Most of those who rent a place to live in Australia are doing it extremely tough. This was further confirmed by the recent 2019 Renter Report issued by realestate.com.au.
Figures show that a staggering 40% of young renters are suffering from rental stress, where they are forced to spend 30% (or more) of their income on housing costs. This huge burden pushes young people to move into often crowded, and poor-quality share houses.
Illegal rooming houses are also becoming an issue with dodgy landlords trying to take advantage of the precarious situation young people find themselves in. Many share and rooming houses have health and safety issues including in some cases a lack of basic facilities.
For example, one small apartment in Melbourne was found to have ten tenants living in it. This was making the landlord $52,000 in rent a year!
Competition for rental properties is tight and this has fuelled the rise of ‘rent bidding’. Rent bidding works like an auction, where the property will go to whoever is prepared to pay the highest price. There are even multiple mobile phone applications that facilitate this.
This practice pits ordinary people against each other so that landlords can increase their profits. While some states have some limits on the practice, there is currently no comprehensive ban of this insidious practice across Australia. Rent bidding should be made illegal in all states.
The best way to cut across rent bidding would be to introduce a cap on rents. Currently rents in Australia are not regulated. The cost of rent is decided by private landlords and property developers, who prioritise short-term profits.
Rent control exists in a number of other countries around the world, and forms of it have even existed in Australia in the past. To stop people being ripped off, rent should be capped at 20% of a tenant’s income.
In the same way that we have pushed for minimum wages to limit how much bosses can exploit workers, we need to push for rent control to limit how much landlords can exploit tenants.
The Labor Party claim that they want to try to address housing affordability but their latest proposals are totally inadequate. If elected, they plan to give huge handouts to landlords in exchange for them offering people marginally cheaper rent.
Many experts have pointed out that the benefits of this scheme will go overwhelmingly to the rich, especially big institutional landlords. These are some of the very people who helped to create the housing crisis in the first place!
Rather than funnelling taxpayer money to private profiteers, the solution is for the government to build housing themselves. We need an expansion of the public housing sector with at least 500,000 new homes to be built across the country.
Unlike previous generations it’s much harder for young people today to ditch renting and save up to buy their own home. According to the 2019 Renter Report, 1 in 5 people aged 18 to 39 have given up on owning their own home, and have resigned themselves to the fact that they will rent for life.
The report also debunked the myth that young people themselves are to blame because they don’t save enough. For most people, home ownership is totally out of reach because wages have lagged far behind the actual cost of homes.
For example, the average young renter in Australia earns around $50,000 a year. Yet according to the Housing Industry Association, repayments on a typical loan for a median-priced house is about $53,000 a year in Sydney and $42,000 a year in Melbourne!
The root cause of the housing affordability crisis is the drive for profit. Removing the profit motive from housing, and bringing the sector into public hands, is the only way to ensure everyone has the right to an affordable home.
A publicly owned and controlled model for housing would be able to provide cheap, good-quality homes to all low and middle income earners. Homelessness and dodgy rooming houses could be done away with, and through planned construction we could create thousands of new jobs.
Unfortunately, none of these things will be handed over without a fight. That’s why the Socialist Party has initiated the Renters Fightback campaign.
We hope to build a grassroots campaign that can put housing affordability on the political agenda, and point the way towards a new type of society where housing is seen as a basic right.
By Triet Tran