Ageing / Autumn 2016 / Housing

Older renters: The new face of poverty

Older private renters, especially those who are single and female, are the new face of poverty explains Robert Mowbray.

olderrentersThe evidence mounts. The number of older, single women in the private rental market increased by a massive 50 percent between the 2006 and 2011 ABS Censuses.[1]

The private rental sector across Australia has grown in size and significance in the last 30 years. Between 2001 and 2010 about 1.7 million Australians dropped out of home ownership and shifted back to renting. More than one in three did not return by 2010.[2]

Private rental now provides long term tenancy for a growing and diverse number of Australian households. If large numbers of long term renters aged 45-64 years remain in the rental sector, they could swell the number of long-term private renters aged 65 years and above quite substantially in the coming decades.

Many older women experiencing a housing crisis or homelessness have led conventional lives and never previously had a housing crisis. As private renters, especially in tight housing markets like Sydney and some regional centres, they are at great risk of unaffordable rents, insecure housing, eviction and homelessness.[3]

A recent report by the Actuaries Institute found that ‘single women are likely to experience the worst outcome in retirement compared to couples and single men, with many unable to achieve a comfortable standard of living.’ [4]

Australia’s first ever Rental Affordability Index was released on 24 November 2015. It reveals the depth and extremity of housing stress faced by private renters in the current market. The Index has been created by National Shelter, Community Sector Banking and SGS Economics & Planning. The first issue of the Index reveals evidence that low income households are in a dire situation, single income households are worst off and rent costs are now locking low and moderate income households out of inner cities. Indeed, in Greater Sydney, rents are highly unaffordable close to the inner city. Affordability improves the further away households live from central Sydney, and rental housing generally becomes affordable west of Parramatta. [5]

Clearly, older renters in receipt of the pension no longer are able to live in the private rental market close to central Sydney. An exception is those who are able to find cheaper accommodation in often unregistered boarding houses where they have little security and remain highly vulnerable to exploitation.

Judy Yates in 2015 examined the economic impacts of Australia’s ageing population and decreasing housing affordability. She writes:[6]

rent increases and no security of tenure, private rental can create anxiety. … more than one third of older renters [with low economic resources (LER)] were in the private rather than the public rental system. However, private rental housing often does not meet older renters’ needs. Older renters are far more likely to experience persistent poverty than other households. They generally rent in the private market, by necessity rather than choice, and they are most at risk of becoming homeless for the first time. Too often private rental is unaffordable. When it is affordable, it is often not appropriate in terms of design or access to services. As metropolitan housing markets have been restructured over the last few decades, low cost rental accommodation has been pushed to the urban fringes, constraining growing numbers of older LER renters to locations that are poorly serviced by public transport, community services and health services.

ortext1Australian Government Productivity Commission in Housing Decisions of Older Australians, highlighted three issues from a Senate inquiry into housing affordability which affects the wellbeing of age pensioners renting in the private market.[7] These are:

  • Affordability — Older Australians in the private rental market have substantially higher housing costs as a proportion of income than any other group in the population. In 2012-13, single people aged 65 and over who were renting in the private market spent 42 per cent of their income on housing, three times higher than the average housing expenditure. Age pensioners who rent privately are eligible for Commonwealth Rent Assistance (CRA), in addition to their pension, however this payment has not kept up with rising rents. In 2014, one in four CRA recipients aged 75 and over were in housing stress.
  • Unstable tenure — Compared to other developed countries, Australian tenancy laws offer relatively low security of tenure to tenants, including short lease terms and the ability of landlords to terminate leases without a specific reason. Insecure tenure can have substantial negative effects on older people’s wellbeing and their ability to “age in place”.
  • Restricted access to home modifications — Evidence submitted to the Senate inquiry indicated that private landlords have little incentive to modify properties to suit the needs of older tenants. Older renters are forced to move as dwellings are no longer appropriate to their needs.

One reason older renters in the private rental market are vulnerable is the insecurity that goes with this tenure as it has developed across Australia. Private rental housing is structurally insecure because the private rental market is enmeshed in the owner-occupier market. Most landlords are individual persons who own a single rental property for speculative purposes (that is, most are operating at a loss – they are negatively geared and hoping for capital gains). They are sometimes referred to as ‘mums and dads’ investors. Their numbers are significant, as evidenced by figures published by the Australian Taxation Office in April 2015 which show that just over 15 per cent of individuals who lodged tax returns in the 2012-13 tax year, both across Australia and in New South Wales, reported receiving rental income. Recent years have seen a significant increase in funds lent by financial institutions for the purposes of investment in residential rental housing.

In order to maximise the prospect of capital gains, these investors need to be able to sell their property with vacant possession when it suits them, selling to either other landlords or to owner-occupiers. This speculative strategy is encouraged by our taxation laws and has a negative impact on tenants in the private rental market.

ortext2Private tenants will only achieve greater structural security by policies that discourage speculation in housing, and that instead foster an increased number of institutional landlords, including community housing providers which are primarily interested in income derived from a rent roll rather than capital gains. The push for institutional landlords requires a number of reforms. A positive sign over the last year is two superannuation funds, NGS Super and HESTA, providing finance to community housing providers for social and affordable housing.[8]

Private rental housing is also legally insecure. In NSW (and other Australian jurisdictions) landlords may give termination notices without grounds. The prospect of eviction without grounds makes renting insecure and undermines tenants’ rights. Tenants should not face termination of their tenancies and bear the financial and emotional cost of moving house, unless there are reasonable grounds for it. They should also feel that they can continue living in their home – and deal with any problems that may arise with their landlord or agent – without worrying whether they will receive a ‘without grounds’ notice.

At the present time NSW Fair Trading is conducting a statutory review of the Residential Tenancies Act 2010. In a discussion paper to stimulate debate, Question 33 asks: ‘Should landlords be required to provide a reason for terminating a tenancy?’ So, indeed, eviction with grounds only is now on the agenda. Reasonable grounds for termination might include where the tenant is in breach of residential tenancy agreement, or the landlord wants to move in, or the premises are to be renovated such that vacant possession is required.

However, it is not just older renters in the private rental market who face increased uncertainty. Social housing tenants across New South Wales will experience massive disruption to their lives with the ‘Communities Plus’ initiative to boost social and affordable housing announced in October 2015 and the thrust of ‘Future Directions for Social Housing in NSW’ announced in January of this year, unless these strategies are implemented sensitively. [9]

The treatment of older tenants in Millers Point over the last two years by the NSW Government does not bode well for older tenants who will be forced to move under these strategies.[10]

In Millers Point, at the end of the day, NSW Government offered just 28 apartments to the remaining 90 tenants! Yet only 21 applications were received. Many of the older people in Millers Point did not make an application for one of these properties, despite the fact that these properties had been withdrawn from immediate sale because of their particular needs and the ongoing detrimental effect on their health posed by a forced relocation. The reasons for this are simple. These properties are unsuitable to older folk because most are small, one bedroom apartments. Many have internal stairs. Also, for those at the corner of Kent and Argyle Street, to put out the washing requires leaving their unit and walking to a common area down a sloped footpath in the street.

Yet the sale of housing stock has been a ‘goldmine’ for the government. By the end of 2015 it had raised $116 million from the sale of 47 out of the 250 Millers Point properties set to go under the hammer. Far more than expected.

It remains intransient on providing the remaining older residents a choice of aging-in-place in their current housing and then selling some of their houses.

The alternative, which is supported by the residents, is retaining some of the units within the Sirius Building and workers cottages to maintain a semblance of a social mix, so that Millers Point does not become an enclave for the wealthy. Indeed, the Tenants’ Union’s submission to the NSW Legislative Council’s ‘Inquiry into Elder Abuse in NSW’ in November 2015 argued that what has been happening to older people in Millers Point can be seen as a form of elder abuse.

Given that the recent ‘Future Directions for Social Housing in NSW’ strategy is premised on the private rental market being both affordable and secure, this poses the question as to whether one arm of government is talking to another. Is the Social Housing portfolio talking to the Fair Trading portfolio and advocating that the current review of the Residential Tenancies Act 2010 seriously considers provisions such as evictions with grounds only and fairer rent increase provisions that would make private rental more affordable and secure?

Robert Mowbray is the Project Officer Older Tenants at the Tenants’ Union of NSW.

Endnotes:

[1] AHURI Research and Policy Bulletin, Issue 185, February 2015 viewed at: http://www.ahuri.edu.au/publications/download/ahuri_rap_issue_185

[2] Viewed at: http://www.smh.com.au/money/borrowing/meet-the-home-owners-going-back-to-renting-20151014-gk91m2.html#ixzz3pEYUutSK

[3] Petersen, M, ‘Older Women’s Pathways out of Homelessness in Australia’, Institute for Social Science Research, University of Queensland, 2014

[4] Viewed at: http://www.smh.com.au/business/the-economy/australians-will-still-rely-on-age-pension-actuaries-institute-report-says-20150902-gjd4qv.html

[5] Viewed at: http://www.shelter.org.au/index.php?option=com_docman&task=doc_download&gid=68&itemid=486%20

[6] Committee for Economic Development of Australia, ‘The super challenge of retirement income policy’, September 2015, Chapter 4, pp 69-71

[7] Housing Decisions of Older Australians, Commission Research Paper, Canberra, December 2015, pp 94-95

[8] See recent report on HESTA’s funding of social and affordable housing in Queensland at: http://www.afr.com/real-estate/superfund-hesta-invests-in-queensland-social-housing-20160112-gm4o18

[9] Check out: http://www.smh.com.au/nsw/baird-government-sees-economic-boost-from-public-housing-revamp-20160123-gmciog.html

[10] Read more at: http://tunswblog.blogspot.com.au/2016/02/endgame-for-millers-point.html

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