Renting in Australia and the role of philanthropy

The state of the housing market has made finding safe, secure and affordable properties increasingly difficult for the near-third of Australians who rent their home. Housing insecurity can lead to homelessness and addressing this most fundamental of needs is the first step to good health, education, employment and an equitable society for all. Renting is not such a precarious option in other countries. What are the political and economic conditions that have led to Australia’s rental crisis and how can philanthropy do more to support renters and drive a systems-level shift? Erin Dolan, Program Manager at the Lord Mayor’s Charitable Foundation and Chair of Philanthropy Australia’s Affordable Housing Funders Network, provides her view.

Renting in Australia

Rents are on the rise.  Since lockdowns have lifted, the costs of private rentals have risen dramatically. Adding to the rising cost of living generally, renting is becoming increasingly unaffordable. Those in housing affordability stress – lower income households who pay more than 30% of their income on housing – are making tough choices about food, health, housing.

The issue of renting has taken centre stage in our community, featuring heavily in our daily news. Renting has also become a political battle ground. At the Federal level, the Greens demanded a rent freeze this year, stalling a national housing bill. A Senate Inquiry into the worsening rental crisis recently finalised their report, yet the committee couldn’t find consensus on recommendations.

Commodification of housing is often to blame, and Australia is unique in the high number of private individual landlords.  ‘Mum and Pop’ investors is the term used for these types of landlords, perhaps a deliberate misnomer as over half of all private rentals are owned by investors with multiple rental properties.  Regardless, Australia has a tax system that supports the status quo over more emerging models, such as institutional build to rent.

Renting was once considered the steppingstone to home ownership, a period where young people could save for a home deposit.  This is now increasingly unlikely, as rents take more and more of people’s wages – pushing home ownership further away. Roughly a third of people rent in Australia and more people are renting for longer.

Yet renting doesn’t need to be a temporary form of housing.  In other countries, for instance Germany, renting provides long-term security. This is not the case in Australia; the median rental duration in Melbourne is currently 19 months. Finding new rental properties takes resources, it also creates instability for the household and can weaken community bonds.

Renting laws

Rental laws differ in each state, yet rent controls,which limit landlords’ ability to increase rents, are not very strong in Australia. The Australian Housing and Urban Research Institute (AHURI) provides a great a explainer on the differences between rent cap, rental controls and rent freezes. The AHURI brief also evaluates the research on the utility of rent controls generally and suggest they are a short-term fix rather than a long-term solution.

Even with rent controls, landlords can use no grounds evictions to reset rents; evicting tenants to increase the rent with a new tenant. The ability for landlords to utilise no grounds evictions or raise rents creates a power imbalance, with many renters fearing reprisal if they complain to their landlord about their rental properties.

This is why many renters don’t use the available laws, particularly as they relate to minimum standards that make each rental property habitable for living. Minimum standards, like having a heater, are particularly important for ensuring we have climate safe homes free from excessive heat, cold or mould. 

Philanthropy’s role

There are several ways philanthropy can help support renters. One of the obvious spaces for philanthropy to invest is to help renters use existing laws. For instance, the Lord Mayor’s Charitable Foundation funded Justice Connect to help renters during lockdown through Dear Landlord.  This online tool enabled renters to apply for Victorian rent relief grants. More recently, Justice Connect also received funding to research why laws aimed at helping women escaping family violence stay in their rentals are underutilised in Victoria.  Lord Mayor’s Charitable Foundation is also funding another group of community legal services to improve how renters can better utilise minimum standards provided under Victorian rental laws.

Some alternative housing models are bridging the gap between renting and owning. One option is cooperative housing, where tenants purchase shares that provides them with long-term housing at reduced rent. Other models include build to rent or even build to rent to buy – although these models for lower income households are just emerging.

Importantly, we need to directly support and advocate for an increase in social housing, which used to be more prevalent in Australia.  A reminder that our current Prime Minister was raised in social housing. When philanthropy invests in social housing, we are investing in one of the most secure forms of renting in Australia.

Many community housing organisations also run real estate agencies as social enterprises. HomeGround Real Estate offers an affordable housing scheme where private landlords receive tax discounts for providing below market rental properties.  Women’s Property Initiatives has a real estate agency that provides rental properties to women, many who have escaped family violence.

Finally, philanthropy should support charities working for change. Better Renting, as the name suggests is a charity that works to get renters a better deal.  Notably they run a Healthy Homes for Renters campaign that calls on government to implement minimum energy efficiency standards for rental properties across Australia. Everybody’s Home works across the spectrum of housing typologies.  As part of their rental campaign, they seek to create further legislative protections for renters as well as policies to prioritise home ownership over speculative housing.

Renting should be a respected option for housing Australians. Renting should be both a short-term and a long-term option amongst Australia’s housing mix. Rental properties should have reports that detail energy efficiency. We need to think deeply about the causes of unaffordability and be brave about shifting to a stable, climate safe and affordable housing policy.

If you are interested in learning more about these issues or how philanthropy can impact the housing and rental space, view a video of the latest Affordable Housing Funders Network meeting on our Better Giving Hub. The next meeting is in March – contact Erin for more: [email protected].