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Rental crisis: What the Labor Government can do to fix it

Several renters outside rental property and for lease sign outside house
Labor sowed the seeds for rental reform and housing experts are hopeful for change. (Source: Getty)

Housing experts are holding out hope for much-needed reforms under the recently elected Labor Government to solve the housing-affordability crisis as rental prices soar.

Millions of Australians are facing rental stress, according to a recent survey by Savvy, with 2.72 million people spending as much as 30 per cent of their income on rent.

This is the rent-to-income ratio that characterises rental stress, according to the Australian Institute of Health and Welfare.

Affordable rental accommodation has become particularly hard to find in regional areas, with reports of young professionals living in tents and garages on the NSW south coast.

In tourist hotspots like Noosa in Queensland, hospitality workers have been sharing eight-bed hostel rooms long term because there are no affordable rental properties available.

While Labor’s policies to help first home buyers access the property market featured prominently during the election campaign, the party also floated several other ideas that may improve affordability for renters too.

This included the development of a National Housing and Homelessness Plan, which was something the Tenants' Union of NSW chief executive officer, Leo Patterson Ross, was cautiously optimistic about.

While Patterson Ross recognised that fixing the housing crisis was not something the Federal Government could do on its own, and that state and territory governments were responsible for tenancy legislation, he said the Commonwealth could play a more instrumental role in housing policy than it had in the past.

Top of his list is reforming the funding model that underpins social housing, which has seen chronic underinvestment from both state and federal governments.

Investing in social and affordable housing reduces pressure in rental markets, particularly in the regions, and provides stable housing for the most vulnerable.

“We can’t expect governments to build more [social housing] if they've got no money to do that,” Patteron Ross said.

He said the social housing system was “spinning wheels” because under the existing funding arrangement, the money available was being eaten up by maintenance and temporary housing.

As such, nowhere near enough social housing has been built in recent years to meet the demand.

Patterson Ross believed the funding issues stemmed from changes made under the Howard government that sought to reserve social housing for the most needy.

However, in doing so, the social housing system was inadvertently made less financially sustainable as it removed people in social housing on higher incomes who were paying more rent.

Without them, there was much less money going towards new social housing dwellings or maintenance.

Turfing people out once they’d hit a certain income threshold was also leading to a “self-perpetuating cycle” of poverty, Patterson Ross said.

The rules are a disincentive for people to rejoin the labour force after a period of unemployment because that means they will be kicked out of their social housing dwelling into the “very unstable, unfair and often quite harmful” rental market.

For Patterson Ross, unwinding the eligibility criteria for social housing would be the types of issues a national housing strategy would grapple with.

He’d also like to open up dialogue with state and territory governments about the laws that manage private renting, which he said was another lever governments could pull to improve the affordability and standard of rental properties.

What else Labor has promised on housing

As part of its election campaign, Labor also promised the establishment of a National Housing Supply and Affordability Council, which would have a couple of tasks on its plate including setting housing supply targets.

This council would sit within an expanded NHFIC (National Housing Finance and Investment Corporation), to be renamed Housing Australia.

CoreLogic’s research director, Tim Lawless, said the expanded remit of the organisation sounded encouraging, especially as it would target many of the factors contributing to worsening housing affordability, such as insufficient land release and restrictive town-planning policies.

This new $10 billion Housing Australia Future Fund would also help to boost the supply of social and affordable housing.

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