Proposed social rent models fail affordability test

 

National Shelter Media Release 15 September 2015

Affordable housing peak National Shelter has today released a report damning reform options under consideration by the Federal Government.

Proposals to move public housing tenants to market rents supported by Commonwealth Rent Assistance would place public tenants in housing stress with insufficient disposable income after meeting massive rent increases.

According to Shelter’s Executive Officer Adrian Pisarski “Public housing is there to protect vulnerable tenants who need the affordability provided by low rents.”

Across Australia public housing rents are set as a proportion of income, typically 25% of mostly benefit payments, which make public housing far more affordable than private rental housing.

Public tenants do not receive Commonwealth Rent Assistance but tenants in private rental who are on benefits do.

“We accept there is an anomaly between public tenants and private renters on similar incomes, where private renters pay far more, but this is an argument to increase affordable housing supply not make all tenants equally poor.” Mr Pisarski added

While a reasonable case can be made for reforming rent policy on a number of grounds, none of the reform options currently on the table appear to be viable replacements for the current approach of basing rents on tenant income. Rent policy reform, if it is to be seriously attempted, requires a much more nuanced and thoughtful examination than it has received in policy processes to date.

The market has run away from social housing and neglect by successive governments has let it. To suggest that we should level the playing field between social housing tenants and low income tenants in the private market is like saying we should remove subsidised medicines and increase disease and distress.

An argument oft cited to change rent policy is that low public rents create a disincentive to work. A recent study by the Productivity Commission has found public tenants are no less likely to find or retain work than others when the characteristics of public tenants is taken into account. http://www.pc.gov.au/research/completed/housing-employment 

The Shelter study finds that the current rent setting for most public tenants is required to provide affordability close to services and opportunities. Reform is required to ensure financial sustainability for the system but needs more careful consideration and flexibility.

The way to make social housing both fair and viable is to build more housing, utilise community housing organisations with private finance based on appropriate government incentives, not by slugging public tenants.

EndsThe full report is available from the National Shelter website here