• Written by Hal Pawson, Associate Director - City Futures - Urban Policy and Strategy, City Futures Research Centre, Housing Policy and Practice, UNSW
Rental stress leaves hundreds of thousands of Australians struggling for years to cover all the other costs of living. Tero Vesalainen/Shutterstock

Low-income tenants in Australia are increasingly likely to be trapped in rental stress for years. New evidence from the Productivity Commission shows almost half of such “rent-burdened” private tenants are likely to remain stuck in this situation for at least half a decade.

Rental stress is where a low-income tenant faces housing costs that leave them without enough income for food, clothing and other essentials. The scale of the problem – commonly defined as when rent eats up more than 30% of income – is usually presented as a “point in time” or snapshot statistic.


Read more: City share-house rents eat up most of Newstart, leaving less than $100 a week to live on


As the Productivity Commission report reveals, the snapshot number in this situation has increased from 48% of low-income renters in 1995 to 54% in 2018. That’s around 1.5 million people pushed into poverty by high housing costs.

For some, of course, this will be only a temporary problem. On this basis, it is sometimes argued that concerns over Australia’s high rate of rental stress are overstated.

However, the Productivity Commission report, Vulnerable Private Renters: Evidence and Options, highlights longitudinal survey evidence showing that a low-income tenant’s experience of rental stress is increasingly likely to be long-term – not a passing problem. As the commission notes:

[…] a growing number of households find themselves stuck in rental stress.

What is the evidence for this?

This conclusion stems from a comparison of two different tenant cohorts experiencing rental stress as revealed by survey data for 2001 and 2013. Less than a third (31%) of the 2001 cohort remained in stress five years later. But almost half (46%) of the 2013 cohort were.

While many people exit rental stress quickly, the proportion of private. low-income renters in long-term rental stress has increased significantly. Vulnerable Private Renters: Evidence and Options, Productivity Commission, CC BY

So, it’s not just that more low-income earners are paying unaffordable rents at a particular point in time. This is increasingly a situation that affected private tenants cannot escape.

Beyond the obvious welfare impacts, recent work argues that excessive rent burdens may also damage human capital and, as a result, reduce economic productivity.

The commission’s findings seem to suggest the ongoing restructuring of Australia’s labour market and housing system is eroding socioeconomic and/or housing mobility. The report notes the significant fall in the numbers who manage to move from renting to owning – from 13.6% of renters in the period 2001-04 to 10.0% from 2013-16.

Perhaps slightly more surprising is the commission’s explanation for the rising rate of (point in time) rental stress for all low-income tenants. According to the report, this results not from increasing unaffordability for the private renter cohort specifically, but from the growing dominance of private rental housing as the tenure in which low-income households live.

The number of private renters has grown as the proportions of owner occupiers and public housing tenants have fallen. Vulnerable Private Renters: Evidence and Options, Productivity Commission, CC BY

Read more: Private renters are doing it tough in outer suburbs of Sydney and Melbourne


This, of course, results from the post-1990s failure of Australian governments to expand the supply of social housing to match population growth. By 2018, well over two-thirds (71%) of low-income tenants were renting in the (relatively expensive) private market – rather than from a (rent-limiting) social landlord. Back in 1996, barely half (52%) of them were renting privately.

What does this mean for policy?

The report presents some useful discussion of possible policy directions.

For example, while dismissing rent control as liable to advantage existing tenants at the expense of potential tenants, the report is implicitly critical of residential tenancy laws in most states and territories.

The report advances the broad case that tenancy law reforms, “if well designed”, can enhance tenant welfare “without substantially increasing the cost of renting”. Longer notice periods are particularly favoured because these will “provid[e] vulnerable families more time to find new accommodation and prepare for the move”.

Slightly more controversially, the commission strongly hints at support for outlawing no grounds evictions. The landlord power to end a tenancy without any need to justify the move persists across most states and territories. Discussing this power the report states:

It increases the bargaining power of landlords […] and decreases that of tenants. Landlords’ incentives to carry out obligations, such as repairs and maintenance, decrease when no grounds evictions are available, since this provides them with an avenue to terminate leases in the event of a dispute.


Read more: Life as an older renter, and what it tells us about the urgent need for tenancy reform


However, having highlighted a private rental affordability problem that is both growing in scale and becoming demonstrably more entrenched, the report is timid on solutions beyond modestly improving tenancy conditions.

It argues in general terms for an increase in Commonwealth Rent Assistance but – beyond tentatively floating a 10% rise in maximum payments – advances no specific proposal.

Expanding the social housing stock as part of the broad-ranging housing strategy Australia badly needs is scorned as “an expensive option”. This is a reference to the narrowly scoped analysis in the commission’s 2017 Human Services report. It favoured market solutions to provide low-income housing – on efficiency grounds.

The “expensive option” assertion is out of line with the more broadly framed analysis of the Productivity Commission’s predecessor, the Industry Commission. The latter concluded:

Public housing and headleasing [when social housing providers sublease private rental properties] are assessed to be more cost-effective than cash payments and housing allowances.

While the Industry Commission report admittedly dates from 1993, the subsequent failure of overwhelmingly private provision for low-income renters surely presents compelling reasons to revisit the investment case for social housing.


Read more: Australia's social housing policy needs stronger leadership and an investment overhaul


Hal Pawson receives funding from the Australian Housing and Urban Research Institute (AHURI), from the Australian Research Council (ARC) and from Crisis UK.

Authors: Hal Pawson, Associate Director - City Futures - Urban Policy and Strategy, City Futures Research Centre, Housing Policy and Practice, UNSW

Read more http://theconversation.com/growing-numbers-of-renters-are-trapped-for-years-in-homes-they-cant-afford-125216

We could have more coronavirus outbreaks in tower blocks. Here's how lockdown should work

The recent lockdown of nine social housing towers in Melbourne’s north to contain the spread of COVID-19 led to widespread concerns for residents’ welfare.Among the concerns was that imple...

Thea van de Mortel, Professor, Nursing and Deputy Head (Learn & Teaching), School of Nursing and Midwifery, Griffith University - avatar Thea van de Mortel, Professor, Nursing and Deputy Head (Learn & Teaching), School of Nursing and Midwifery, Griffith University

7 Tips to Get Your New Website Indexed by Google Quickly

So, you have just launched a new website; congratulations!! But then soon enough, you are confronted with the challenge of your website or some pages not showing up on Google. The dream of every...

Media Release - avatar Media Release

Making it harder to import e-cigarettes is good news for our health, especially young people's

ShutterstockFrom next year, access to e-cigarettes and related products containing liquid nicotine will require a doctor’s prescription. This is to ensure liquid nicotine is handled like the poi...

Becky Freeman, Senior Research Fellow, University of Sydney - avatar Becky Freeman, Senior Research Fellow, University of Sydney

288 new coronavirus cases marks Victoria's worst day. And it will probably get worse before it gets better

Victoria has recorded 288 new COVID-19 cases since yesterday, the largest daily increase we’ve seen so far.This big jump must have the Victorian government and health authorities very concerned...

Adrian Esterman, Professor of Biostatistics, University of South Australia - avatar Adrian Esterman, Professor of Biostatistics, University of South Australia

Which face mask should I wear?

ShutterstockAustralia’s chief medical officer Paul Kelly today recommended people in Melbourne and the Mitchell Shire wear masks when leaving the house:[…] If people have symptoms and the...

Abrar Ahmad Chughtai, Epidemiologist, UNSW - avatar Abrar Ahmad Chughtai, Epidemiologist, UNSW

Rising coronavirus cases among Victorian health workers could threaten our pandemic response

ShutterstockOver the past week, we’ve seen a spike in the number of COVID-19 infections among health-care workers in Victoria.This includes a doctor at Melbourne’s St Vincent’s Hospi...

Rochelle Wynne, Director, Western Sydney Nursing & Midwifery Research Centre, Western Sydney University - avatar Rochelle Wynne, Director, Western Sydney Nursing & Midwifery Research Centre, Western Sydney University

3 Easy Demi-Glace Recipes

Demi-glace holds a very special place in the traditional cooking world. It’s a rich brown sauce used traditionally in French cuisine, and can be used by itself or as a base for other delectabl...

News Company - avatar News Company

Thinking about working from home long-term? 3 ways it could be good or bad for your health

ShutterstockThe coronavirus pandemic has forced many of us to work from home, often in less than ideal circumstances.Many employees had little choice in the decision, limited time to prepare, patchy t...

Carol T Kulik, Research Professor of Human Resource Management, University of South Australia - avatar Carol T Kulik, Research Professor of Human Resource Management, University of South Australia

why NZ's law lacks necessary detail to make a fully informed decision

Photographee.eu/ShutterstockWhen New Zealanders go to the polls in September, they will also be asked to vote in a referendum on assisted dying.Parliament already passed the End of Life Choice Act in ...

Rhona Winnington, Lecturer, Auckland University of Technology - avatar Rhona Winnington, Lecturer, Auckland University of Technology



News Company Media Core

Content & Technology Connecting Global Audiences

More Information - Less Opinion