Renters & Housing Union

Issues with private rental housing and recommendations towards housing stability
RAHU February 2023

Introduction 

Australia’s housing crisis is worsening, after the pandemic has exacerbated the struggles faced by the third of Australia’s population who rent their home. Renters have fast become the largest growing cohort of tenure, making up 32% of the national population, three quarters of whom are living in financial stress.

A national housing strategy must both commit to building new housing, and address affordability, accessibility and regulation of private rentals to truly address the homelessness crisis. 

What is rent regulation? 

International models of rent regulation include federal measures of rent caps and limits on amount and frequency of rent increases. These caps are often linked to Consumer indexes, wages or parallel economic markets to stabilise the rental market to remain reasonable and affordable to the majority of the population who rent. 
The macroeconomic effects of rent control have historically been found to have a direct correlation with addressing inequality¹

Rental market in Australia 

While most markets are stabilised through some kind of regulation, the Australian private rental market has remained unchecked².
Compounded growth in costs of living, housing market and interest rate rises are exorbitantly inflated by the real estate industry and pushed down onto the lowest socio-economic populations, who are the least economically stable both in assets and employment.

An unchecked rental market has benefitted the industry through their own mechanisms at the detriment of the broader population. 
Alongside a national lack of public housing to meet need, the growing low-middle income earning population are forced into the private market to the detriment of affording immediate needs or future security.

Summary Recommendations 

As part of a National Housing Agreement:

Rent Affordability

• Legislate rent regulations that
  • Tie national rent price index with median wage index
  • Limits rent increases to once in 12 months, tied below Consumer Price Index
• Broaden welfare eligibility and raise the rate of payments above Henderson Poverty Line
  • Tie Commonwealth Rent Assistance to CPI
  • Include Commonwealth Rent Assistance for all payment types
  • Broaden CRA to low income private rental households in rental stress
    

Stability of tenure 

• Introduce a Federal & State funding agreement that incentivises provision of long term leases of 5 years that

• Limits rent increases to a maximum of 1% each year in fixed long term leases
• Broadens provisions for renters to terminate lease with reasonable notice

• Remove no-grounds terminations and specify reasonable grounds with 6 month minimum notice periods 
• Enact Provisions for State tribunal discretion to decline eviction in cases where it would cause renters homelessness, undue hardship or significant detriment.
  

Public Housing

• Enact a National Public Housing Agreement with all States and Territories that
  • Matches Federal Government investment 2:1 to incentivise funding new public housing builds and ties capital investment to supply outcomes 
  • Commits to a 10 year development plan that creates 24,000 new Public Housing dwellings per year for 10 years 
  • Commits to a rate of development that sees 10% of the national housing supply to be Public Housing by 2050
    

Economic Reform for Housing stability  

• Legislate conditions on returns for negative gearing that limit to one investment property
  • Requires the rental income to be capped at 30% of median household income

• Eliminate negative gearing by 2028 and commit to a minimum 50% of revenue saved invested into new public housing development
• Utilise vacant homes through
  • Establish Vacant Land Tax in each State and Territory 
  • Develop Bond loan program for 3 year minimum leases with rent cap of 30% median wage

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