Vulnerable private renters: evidence and options

affordable housing Private rentals Housing security Australia

Private rental market affordability has remained steady in Australia, but there has been a rapid rise in the number of low-income renters.

This report finds that the private rental market works well for many of the 6.3 million people renting, with rent paid compared with income steady, and the supply of rental properties increasing by more than one million over the past two decades.

But the number of low-income households in rental stress has doubled in the past two decades.

Key points:

  • Australia's private rental market works well for most people, most of the time. The market has adapted to a fast-growing population as well as to several structural shifts — stemming from the coincident rise in house prices as well as to the declining availability of social housing.
  • These forces have culminated in an increase in the share of the population renting privately since the mid-1980s — a reversal of the long run decline in this share since World War II.
  • Once considered a short-term form of tenure for young people, more families with children are renting nowadays, and they are renting for longer periods.
  • However, there are concerns with vulnerable private renters, most of whom have low incomes. More than 1 million low-income households (2.65 million people) rented in the private market in 2018, a figure that has more than doubled over the past two decades.
  • Many vulnerable private renter households struggle with rental affordability. Two-thirds spend more than 30 per cent of their income on rent — the commonly used benchmark for identifying 'rental stress' — and many spend much more. 170,000 households have less than $250 available each week after paying rent.
  • Many households experiencing rental stress successfully escape within 12 months, generally through securing higher paid work. However, others are becoming 'stuck', with about half of these households still experiencing rental stress four years later.
  • While renting privately offers flexibility — desirable for many — moving involuntarily can be disruptive for low-income households, families with children, older people and people with a disability. It can heighten the risks of financial hardship and homelessness, especially if little notice is given.
  • The overall success of the private rental market in responding to the different forces at play highlights the need not to stymie the responsiveness of rental housing supply with unnecessary taxes or overly stringent regulations.
  • Commonwealth Rent Assistance has proven to be effective in supporting low income and low wealth households (including retirees) that do not own their own homes. However, maximum payment rates have fallen behind average rents over the past two decades.
  • Some state-based residential tenancy laws could do more to improve certainty of tenure for vulnerable tenants. For example, there are wide disparities across the country between the minimum notice periods required for eviction on sale of a property, from as little as four weeks to more than eight weeks.
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