Under the Coalition Government’s housing policy, struggling renters on public housing lists will be given rental vouchers to help pay more for their rents in the private sector.
According to data from Australian Property Monitors, medium rents increased by only 1 percent in the June quarter with many capital cities recording falls. In overheated Melbourne for example, rents fell 1.4 percent for houses and 2.9 percent for units.
In roughly the last 10 years that Australia’s housing bubble has been growing, house prices have outstripped wages (the owners income used to service the debt). Outside that fact that household debt has ballooned, this has not caused much hardship (yet) as buyers simply borrow more money.
However, rents are not like this. Renters can not simply go to the bank when landlords continue to put rents up greater than wage inflation, year after year. Rents come from the renters income, primarily their wages or pensions.
In recent years, private sector landlords have been spurred on my lobby groups to raise rates by 20 percent per annum. Simply, renters have ran out of capacity to service their rents have have been forced to downsize or move back in with the parents. Worse still, aged pensions have not kept abreast of rents either, forcing many parents to move into their baby boomer sons & daughters homes. Many are not that lucky, having to turn to public housing for help.
However, the Liberal party has a plan to fix all this by offering rental vouchers funded by state money should they gain power.
”The idea is one that obliviously needs to be negotiated with the states, because effectively it is their money we are talking about, although I suppose the implication is that the Commonwealth would help contribute to this over time to sort of make the idea work,” said Gary Humphries, Liberal Senator for the ACT and Shadow Parliamentary Secretary for Families, Housing and Human Services.
It’s said the policy was written after consultation with real estate and property groups. Senator Humphries said “We’ve talked to a number of stakeholders, not particularly any representing renters or people like that”.
Tenancy and social housing groups believe the scheme will drive up rents, no different to a first home buyer’s boost driving up house prices, causing even more problems and financial hardship in the long term.
It’s unclear, if the policy, which is not yet funded, will be indexed at 20 percent per annum, to ensure landlords can obtain the rental increases they deserve. Treasury has been unable to cost the policy due to lack of detail.
» Coalition plan for rental vouchers – The Sydney Morning Herald, 27th August 2010.