the planning system remains a ‘black box’. As such it has long been an easy target for powerful property lobbies, neoliberal ideologists, and governments seeking to flex their deregulatory credentials (see TCPA, 2018).

We hope The Wrong Answers to the Wrong Questions can help stimulate debate about the planning changes we should be making to build back better.

COVID-19 renter survey – invitation to participate

Posted by on August 19th, 2020 · Housing, Pandemic, Tenancy

Renting in Australia during the COVID-19 emergency? You’re invited to participate in a survey about COVID-19 rental negotiations, conducted by the City Futures Research Centre at UNSW Sydney.

The survey is open to persons who

  • Were living in a rented dwelling in Australia on 29 March 2020 (when the eviction moratorium was announced)
  • Are aged 18 or older.

Participants who complete the survey can enter the draw for a $500 voucher.

You can find the survey at unsw.to/covidrent

Participation is voluntary. The survey takes 5-10 minutes to complete, and asks about your rent, income and household, whether you negotiated a change to your rent and whether you moved. The information you give will be used only for the purposes of the research and no identifying information will ever be disclosed. The full Participant Information Statement is here, and linked at the start of the survey.

The survey is part of City Futures’ new research project, Housing and homelessness policy in the COVID-19 pandemic and recession.

Please consider participating, and inviting others to participate too!