Research Reports and Evaluations - Page 12

3 Barriers to accessing the private rental sector households where income levels have not kept pace with rental price increases. ‘The critical thing we need to decide as a real estate agent is whether the tenant can afford to pay the rent. We used to base this on a 30% rule but now we have generally increased that amount to 45%. It has become more difficult for some of the low income renters…..What a lot of people are now trying to do is to share with their brother, sister or pool the rent- we have seen that happening a lot more’ [External stakeholder]. The private rental sector has become a long-term, if not permanent, housing option for increasing numbers of low income households (Stone et al., 2013). The long-run decline in affordability at the bottom end of the private rental sector in Australian cities and some regional areas is well established. Despite the growth of rental properties over the past decade there remains a critical national shortage of some 187,000 dwellings in 2011 (up from 138,000 in 2006) that is affordable to those in the lowest 20 percent of the income distribution (Hulse et al., 2014, p.29). Increasing reliance on the private rental sector to house low income households indicates that a range of private rental support programs will be needed to not only bridge the affordability access gap but to also overcome the selective sorting practices that can often place low income households at the ‘bottom of the application pile’ (Short et al., 2008; Wallis Consulting Group 2008). The more widespread use of month by month leasing following the initial twelve month leasing agreement was considered problematic for many low income and vulnerable tenants. There was a view that some landlords are finding ways to ‘get around the existing tenancy legislation’ through the month by month lease agreement. While month by month renting can provide flexibility for both tenants and landlords, it can pose a significant threat to longer-term security as it may be subject to misuse, as reflected by one stakeholder Consultations with clients, external stakeholders and staff in the focus group reinforced the difficulties that low income households faced in the initial stages of gaining entry to the private rental sector. This section focuses on the key themes in relation to the difficulties that low income households were reported to experience in obtaining rental properties in the Whittlesea area. The provision of financial support was considered only part of the solution in assisting these households to overcome constraints to access and increase their competitiveness alongside other prospective tenants. We are seeing more tenancies with the 12 month lease ending and then going onto a monthly agreement where it is easier to evict the tenant. The security of tenure is becoming increasingly precarious despite there being protection. We have found many practices that place the tenancies at risk for low income tenants. Landlords have evicted clients on the basis that they would like to renovate the property or to move into the property only to see it advertised the next week at a higher rent [External stakeholder]. 3.1 A shifting benchmark of what is affordable and secure? Service providers and real estate stakeholders were candid about the difficulties faced by some low income households in securing a rental property to live in and highlighted how both real estate and welfare agencies have attempted to respond to this changing market context. One significant development reported was that real estate agents have had to adjust the affordability threshold for lower income households from the traditional cut off of 30 percent of income up to 45 percent. Although adjusting the affordability threshold can mean that tenants who might not have been considered eligible for a property previously would now be eligible, it reveals the state of the housing market for low income 5