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Improve housing affordability and reduce homelessness

Improve housing affordability and reduce homelessness

Victoria’s high housing costs limit people’s opportunities more than any other factor. Skyrocketing rents and house prices mean people struggle to stay housed, or are forced to live in sub-standard homes, or live far from jobs and services. Excessive housing costs not only prevent people from finding secure shelter, but make it difficult for them to cover other basic living costs.

Skyrocketing rents and house prices mean people struggle to stay housed, or are forced
to live in sub-standard homes, or live far from jobs and services.

More than 22,000 Victorians face homelessness.[1] The number of people sleeping rough in Melbourne’s CBD has increased 74 per cent in two years.[2] There are more than 32,000 people on the public housing waiting list.[3]

Low-income households spend a large share of their incomes on housing. Low-income private renters on average spend 34 per cent of their income on rent. About 115,000 Victorian renters face housing stress.[4]

Low-income mortgagees on average spend 27 per cent of their income on housing. Victorian regions with greater concentrations of low-income households have high mortgage stress rates. For example, more than 14 per cent of Melton residents experience mortgage stress.[5]

It is also of concern that the future of the National Partnership Agreement on Homelessness remains uncertain, with funding unconfirmed beyond 30 July 2017.

Budget investments

Build more social housing

The Victorian government can establish a dedicated social housing growth fund to help more people find secure, affordable and appropriate housing.

The government is releasing an affordable housing statement by the end of 2016. This can significantly expand social housing, and be funded in the 2017-18 State Budget.

Building more social housing is Victoria’s most effective ammunition in the fight against poverty. The state’s significant lack of affordable housing makes all other social problems worse. Appropriate and affordable housing gives people a solid foundation from which to turn around their lives.

Whether by helping people find a job, overcoming family violence, avoiding homelessness, engaging in education, managing chronic illness, avoiding contact with the justice system, or protecting children from harm; safe and secure housing helps people overcome challenges, and lift themselves out of poverty. Higher rates of poverty and severe financial hardship are directly linked to high housing costs.[6]

Infrastructure Victoria lists affordable housing expansion in its top three priorities, finding:

“While the cost of improving the provision of housing for vulnerable Victorians will be significant, not acting will come at even greater costs to society and the economy, which will be felt by generations to come. This is not a future we can accept.”[7]

Victoria’s housing affordability problem keeps getting worse. More than 22,000 people face homelessness on any night. The number of people sleeping rough in Melbourne’s CBD has risen 74 per cent in two years.[8]

Housing stress grips 115,000 Victorian rental households.[9] Of more than 21,000 private rental homes listed in Melbourne, Anglicare’s Rental Affordability Snapshot found only four were affordable for Newstart or Disability Support Pension recipients.

Of more than 21,000 private rental homes listed in Melbourne, Anglicare’s Rental Affordability Snapshot found only four were affordable for Newstart or Disability Support Pension recipients.

Victoria’s public housing is increasingly dilapidated and no longer fit-for-purpose. About 10,000 public housing properties are nearing obsolescence.[10] More than 32,000 people are on the public housing waiting list.[11]

More can be done, as Victoria lags behind other states. Despite investments of around $600 million in housing and homelessness funding since the Royal Commission into Family Violence report, Victoria’s social housing supply is still at crisis point. Infrastructure Victoria suggests the state needs 30,000 affordable housing dwellings.[12]

VCOSS members report single people are the hardest group to house, with few social housing vacancies, and the private market completely unaffordable to this group. Future social housing projects can build more houses for single people.

VCOSS members report particular housing difficulties for people experiencing long-term homelessness, people with disability, older people, women and children escaping family violence, Aboriginal Victorians, refugees and asylum seekers.

A dedicated social housing growth fund can resource a social housing transformation. The fund can provide resources to:

  • Refurbish, redevelop or replace dilapidated public housing stock
  • Finance new social housing, directly or by leveraging finance such as housing bonds, revolving loan facilities, debt guarantees or shared equity models.
  • Combine with community housing stock transfers or land grants to maximise asset growth potential.

Fair and transparent distribution of funds can give non-government organisations the chance to develop strong proposals, not only increasing dwelling numbers, but also improving affordability, amenity and access to services. Social housing can support diverse socioeconomic communities, and cater to high demand groups, such as single people facing poverty and disadvantage.


Invest in a chronic homelessness permanent support model

The Victorian government can reduce the number of people sleeping rough by developing a long-term support model for people experiencing chronic homelessness.

Rough sleeping is ever more visible, especially in Melbourne’s CBD. Engaging people sleeping rough in intensive interdisciplinary homelessness services, and establishing them in homes, is the most effective way to reduce chronic homelessness. This requires more social housing availability. These services can work with people to overcome other barriers over the longer term, and ‘step in’ if their housing is at risk.

People who are homeless for a long time, or experience repeated homelessness episodes, often accumulate disadvantage over time, including worsening physical and mental health, exposure to violence, and alcohol and other drugs, and loss of living and employment skills. Overcoming these barriers takes time, resources and skills, but helps people successfully establish and maintain their housing.

Establishing interdisciplinary teams, comprising assertive outreach workers, community health nurses and psychiatric nurses, for an integrated and accessible response to people with a history of homelessness can effectively reduce the number of people sleeping rough in Victoria.


Sustain tenancies and prevent homelessness

The Victorian government can reduce homelessness by funding more services that prevent people becoming homeless in the first place.

Supporting people when their housing is under threat is far more cost-effective than waiting for them to become homeless. Homelessness prevention helps people sustain their tenancy or transition to a new home. An integrated homelessness prevention service can help people negotiate with landlords and creditors, access brokerage to manage rental arrears or damage costs, provide case management to help people maintain their tenancy, provide legal assistance in eviction proceedings, and provide financial counselling to help people manage their budget and reduce their living costs. A good service system can help people regardless of tenure, covering social housing and private rental, and even extend to mortgage foreclosure. It can refer people to other services, including mental health services, alcohol and drug services, family support services, aged care assistance and the NDIS.

However homelessness prevention services are currently under resourced and disparate. Initiatives like the Social Housing Advocacy and Support Program, having been cut by the previous government, are restricted to working with people in the public housing system, while other services like tenancy and homelessness legal services, are only funded to focus on the legal aspects of eviction prevention, rather than provide more holistic support.

Homelessness prevention services can be funded separately from homelessness crisis services, as crisis-response services already face overwhelming demand, and cannot stretch their budget to service those already homelessness, let alone those at risk of losing their housing. Homelessness prevention services have been prioritised by Infrastructure Victoria.[13]


Expand social housing energy efficiency retrofits

The Victorian government can create secure, affordable and healthy social housing by expanding energy efficiency retrofits to all social housing stock. Energy efficiency retrofits are a win-win for government and low-income Victorians. Tenants can stay healthy, live in greater comfort, and pay rent more reliably without facing bill shock.

Energy efficiency retrofits are a win-win for government and low-income Victorians.

As the state’s largest landlord, the Victorian government can lead on energy efficiency by improving its own housing quality and affordability. A wide-scale retrofit program can generate construction and energy efficiency jobs.

Alongside building retrofits, the Victorian government can expand solar panel installations in social housing, reducing energy bills and increasing energy security. Energy security especially helps social housing tenants, including a high proportion of older people, young children, and people with medical and other vulnerabilities relying on electricity, to stay healthy and safe.

Further strategies

Develop an affordable housing strategy

The Victorian government can integrate diverse policy levers in an integrated affordable housing strategy to help people throughout Victoria afford safe and secure homes.

Unaffordable housing affects everyone. It causes rising rates of homelessness, more social housing demand, unaffordable and insecure private rentals, and high house prices that prevent people purchasing their own home.

Victoria has no integrated, effective response to unaffordable housing. Potential policy levers to improve housing affordability include homelessness services, social housing, planning, taxation, and use of public land. Despite this, housing affordability efforts have so far been siloed and limited to small-scale initiatives, often disconnected and working at cross-purposes.

The Victorian government will release an affordable housing statement by the end of 2016. VCOSS encourages the government to develop an ambitious strategy covering the full housing spectrum, including homelessness, social housing, private renting and home ownership.

Review taxation effects on housing affordability

The Victorian government can change taxation settings to reduce housing price distortions.

Options include shifting revenue from inefficient stamp duties to a broad-based land tax, which improves housing affordability while maintaining a sustainable, less variable revenue base. This provides a progressive taxation base, does not penalise people who move more frequently, removes a barrier for first-home buyers, discourages property speculation and land banking, and acts as a value-capture mechanism. Tax changes can be designed carefully, including appropriate concessions and deferred payment options, especially for people who may be asset-rich, but income-poor.

As has been seen in West Australia, state budgets can crumble rapidly if built on unsustainable revenues. The Victorian budget is especially exposed to the housing market, and could be better protected by transitioning to a less volatile base, including substituting property stamp duties with broad-based land taxes.

Develop housing strategies for diverse groups

The Victorian government can better help people secure housing by developing specific strategies for specific groups. A coalition of older people’s organisations is calling for a housing strategy for older people. Other groups with specific housing needs include people with disability, Aboriginal Victorians, young people, single parents, and multicultural communities, including new migrants, refugees and asylum seekers.

While an overarching housing strategy extends somewhat to these groups, each has particular housing barriers not necessarily addressed by a generic strategy. For instance, older people may face particular problems with retirement living and rental security, people with disability may have difficulty finding accessible housing, and multicultural communities may face discrimination or difficulty around identification and demonstrating a rental history.

Introduce minimum standards for rental housing

The Victorian government can ensure secure, healthy homes by introducing minimum standards for renters. Minimum standards are beneficial and achievable, requiring investors to provide basic amenities such as heating, bathing and cooking facilities, a weatherproof structure and window coverings.

Quality housing improves housing stability by helping people stay healthy and safe, raise their children and manage energy costs. Low-income households, often forced to live in poor-quality housing, particularly benefit from minimum standards.

Landlords are financially well-placed to meet minimum standards, with 70 per cent in the top two income quintiles.[14] The Victorian government can ease any potential consequences for rents by staging the introduction of standards over time, and by facilitating affordable finance for low-income landlords, or those renting to low-income tenants. ‘On-bill’ financing is a proven way of delivering finance. Only a small percentage of rental housing is likely to need significant repairs or improvement, helping contain any affordable finance costs.

In the absence of minimum standards, the Victorian government is effectively subsidising landlords not maintaining basic housing conditions, by funding energy bill concessions, the Utility Relief Grant and the healthcare costs arising from poor-quality housing. The government will reap some offsetting savings by introducing minimum standards.

Improve security of tenure in private rental homes

The Victorian government can help people maintain stable, appropriate accommodation by strengthening security of tenure in rental laws, especially by removing no-cause evictions and allowing eviction only as a last resort.

Victorian law provides renters little security of tenure, and lags behind other countries and jurisdictions.

Victorian law provides renters little security of tenure, and lags behind other countries and jurisdictions. People can be evicted for no reason, constantly living weeks away from having to find a new home at short notice, or becoming homeless.

This precarious situation means people are reluctant to assert other rights to a decent home. Without recourse to evictions, people can be afraid to raise problems with substandard housing, broken fixed appliances, faults or maintenance requirements. This can put their health and wellbeing at risk, and increase their living costs.

By abolishing no-cause evictions, and making other tenure security improvements, the Victorian government can prevent people being evicted into homelessness,
and help them live more stable, secure lives.

Mandate universal housing standards in the building code

The Victorian government can make more appropriate housing available for people with disability and older people, by mandating minimum accessibility requirements in the building code for residential housing.

People with disability and older people have different accessibility needs, which are often not provided for in standard housing design, and this can exclude them from mainstream housing.

In 2010, the Victorian government undertook a regulatory impact statement on mandating building code accessibility standards. However, the recommended changes were not introduced. The proposed better apartment standards include some accessibility requirements, but these do not extend to detached housing.

Introduce inclusionary zoning to boost affordable housing

The Victorian government can boost the supply of social and affordable housing by changing planning laws to leverage affordable housing from residential development.

Options include inclusionary zoning, meaning multi-unit residential developments include a certain percentage of social or affordable housing. Inclusionary zoning is especially appropriate when ‘up-zoning’ or selling public land, as it is less likely to reduce land values.

Another option is density bonuses, where developments may be more intensive if incorporating social and affordable housing. Other planning changes can improve housing affordability, such as fast-track approvals and car-parking requirement reductions for social and affordable housing developments.

[1]      Australian Bureau of Statistics, Census of Population and Housing: Estimating homelessness, 2011.

[2]      City of Melbourne, StreetCount 2016, Final Report, 2016, p. 7.

[3]      Department of Health and Human Services, Public housing waiting and transfer list, June 2016.

[4]      Australian Bureau of Statistics, Housing Occupancy and Costs 2013-14, Data Cube: Additional Tables – low income rental households, Cat No. 4130, 2015.

[5]     Community West Vic, Victoria-first mortgage stress service announced in Melton, Media release, 22 February 2015.

[6]      Bankwest Curtin Economics Centre, Falling through the cracks: poverty and disadvantage in Australia: focus on the States, Report Series No. 1, 2014, p. 49.

[7]      Infrastructure Victoria, Victoria’s Draft 30-year Infrastructure Strategy, 2016, p. 4.

[8]      City of Melbourne, StreetCount 2016, Final Report, 2016, p. 7.

[9]      Australian Bureau of Statistics, Housing occupancy and costs 2013-14, Data Cube: Additional Tables – low income rental households, Cat. No. 4130, 2015.

[10]    Victorian Auditor-General’s Office, Access to Public Housing, PP No 118, 2012, p. viii.

[11]    Department of Health and Human Services, Public housing waiting and transfer list, June 2016.

[12]    Infrastructure Victoria, Victoria’s Draft 30-year Infrastructure Strategy, 2016, p. 95.

[13]    Infrastructure Victoria, Victoria’s Draft 30-year Infrastructure Strategy, 2016, p. 92.

[14]    R Wilkins, The Household, Income and Labour Dynamics in Australia Survey: Selected Findings from Waves 1 to 14 – The 11th Annual Statistical Report of the HILDA Survey, Melbourne Institute of Applied Economic and Social Research, 2016, pp. 74-75.