Minggu, 08 September 2013

Public housing market rent increases

Housing NSW is increasing the market rents for public housing tenancies. Usually this happens without a lot of public controversy, but this year it is in the news, following some comments from Family and Community Services Minister Pru Goward, and some puzzling interpretations by the papers. We'll try to clarify what's going on.

First, here's the basics of how rents work in public housing. Every public housing tenancy has a 'market rent', which approximates what the premises would go for on the private rental market, considering the location, size and amenity of the premises. The market rent is the rent on the face of the tenancy agreement, as increased from time to time by Housing NSW.

Most public housing tenants actually pay less than the market rent, because they are eligible for a low-income rental rebate, which reduces the rent they actually pay to 25-30 per cent of the tenant's household income. This is often called the 'rebated rent'.

Of the minority who pay the market rent, some would be ineligible for a rental rebate because their income is not low enough; others would be eligible for a rental rebate, but in their particular case the market rent is lower than the rebated rent, so they pay the market rent.

As we said, Housing NSW reviews and, in most cases, increases its market rents every year, to reflect increases in the market. This year, as it does every few years, Housing NSW has sent valuers out to do thorough valuations of certain benchmark properties, and on the basis of these valuations Housing NSW works out what it thinks should be the market rent for each of its properties throughout the State.

We understand that Housing NSW has instructed the valuers to do their valuations on the basis of the size, amenity, location and other factors pertaining to the premises, and that they should not apply any general discounts for the premises being public housing. Of course, in many cases public housing premises are physically different (eg no balconies; distinctively designed blocks; located on estates) from private rental dwellings of similar size in the same area, so the market rent may be justifiably lower for the public housing dwelling.

So far so clear. Yesterday, Minister Goward is reported to have stated that market rents will be increased so that:

public housing tenants currently ineligible for a subsidy, but who can afford it, will be paying the fair market rent for their property, rather than a discounted rate.

This may give the impression that there has previously been a deliberate policy of charging 'discounted rate' market rents and that a significant change has taken place. On the contrary, we understand that the only change to take place is the instruction to the valuers that in the practice of their art they should not do blanket discounts to come up with a market rent for public housing premises, but instead consider all the relevant factors and get to the market rent that way.

The news.com.au article confuses things further, by naming 'suburbs being targeted' by Housing NSW for rent increases. No suburbs are being targeted; market rents throughout the State are being reviewed and increased, and in some places the increases will be larger than in others.

Meanwhile, the Herald confuses things utterly, by reporting the issue under the headline 'Rents to soar as housing discounts get means-tested'. This is wrong: there's no 'discount' that's now getting means-tested. And to the extent that it conflates discounts with rental rebates and gives the impression that rental rebates have until now not been means-tested, it is wrong too.

At the end of it all, what public housing tenants need to know is this:
  • If you pay a rebated rent, the market rent increase will not affect you directly, because it does not affect the amount of rebated rent you pay. 
  • If you pay market rent, apply again to Housing NSW for a rental rebate and see if you're eligible. If you are, you'll pay that amount, if it's less than the increased market rent.
  • If your market rent increase strikes you as excessive, you can apply to the Consumer, Trader and Tenancy Tribunal for an order setting aside the increase, and fixing the rent at an appropriate amount. The Tribunal will consider the general market level of rents, the state of repair, the amenities provided, and any other relevant matter (but not affordability), in determining whether the increase is excessive.  Talk to your local Tenants Advice and Advocacy Service for advice on making an application.

UPDATE: see our post discussing the Minister's media release.