Renting for life is becoming Melbourne’s new normal — but is the law keeping up?
Rental properties are now more expensive, and harder to find, than in the past. (ABC News: Michael Barnett)
There’s a good reason Melbourne is so wedded to the great Australian dream of owning a house and land: it was created here.
“We invented the quarter-acre block,” says demographer Bernard Salt.
“The three-bedroom brick veneer, AV Jennings … that model actually came out of the suburbs of Melbourne.
“So we have this cultural history, reaching right back to Edna Everage’s era, where we have celebrated low-density suburbia.”
And, most importantly, owning our own piece of it.
But in the mid 1990s, something changed. We began shifting from a city of homeowners to a city of renters.
Price growth in recent years means prospects are gloomy for many would-be homebuyers in Melbourne. (ABC News: Danielle Bonica)
Between 1996 and 2011, the number of private tenants in Melbourne jumped by almost 60 per cent.
The number of privately rented households went up 50 per cent.
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Nearly half of that growth was made up of families.
Rental properties are now more expensive, and harder to find.
“It’s different from what it was 20 years ago, when people might rent for a short time, while they were saving to buy a home, or while they’re studying,” says Emma King, the CEO of the Victorian Council of Social Service (VCOSS).
“So many Victorians are renting for life now, or renting for much longer periods.”
In 2011, the proportion of people renting in Melbourne was at 26 per cent and rising.
London leads on renters’ rights
It’s the same level as London, which — like Melbourne — is absorbing more than 120,000 new residents each year.
In London, as home ownership becomes ever harder to achieve, the number of people renting is climbing so fast that by 2025, there will be as many renters as owners.
And like Melbourne, London has a long — and growing — waiting list for social housing, and a rising population of homeless people.
This year, Lord Mayor Sadiq Khan released the London Housing Strategy. Significantly, it includes strengthening the rights of tenants, to make renting “more secure, stable, and affordable”.
What’s in the London Housing Strategy?
- Nearly $9 billion to start the construction of 116,000 “affordable homes” by 2022
- City of London will “name and shame rogue landlords” who fail to meet housing standards
- Promotion of higher density housing across London to make the most of available land
- Creation of a new tenancy model to offer more rights and reduced fees to renters
It’s the sort of change Tenants Victoria CEO Mark O’Brien says is needed in the Melbourne housing market.
“We are a long way from the tenancy protections that exist in other parts of the world,” he says.
“There are significant groups now renting that weren’t a generation ago. Couples with young children, and over 55s.
“To make them feel more secure we are going to have to continue to improve or to restrict the circumstances under which they can be evicted for no fault of theirs.”
Mr O’Brien says Melbourne’s existing rental culture is directly linked to the rise in homelessness.
“The increased demand has squeezed out a lot of disadvantaged households who might have been able to find a place in the private market, but now can’t,” he says.
“They now end up in rooming houses, or living in caravan parks — who then squeeze the even more disadvantaged people out onto the street.
“We are going to hit a crunch where you have a whole generation who are going to be stuck in renting for longer, and the unaffordability of renting becomes a consequence and a cause of them not being able to afford to buy a home.”
Melbourne’s housing issues are manifesting in increasingly visible homelessness in the city. (ABC News: Stephanie Anderson)
Mr O’Brien strongly supports changes to Victoria’s Residential Tenancies Act passed in September, giving renters dozens of new rights, such as owning pets and making minor modifications to homes without permission.
It also removes the 120-day ‘no reason’ notice to vacate, when a landlord wants their own property back for a reason not specified in the legislation.
“They are heading in the right direction,” Mr O’Brien says.
“But you can’t head in the right direction if every attempt is seen by the industry as an attack on property ownership.”
The Real Estate Institute of Victoria (REIV) is warning those changes will make renting harder, not easier.
“If the Government makes it too hard, then landlords will consider removing properties from the rental market,” the REIV’s president Richard Simpson says.
“Rents are likely to rise, and property owners will be forced to minimise their risk by offering shorter tenancies.”
Mickleham on Melbourne’s northern outskirts is Australia’s fastest-growing suburb. (ABC News: Margaret Burin)
Politicians warned on affordability meddling
The Greens want to extend tenancy rights further by banning “without grounds” evictions completely.
The Greens would also ban rental bidding, and — most controversially — cap the amounts landlords can charge for rent.
Neither major party is likely to support that idea, as they focus on offering policies to help aspiring homeowners by tackling housing affordability.
Ahead of next month’s election, Liberal leader Matthew Guy is promising to “flush the market with land”, by releasing 290,000 new blocks of land in Melbourne’s outer growth suburbs if he is voted into power.
He’s also trumpeting a strategy to help people relocate to regional cities, where it’s easier to buy a house.
It is also trialling a scheme for low-income first-home buyers, in which the State Government pays 25 per cent of the price for homes in targeted areas.
But Brendan Coates, from think-tank the Grattan Institute, says adding more fuel to the fire of the housing market is the worst thing a government could do.
“While prices are now falling, things like first-home buyers grants or stamp duty concessions for first-home buyers are a bad idea,” he says.
“They get built into the price of the property [and] the main person who ends up winning is the person selling the property rather than the person who is buying it.”