Senin, 30 April 2012

With the shape of an 'L' on their foreheads

The Australian Tax Office has released its 2009/10 taxation statistics, which, for us at the Brown Couch, are most interesting for what they say about the nation's landlords and rental housing.

The headline figure, of course, is landlords' rental income, and in 2009/10 Australian landlords – all 1.75 million of them – together collected a new record high of over $28 billion in rents... which, after deductions for expenses (mostly interest payments), works out to be a $4.8 billion loss



That's actually the best income result they've had since 2004/05 (not least because rents kept rising as interest rates went down post GFC).




Australia's landlords haven't collectively turned a net positive result since the turn of the century. That's by design, of course: they're taking advantage of the Australian tax system's uniquely generous treatment of negative gearing, by which these sorts of losses can be deducted against income from other sources, thus reducing the negative gearist's tax liability. This softens the loss, which the negative gearist is thinking they'll more than make up for when they sell the property later for a higher price (and the tax system helps here too, taxing the income from the gain at half the rate that applies to income from work, rent, or interest on a deposit in the bank).



Looking over the graphs, we can see that Australian landlords are not negatively gearing quite as intensely as they were pre-GFC: it's not just net losses that are down, but the proportion of landlords declaring a loss is down too. But they are still the majority: 64 per cent of landlords are net losers, and so are still banking on prices rising higher than their (tax-softened) losses.

(Or, perhaps it is better to say that they were of this frame of mind in 2009/10. Since then, prices have fallen....)

*

Meanwhile, Federal Treasurer Wayne Swan needs another $10 billion over two years to get the budget into surplus (a surplus required, it might be added, because the budget implicitly guarantees the banks, which have borrowed heavily overseas to fund their own lending to Australian borrowers – mostly for housing). Says the Treasurer:

... in a budget where we are looking for savings it's important to run your ruler over a whole range of tax expenditures to make sure that they are directed in the right areas....
He should be running the ruler over negative gearing.

Private Rental Market Failure

Yesterday Anglicare Australia released its "Rental Affordability Snapshot" for 2012, and the findings have not been good.

Here are a couple of snippets from the press release:

Anglicare Australia's annual Rental Affordability Snapshot released by executive director Kasy Chambers shows the private rental market has failed Australians living on low incomes.
On the weekend of April 14 and 15, Anglicare agencies from every State and Territory in Australia conducted a snapshot of advertised private rental properties to test their affordability for two groups of people – households who rely entirely on Government payments, and households that rely on the minimum wage. 'Affordability' is classed as spending up to 30% of a low household income on rent.
“What the Snapshot shows is that people on the minimum wage need two incomes to rent a house. In many places even that is not enough,” Ms Chambers said.

“And for those trapped on the NewStart, supporting parent or youth allowance there is absolutely nothing suitable available at all.

“In our largest cities, Sydney and Melbourne, with over 20,000 properties advertised between them less than 40 properties were considered suitable across all of the household types.

“In our regional areas too, housing for families on a low income is virtually non-existent with results like 2% of available properties in the Southern Tablelands in New South Wales for a single parent on the minimum wage or 6% of properties in Gladstone for a family of four.

“Anglicare's Snapshot gives an insight into the experience of housing stress, makes it clear how distant safe and secure housing is for hundreds of thousands, even millions, of Australians, and raises the question of why it isn't a true national priority.

The Rental Affordability Snapshot has attracted its share of media attention, as can be seen by these excellent reports from SBS and the ABC.

Click this link to download a copy of the snapshot.

Rabu, 25 April 2012

Rentstart bond loans - a few things to keep in mind

A couple of weeks ago we mentioned an anticipated change to Rentstart - the suite of assistance 'products' from Housing Pathways that aims to help social housing clients secure homes in the private rental market (helpful, indeed, if you're waiting approximately 5-10 years for a house, or being kicked out of social housing because you've started a job).

Rentstart helps out with a few extra dollars towards the bond at the start of a tenancy. It's currently provided by way of a grant, and any unclaimed money is returned to the funding pool at the end of the tenancy. Soon, it will be provided by way of a no interest loan, and tenants will have to pay it back - over an agreed period of time, just like any loan - into the funding pool themselves. The plus side of this is that tenants will get the benefit of any refund of the bond when the tenancy is over - after all, once they've paid it back, it's their money. However, as we discussed last time, many landlords are already in the habit of claiming Rentstart money, and some tenants might struggle to hang onto it.

When we discussed this earlier, we didn't know when this change would happen. We'd had some conversations, heard some rumours, and seen the occasional reference to Rentstart bond loans on a couple of updated Housing Pathways application forms... but we were none the wiser about when 'Rentstart Bond Loans' would start.




We can now confirm that this change will take effect on May 1st 2012 - that's next week!

You'll be able to apply for a Rentstart grant right up until April 30th - and we understand that 'live' applications for this type of bond assistance will remain open until May 7th - to allow people in the midst of the process a bit of time to finalise their application, and not miss out on a grant (evidently there's more to this than simply filling out and handing over a form... applicants need to provide various supporting documents as well).

However, any applications received from May 1st onwards will be processed as a Rentstart Bond Loan. So... if you're thinking about applying for bond assistance through the Rentstart scheme, bear this in mind.

Another couple of things to bear in mind: the Tenants' Unions factsheets on bonds and the CTTT, and the contact details of your local Tenants Advice and Advocacy Service. You never know, they might just come in handy.

Senin, 23 April 2012

Social housing applicants: get back in line, or get to the back

The NSW State Government's new policy for managing the social housing register comes into effect next week. This means that if your contact details are found not to be up to date, you're struck off the register. You can join again at the back of the queue.




So if you haven't done it already, get your contact details updated this week – or next Monday 30 April at the very latest. The new rule starts Tuesday 1 May. You can update your details here.

Kamis, 19 April 2012

Residential Tenancy Databases: One year on


The Brown Couch has been asked a number of times recently about tenant's databases, and how it's working under the New Act. We last discussed the databases back in 2010, so we thought it might be worth a revisit.
As a quick refresher, the change to the old system is that real estate agents, landlords and database operators now have clearer responsibilities under the Residential Tenancies Act regarding the provision of information to tenants as well as the quality of listings. Tenants now have options available to them through the Consumer, Trader and Tenancy Tribunal to address listings that do not comply with the Act.
The full provisions are lengthy so we won't reproduce them here, but you can access the whole provision on NSW's Legislation website.

Now that we're 12 months in to this new system, how has it been working in practice? While there are still no cases available to refer to, we have received numerous reports from Tenant Advocates around the state that cases have been proceeding to the Consumer, Trader and Tenancy Tribunal. All those reported have been resolved in conciliation.
While the ability to have these listings addressed is is positive news for tenants, it does lead to a question. Why are agents, landlords and operators continuing to list former tenants inaccurately with the knowledge that they will have to remove them when confronted? It should not be up to the tenant to correct dodgy listings where the law is clear.

Happily however we are also receiving reports that real estate agents are generally reporting to prospective tenants that they are listed. This allows a tenant, who has been listed wrongly, to take the necessary steps to have their listing removed or altered.

If you find yourself listed on a tenants database, check out the Tenants Union factsheet here, and get some advice from your local Tenants Advice and Advocacy Service!

Selasa, 17 April 2012

A year of living dangerously: part 2

Time for another look at the Residential Tenancies Act 2010, one year on... We're doing this to celebrate the release of our report on the Act (which we did back in March 2012).




Last time we talked about the need for strong renting laws to ensure tenants get a fair go, and we acknowledged that there have been some significant improvements in the law for tenants. But, in spite of this, a couple of negative changes will continue to undermine any semblance of balance, and tenants will remain reticent to enforce their rights until after their contractual relationship with the landlord has come to an end (or, at least, the decision to move on has been made...)

Today we're going to do something a little bit different. We're going to look at some of the good things the new laws are doing...

First and foremost, we must take a minute to reflect on the big-ticket changes. The introduction of rules around tenant 'blacklists'; provisions that ensure a tenancy will not prevent a victim of domestic violence from becoming contractually disentangled from their attacker; and a regime that reflects the very different needs of share-house tenancies, was nothing short of long-overdue. While it is still too early to suggest these changes wont ever need a tweak or two in order to fix things once and for all, we must remember that the old laws did absolutely nothing of the sort... we're taking some big steps in the right direction. We can also surmise (perhaps a little hastily) that the lack of controversy in the Tribunal over much of these changes means that they are doing what they are supposed to do, at least for the time being. None-the-less, we'll be keeping a close eye on them.

Along with these most welcome additions, the new law provides a number of small fixes for tenants that seem to be doing the trick. In our report, we've discussed these under the heading "what's working"...

So - what is working? There are two things in particular that are worth having a look at.


1. When a landlord gives a tenant a notice of termination, the tenant can leave at any time within the notice period.

It doesn't matter whether the notice was for 30 days, or 90 days, or any other number of days - the tenant can leave at a time that suits them. However, it does matter if the notice is given because the fixed-term is about to expire - in that case, the tenant can leave early, but must continue to pay rent right up until the end of the fixed-term.

Now, if we were to take a pedantic position on this, we might say that this has always been the case - a tenant could always leave at a time that suited them, even under the 1987 Act... But under that law, a tenant had to issue their own 21 day notice to the landlord, in order to limit their rent liability when vacating before the landlord's notice period had expired. They'd remain liable for rent during that 21 days, even if they left sooner.

In the past, tenants were cautious about looking for properties in the first weeks of a landlord's notice period, because they were conscious of the need to give that 21 days notice of their own. Now, they can leave when they want to, and the rent liability ends on the day the tenant leaves - provided they let the landlord know that vacant possession is returned.

Not surprisingly, tenants seem pretty happy with this. It means they don't have to double-up on rent payments quite as much as they used to, when moving house.

Landlords should be happy with this too... Tenants are much less likely to overstay a notice of termination if they can just up and move as soon as they find a new place. Unfortunately, though, we're hearing that landlords are not thinking of it in this way. We've heard reports of landlords and real estate agents insisting that tenants still give 21 days notice - even writing this into the tenancy agreement - as per the old law. When tenants question them on this, they say things like "oh, we know you don't have to, but we just think it's the polite thing to do..."

Ahem... politeness is all well and good, but with respect, if you didn't want the tenant to move out, you shouldn't have given them that notice of termination...


2. In some circumstances tenants can end tenancies during the fixed-term, and not have to pay compensation to the landlord.

Generally speaking, a fixed-term residential tenancy agreement is binding on both the landlord and the tenant, and neither party can end the tenancy without the others' agreement, or some indiscretion such as failure to repair or non-payment of rent. Absent such factors, tenants who need to move during a fixed-term tenancy have to compensate the landlord for their unexpected re-letting expenses.

The new Act recognises that circumstances sometimes change, and allows tenants to end a fixed-term tenancy if certain conditions are met. An offer from a social housing landlord, a place in an aged care facility, or the landlord selling are now all recognised reasons for ending a fixed-term tenancy, without compensation to the landlord. In such circumstances tenants can now give 14 days notice of termination during a fixed-term.

That last one - the one about the landlord selling - is a little bit controversial. It's something we've talked about before on the Brown Couch, and no doubt we'll talk about it again. Landlords, you see, don't seem to like it all that much.

But your landlord has always been entitled to a change of heart about being your landlord - because they could always decide to sell up. In the past, tenants have just had to put up with this - not to mention the interruptions and the uncertainty that the sale of your home invariably causes. But now, thanks to this improvement in the law, tenants also have a choice about sticking around when the landlord wants out.




There are one or two other improvements in the Residential Tenancies Act 2010, but these appear to be having the biggest impact for tenants. We can't help but notice that the two greatest improvements are only really useful when tenancies are coming to an end... and we return to our earlier point about balance. It's great that some things have been fixed, but we're still a long way off having laws that tenants could be truly pleased with.

Keep an eye out for our next installment, which will focus on some of the bad bits of the new law. In the meantime, you can find the report on our website if you'd like to give it a closer look.

Rabu, 11 April 2012

Cast adrift: residents in licensed boarding houses

Recently we brought you some reports of the NSW State Coroner's inquest into the deaths of six residents of a licensed boarding house (aka licensed residential centre, or LRC, for people with disability).

While we wait for the Coroner's findings, the Herald's Thea Williams has written a longer report on the proceedings. Read it and weep – or, better, read it and get angry and write to your State MP and demand reform of marginal rental accommodation and LRCs in particular.


Here's a couple of images of the premises from Williams' report - but really the whole of the report is worth your reading.  





Incidentally, the landlord of the premises at the time, Chris Young, is President of the NSW Property Owners Association.

Senin, 09 April 2012

Robertson criticises negative gearing

One hundred years after a State Labor Government established the public housing system and other housing reform initiatives, the NSW State Opposition Leader, John Robertson, has said New South Wales is 'in the grip of an affordable housing crisis', and criticised the Federal Government's treatment of negative gearing as a key cause of the crisis.


(John Robertson, in public-housing-centenary sepia.)

As part of a call for debate on unaffordable housing, Mr Robertson said:

Negative gearing.... It's a subsidy to people, many of whom already own a home. Now there is nothing wrong with owning or aspiring to own more than a single property. We just need to be honest about the effects on housing affordability of a tax system that encourages such an outcome.

It augments the purchasing power of people who already own homes. It puts upward pressure on prices, helping to crowd out many others who can't even get onto the first rung of the ladder. And it’s also regressive – the higher the tax bracket that the homeowner falls into, the higher the deduction they receive.

Well said. As for our own contribution to the debate, we'd go further, and observe how negative gearing has not just screwed up prices for would-be owner-occupiers, but also distorted the rental market, particularly to the disadvantage of low-income renters.

In making his remarks, Mr Robertson referred to 'Homes for All', the first policy report of a new think-tank, the McKell Institute (named after William McKell, another Labor housing reformer who, as Premier, established the NSW Housing Commission 70 years ago)*.


 (William McKell)

The McKell Institute puts forward 40 'actions' to fix the 'systemic crisis in housing', including:
  • phasing out negative gearing, at least in relation to existing properties; 
  • replacing stamp duty with a broad-based land tax that includes land for owner-occupied housing (we note that Mr Robertson mentions getting rid of stamp duty, but not the bigger and more imprtant reform of land tax);
  • otherwise directing tax policy away from inflating demand for housing; and
  • reform of the planning system to liberalise development controls.
None of these proposals is really new – but that's fine, it just means that there's a good deal of well-founded opinion and consensus behind them. The most important thing is that they're being made by an organisation that has been established particularly to inform policy development by the Labor Party, and that the State leader is listening.



* That makes four Labor politicians referred to here at the Brown Couch in the space of one week and three posts. Don't worry - we'll address the imbalance with some posts on non-Labor parties and housing in coming weeks.


Minggu, 08 April 2012

The NSW Housing Board and J D Fitzgerald

We observed last week the centenary of the Housing Act 1912 (NSW), which established the public housing system in this State. Today it's 100 years since New South Wales's first dedicated public housing agency – the Housing Board – was established under the Act.

The Housing Board comprised three members: T H Nesbitt (Town Clerk of the City of Sydney), J W Holliman (a public servant) and, as chairperson, J D Fitzgerald. As that link indicates, Fitzgerald is the really interesting one.



(J D Fitzgerald)
A barrister, journalist, trade unionist, republican, suffragist, town planning advocate, housing reformer and, occasionally, a Member of Parliament (before and after his stint as Chair of the Housing Board), Fitzgerald was a founding member of the State parliamentary Labor Party, twice expelled from Labor and, after the split over conscription, Minister for Public Health and Local Government in the State Nationalist Government.*

Fitzgerald's curriculum vitae reflects the remarkable ferment at the beginning the twentieth century of ideas for reform from a particularly 'social' point of view. In contrast to the moralising, classical liberal reformism of the previous century,  this new social, or social-liberal, reformism proposed solutions to governmental problems not through laissez faire or philanthropy or well-meaning amateurs, but instead through greater interventions in the processes of life and economy, particularly by the state and technocratic experts in programs of social security and eugenics. Housing was significant in these programs of reform: garden suburbs like Daceyville were described at the time as being 'the great lever of social reform', and Daceyville itself was described, in Fitzgerald's own words, as 'a small experiment in eugenics'.

The social-liberal reform of housing was not just – or even mainly – about public housing, though: the first choice of reformers was a reform of housing provided privately by the market. So, in the same parliamentary session as it passed the Housing Act 1912, the NSW State Government also passed legislation to advance deposits and mortgage finance to workers for home ownership; later, the Commonwealth Government would directly support home ownership through the War Service Homes Commission. Less directly, private housing to an appropriate standard was supported by the state through the wage arbitration system, which formulated a 'living wage' that accounted for the reasonable cost of housing for a working class household. To similar ends, the state also intervened in the landlord-tenant legal relationship: in New South Wales, the State Government first restricted (in the late 1890s), then abolished (in 1930), landlords' old common law remedy of 'distress for rent' (that is, entering the house of a tenant in arrears, and seizing their personal property); it also instituted rent controls (under the Fair Rents Act 1915; rent controls were partly lifted in 1928, repealed in 1937, then imposed again on the outbreak of the Second World War in 1939).

Public housing, then, was only one of several solutions proposed by reformers, never the most preferred one and, where it was implemented, it was with a considerable degree of variation and experimentation. This was especially the case in New South Wales. Daceyville was originally planned to comprise over 1 700 dwellings, but just 315 dwellings were completed when building stopped in the 1920s. The Housing Board itself was abolished in 1924.

Still, the Housing Act 1912 remained on the statute books, and would later form part of the legislative basis of the Housing Commission (established 1942) and the Department of Housing (established 1985). It was repealed only in 2001, when its provisions, and those of the later Housing Act 1985, were updated and consolidated in the present Housing Act 2001.


*An aside: Fitzgerald could also lay dubious claim to writing the first Australian publication in the then-new field of criminology. I say dubious, because 'Studies in Australian Crime' (1924) is written in that 'infamous true crimes' style, and is not really scientifically rigorous. Interestingly, a much stronger claim to authorship of the first Australian work in criminology can be made by another housing reformer and administrator, F Oswald Barnett, the slum clearance propagandist and member of the Victorian Housing Commission, who produced 'The Making of a Criminal' (1940).

Selasa, 03 April 2012

Centenary of public housing in New South Wales

On this day 100 years ago, the NSW State Governor signed into law the Housing Act 1912 (NSW), thus founding the public housing system in New South Wales.

The Housing Act 1912 was introduced by State Labor Treasurer, and long-time housing advocate, John Rowland Dacey. His government already had a public housing project in mind: a development of 400 acres of sandhills south of Kensington, that had been reserved for the Church of England. Just a week after introducing the Housing Act, Dacey died, and the public housing project – Daceyville – inherited his name.
 

(John Rowland Dacey)


This would not be the first time that the NSW State Government had been involved in the provision of rental housing: it owned and let houses at The Rocks and Millers Point, through the offices of the Sydney Harbour Trust. But there it was an incidental – even accidental – landlord, having acquired the houses when it resumed the area for sanitary redevelopment following an outbreak of bubonic plague in 1900.

What was new and distinctive about the Housing Act 1912 was that it provided for the planned purchase of land and the construction, sale and letting of housing by a dedicated government housing agency – the Housing Board – with the deliberate objective of improving housing. As Dacey said in debate on the legislation:

We propose to establish a garden city, and to offer the people healthy conditions for living. It has been truthfully said that the city beautiful will yield big dividends to the nation. We propose to establish a city beautiful, which Australians abroad will be able to point to with pride and say, ‘There, that is how Australia builds its garden cities.’ (NSW Parliamentary Debates, 28 February 1912)

For more on the Housing Act 1912 and Daceyville, we'll let the late great tenants advocate and housing scholar, Harvey Volke, tell the story (beware: that's a 7M download; alternatively, you can google up a cached HTML version).

Happy 100th birthday, public housing.

Senin, 02 April 2012

The 'S10 Project'



In late February we reported that the Tenants Advice & Advocacy Services were getting involved university O-Week activities to raise awareness about what has become known as the 'S10 Project' - named after section 10 of the Residential Tenancies Act 2010:

"10 - A person who occupies residential premises that are subject to a written residential tenancy agreement, is not named as a tenant in the agreement and who occupies the premises together with a named tenant is a tenant for the purposes of this Act only if:
(a) a tenant under that agreement transfers the tenancy to the person or the person is recognised as a tenant (see Part 4), or
(b) the person is a sub-tenant of a tenant under a written residential tenancy agreement with that tenant."

Section 10 means that if you live in a sharehouse, you need to get your agreement in writing.

Today, Patrick from NorWest Lincs (the TAAS who advise and assist tenants across north and north-western Sydney...) has dropped by to discuss some of their contributions to the S10 Project with us on the Brown Couch:

"NorWest Lincs contacted 3 Universities & 3 TAFE Campus' during the initial mail-out period for the project, capturing "O" week when all the students attend for enrolment at TAFE & Uni. During this period we handed out 21 posters & 550 flyers which were gladly received by all our contacts. We contacted the Student Welfare Departments, International Student Welfare Departments & Student Representative bodies.

This resulted in 3 formal follow-up Community Education Sessions, one session was with new International Students at Macquarie University with an attendance of 40+ students, North Sydney TAFE with Early Settlement Students with 25 in attendance & Hornsby TAFE Early Settlement Students with 55 students in attendance.

Overall this was an AWESOME response considering the short period of time in which we had to contact the institutions & arrange for the flyers & brochures to be distributed.

The Student Welfare Department at Macquarie University also spoke of the S10 Project in their opening address to 3 other groups of 50 students & included the brochures in their information bags. We have been invited to attend at the half yearly intake, to speak again to the students attending from overseas, as this was very well received & we have already received 2 referrals since this Community Education session."

Well done NorWest Lincs, and thanks Patrick for this excellent rundown.

The Project continues.
Get in touch with your local TAAS if you'd like more information about your rights in shared rental housing.