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Renters left behind as housing crisis bites

Politicians promise to build more houses under long-term plans -- but what about the immediate dire shortage of affordable properties for renters? Matthew Parkhill explores the key issue in the cost-of-living crisis.

Australian government actions to address the housing shortage are likely to do little to alleviate the crisis in the rental market as affordable properties become further and further out of reach for most people, experts say.


While many nations are confronting the inflation-fuelled housing crisis with drastic measures to help renters, Australian governments are taking more of a hands-off approach -- and that strategy will not offer much short-term help to people struggling to meet soaring rental costs, experts say.


In Europe, there has been targeted regulation of the market. Germany introduced rental controls in 2020, with caps introduced on rent increases. There are rent controls in numerous other European countries, and there is voter pressure to put housing policy at the centre of planning around expected population peaks.


However, Australia has taken a more hands-off approach to the rental market.


Victoria’s Housing Statement, unveiled in September 2023, promises to deliver 80,000 homes annually over the next decade, with former premier Daniel Andrews saying: “Housing affordability is at its lowest in decades… It’s a simple proposition: build more homes, and they’ll be more affordable.”


The statement came amid market analysis that found Melbourne’s rental prices had risen 23 per cent, with historic lows in vacancy rates. Social policy and housing experts have since criticised the direction of Victoria’s housing plans. 



Housing policies do little to alleviate the crisis facing renters. (Photo: Genevieve Saville)


Dr David Hayward, emeritus professor of social policy at RMIT has called the statement “powerful, if not uninspiring,” and asks on what example the statement is modelled.


Writing for The Conversation, he said Victoria’s divergence from European standards on social policy was a matter of poor legislative philosophy. 


“I think that one of the key points is that they’re not integrated,” Dr Hayward told The Burne.


“So, it’s like a ragbag of initiatives… without any clear overarching policy of why do this rather than this is what we want to achieve.”


Dr Hayward said social policy is “a term that's meant to capture government initiatives that support people’s standard of living,” but he could not see how Victoria’s plan to build new homes would accommodate tenants facing a fierce market.


Instead, the statement boosted developers and relied on the market regulating itself.


“It’s failing to provide people with the means to even begin those developments in the first place," he said.


"It’s giving subsidies to the developers. But, if people aren’t actually buying into the contracts, then nothing is built anyway … there is a problem with the affordable housing stock because it’s not covered by any clear legislation.”






“The legislation (around the country) is very poor by European standards… It’s going to require a strong shift in thinking… That’s what you would do is start from where’s your lofty goal, what’s your vision? What do you want it to look like?” 

 

- Dr David Hayward, Emeritus Professor of Social Policy at RMIT 

 

Photo: Supplied



Amid the concerns over low vacancy rates, social housing stock in Victoria rose by only 74 dwellings from June 2018 to June 2022, increasing the stock to 86,887 homes, according to the Department of Families, Fairness and Housing’s annual report last year.


Meanwhile, the waiting list for social and affordable rental homes has increased from “about 44,000 applications in June 2018, to 64,168 in June 2022,” or about a 45% increase, the Guardian reported.


For comparison, Finland, which is similar to Victoria in GDP and population, has 60,000 social and affordable-to-rent housing units in just its capital alone, according to an article from World Habitat.


Terry Burke, an adjunct professor of housing studies at Swinburne University, said Victoria’s statement would have “minimal impact” on soaring rents. Instead, he would like to see a policy called "inclusionary zoning", which is in place in Finland and Britain.


Inclusionary zoning in the UK provided 26,000 social and affordable homes to rent from 2021 to 2022 making up 44 per cent of all affordable housing stock from that year, according to the UK government’s affordable housing statistics


“The UK’s inclusionary zoning policy requires developers to deliver a percentage of their housing build to the social and affordable home stock from developments on both private and public land, which current legislation (in Victoria) states only builds on public land must adhere to,” Professor Burke said.


Victoria’s current social policy requires developers to make 10 per cent of their proposed housing into social and affordable housing if they want to “fast-track” their big-build application.


However, this requirement can be bypassed if they instead donate a cash gift equivalent to the price estimate of that theoretical 10 per cent social housing to the Social Housing Growth Fund, leaving a more inconsistent stream of social housing in comparison to the UK.


Victoria’s Housing Statement promises ambitious goals in terms of housing stock and tenant rights, but differs from European examples of housing social policy.  

 

The most ambitious and outstanding promises are: 

 

  • 2.24 million new homes by the year 2051, along with an annual target of 80,000 new homes for the next decade. 

 

  • Developments above $50 million in Melbourne can gain access to a fast-track Developmental Facilitation Process, which can cut applications down to four months turn around. 

 

  • Heavier restrictions against rental bidding, the practice of making competing tenants bid to get a lease. 

 

  • Rent increases must be 12 months between new leases. However, if the tenant continues their lease the rent can be increased with no restriction. 

 

  • The redevelopment of all 44 public housing towers in Melbourne by 2051, which will force residents back into the social housing queue until completion. 

 

  • A billion dollar investment into a fund, in which banks and developers can draw low-interest loans to finance social and affordable housing development. 


 


An alternate housing statement was presented by the Victoria Greens last April that proposed “a minimum of 50 per cent of housing should be public and affordable within any special development zones, and a minimum of 30 per cent of public and affordable housing in developments of 15 or more homes across the state."


Professor Burke and Dr Hayward said this would likely drive away housing investors.


“The Green’s housing statement looked too short term in terms of the housing market and would drive investors away… there’s just nothing there for investors to want to build in Melbourne,” Professor Burke said.


Dr Hayward said stronger tenant legislation was needed.


“First, we need to have uniform and clear tenant legislation…. In Holland they have an extensive control system; they have rent boards. So when a place becomes vacant, if it's registered to a board, you have to ask the board if you can increase the rent, and they determine whether you can,” he said.


“So (with that) you can set up all sorts of mechanisms.”





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