800,000 Aussie home owners are facing steep mortgage increases this year as they reach the end of their fixed term loans. Image – Supplied
  • Sydney is facing record-low rental vacancies
  • UNSW housing experts have put forward five initiatives they say should be on the NSW election agenda
  • Suggestions include tax reform, increased rent assistance and enhanced tenants' rights

With a housing crisis rampant and a state election on the horizon, University of NSW housing experts have compiled five key policy recommendations that could provide some relief.

Along with the rest of Australia, NSW is facing a housing crisis with record-low rental vacancies and a fixed rate cliff looming for many mortgage holders.

REINSW CEO Tim McKibbin says the vacancy rate for Sydney overall dropped 0.3% for January to just 1.5%.

“This 9-year low in Sydney vacancies is proof that the rental crisis is showing no signs of abating. Demand for rental accommodation across Sydney is at an all-time high,” he says.

Meanwhile, the Property Council of Australia has announced that 725,000 new dwellings are needed in the greater Sydney area by 2035.

UNSW housing policy experts, Professor Hal Pawson and Dr Chris Martin from the City Futures Research Centre, have five key policy reform recommendations.

Emergency packages and regulatory relief

According to Professor Pawson and Dr Martin, there are regulatory options available to state and federal governments to provide immediate short-term relief for renters struggling in the current market. These include legislating a limit or control on rental increases. This is something that can be done quickly, as demonstrated by some states during COVID.

Increased rent assistance is another potential policy to provide relief. This is quickly deliverable and could be used while longer-term solutions are implemented. Professor Pawson and Dr Martin highlight that decades of “inadequate” up-rating have drastically devalued the rental assistance in NSW. An assistance boost is backed by voices from the Grattan Institute, the Australian Council of Social Service and the Productivity Commission. Although this move is formally beyond the power of state governments, NSW party leaders commit support for this campaign.

Improved regulation of Airbnb is another policy option available to the government to implement.

“In some parts of NSW and the rest of the country, perfectly good long-term rentals are becoming Airbnbs – causing more strain on the housing and rental market,” says Professor Pawson.

Widen land tax reform

Professor Pawson and Dr Martin. suggest that a broad-based land tax that includes owner-occupied housing, is a key reform to improve housing affordability and economic productivity in NSW.

“Widening land tax would bring more under-utilised land to market, improve housing supply, and discourage speculative hoarding.”

Chris Martin, City Futures Research Centre

The land tax has the benefit of capturing for the public some of the land value gains from public investment in infrastructure. It can be designed to avoid creating hardship for low-income owner-occupiers, by allowing tax liabilities to be deferred until a property is finally sold or inherited.

“The Coalition took the big step of committing to land tax reform but came close to flubbing it with a badly compromised policy which is that first home buyers can opt-in and avoid stamp duty,” says Dr Martin.

“Its election promise to allow other owner-occupiers to opt-in, while keeping stamp duty for multiple property owners, would go some way to getting this reform back on track.

“NSW Labor on the other hand is opposing land tax reform in this election, which is disappointing. Phased introduction of a broad-based land tax is a pro-affordability, pro-productivity, pro-fairness policy they should endorse.”

Recent City Futures research found strong support among economists for shifting to a broad-based land tax, both to reduce wealth inequality and enhance productivity.

REINSW suggests an alternative approach

The Real Estate Institute of New South Wales (REINSW) suggests that implementing taxation reform that abolishes or reduces property taxation would better aid the rental crisis. It is of the perspective that property tax and other fees and levies are discouraging property investment.

Enhance tenants’ rights

With more long-term and lifetime renters, Professor Pawson and Dr Martin say law reforms are needed to help rentals be long-term homes.

One essential action would be to prohibit landlords from terminating tenancies without grounds.

“No-grounds terminations are unfair, give cover for bad reasons for termination – such as discrimination or retaliation – and undermine tenants’ legal rights to get repairs done and challenge rent increases,” explains Dr Martin.

Labor has promised law reform that will require ‘reasons for evictions’. The Coalition promised to ban no-grounds terminations for periodic tenancies, but still allow no-grounds terminations at the end of a fixed term.

“Reformed tenancy laws must also ensure that the tribunal has the discretion to decline termination, considering the circumstances of the parties and the balance of hardship. Termination of a tenancy should never be mandatory,” Dr Martin says.

The Compass Housing Services report has estimated there will be a shortage of almost 200,000 homes across Australia by 2031. Image – Supplied.

Scale up investment into social housing

NSW has social housing stock has been relatively stagnant in the last 25 years. Although official figures indicate apparent growth, that is largely due to a 2016 statistical re-definition. As a proportion of all housing, the NSW stock of public and community properties has in fact continued to dwindle.

A recent City Futures report revealed that 144,000 households around NSW are experiencing unmet needs for social housing.

“This election, looking at the platforms of both major parties, we see a glaring absence of any pledge to confront the mounting problem of unmet housing need – or even to stabilize social housing representation within the overall property market,” says Professor Pawson.

“NSW could expand the existing Social and Affordable Housing Fund, enabling it to underpin an additional cohort of newly developed homes – emulating Queensland which recently doubled its own housing future fund by pledging another $1 billion to its stake.”

Mandatory developer contributions to affordable housing

In line with standard practice in many other countries, Professor Pawson and Dr Martin suggest Australia’s planning systems could require regular inclusion of affordable housing within private residential developments. Alternatively, simulating the system operating in the City of Sydney, developer financial contributions to affordable housing could be managed through the scheme approval process.

Professor Pawson and Dr Martin said it is time to consider a Sydney-wide scheme of the same sort. For instance, it could be mandated that 5% to 10% of private development floorspace be dedicated to social or affordable housing.

“This was proposed by the Greater Sydney Commission as long ago as 2016, but never actioned by the Coalition Government,” says Professor Pawson.

“Properly implemented, the cost of such a measure will be borne by landowners, not builders or consumers.

“It’s no substitute for government-funded social housing subsidies. But when you consider that it could enable affordable housing provision to be hard-wired into market housing development at no cost to government, surely this is a no-brainer that has been largely ignored in Australia for far too long”.

Professor Pawson, University of NSW

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