Working paper

Demand subsidies for private renters: a comparative review: Positioning Paper

AHURI Positioning Paper No. 32
Rental housing Low income housing Tenancy support Housing assistance Public housing Australia New Zealand Canada United States of America


Context: The Commonwealth government pays rent assistance (RA) to income support recipients who rent in the private sector, to assist with their housing costs. It is paid directly to low income households, a type of assistance usually termed a demand or personal subsidy. This approach differs from other types of housing assistance in Australia, such as those covered by the Commonwealth-State Housing Agreement, in which funding goes to housing providers, for example, public housing authorities or community housing agencies, a type of assistance usually termed supply or ‘bricks and mortar’ subsidies.

Housing assistance policy in Australia has become increasingly reliant on demand subsidies (RA). Despite this, there has been little independent analysis and research to progress the policy debate about RA. This paper attempts to fill some of that gap.

Objectives of the research: This paper reports on a research project that compares and evaluates different demand subsidy models for private renters, to enable a more informed debate in Australia about the future of RA. The research focuses on key policy issues surrounding RA and examines how other, similar countries deal with these issues and what the outcomes have been. The project examines demand subsidies for private renters in Australia, New Zealand, Canada and the US. Specifically, the research aims to:

• Review the various shelter and non-shelter objectives of housing demand subsidy schemes; • Compare the design, administration and cost of demand subsidy schemes;

• Document and assess evidence on the shelter outcomes of demand subsidy schemes, including affordability, adequacy, appropriateness and security of housing;

• Document and assess the non-shelter outcomes of demand subsidy schemes, including personal and family wellbeing, housing-related poverty, workforce participation and welfare dependency;

• Evaluate available evidence on the impact of housing allowances on communities and private rental markets, including the supply and location of affordable housing; and • Review evidence from the four countries on the cost-effectiveness of housing allowances relative to social housing and other supply strategies.

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