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Buying or selling? Get the right advice

A better way to house those needing assistance?

By johnboy 9 April 2010 35

In the recent train wreck on public housing GregW conducted an interesting thought exercise:

#39
GregW
(Anarchist)
11:55, 09 Apr 10

All this talk of social housings inefficiencies got me curious, so I went and took a look at the latest annual report from Housing NSW (Housing ACT is integrated with Community Services).

I’m no finance major, but if I am reading correctly, the department has:

130,000 properties
$688 million in rental income
$1,396 million in expenses
$28,830 million in assets

Thus, each tenant is paying an average of about $100 per week in rent. Each property costs the department approximately $200 per week to maintain (of which half is paid for by rental income and half from government grants).

Lets say the government decided to sell all of its public housing assets, and place the proceeds into an endowment fund at, say, 7% interest per year. This would generate revenues of $2,017 million per year (or about $300 per property per week).

Doesn’t this mean then that each public housing property is actually costing about $500 per week? Made up of $100 in private contributions and $400 in public contributions ($100 in government grants, and $300 in foregone interest)

Given the problems mentioned with the current housing system (long wait times, difficulty moving to more suitable locations, incorrectly sized housing), why not remove public housing and have Centrelink provide a separate state-funded rent assistance to those who would otherwise be eligible for public housing.

The tenant would then enter the private rental market with their $100 in rent, ~$60 in federal rent assistance (since they are now meeting the rent thresholds to be eligible), and a portion of the previous $400 public contribution.

If you gave each tenant say $200 in state funding, then the state could fund twice as many tenants, with each one having $360 per week to spend on housing. Alternatively, the state could support the same number of tenants and grow their endowment fund at slightly above the CPI.

I must have made a mistake somewhere, because at first glance like a much better solution all round.

Your thoughts?

What’s Your opinion?


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A better way to house those needing assistance?
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Jen10 2:46 pm 12 Apr 10

Jim Jones said :

sloppery said :

Imagine that – people who trash houses, don’t pay the rent on time and are pains in the a*** having to clean up their act in order to get a property! What is this world coming to when people can’t destroy the property of others at will?

The trick to do would be to find rentals for those who can’t manage it, with a government guarantee that the property will be looked after. This guarantee will be supported by the small weekly/fortnightly bond that will be extracted automatically from these people’s wage or welfare.

Where do you get this sh1t from?

Do you really believe that people who live in public housing are all like this?

Were you dropped on your head as child? A lot?

That seems a bit uncalled for. I think the comment was about the people in public property who don’t care about where they live (which is certainly not all of them).

Genie 12:56 pm 12 Apr 10

And some public housing tenants really do completely destroy properties. One in our street was left with holes in floors, walls and ceilings, most doors had been removed, flyscreens were in bits all over the yard, the bathroom walls were rotten from the floor up, the shower had been pulled off, and under the house was a dead dog. There were piles of rubble outside bedroom windows (window used as rubbish bin, I think). They did have foxtel outlets though, amongst the rubble in the lounge. The complete trashing was a blessing in disguise though, as when the tenants disappeared, housing had to sell the place off, as it was way beyond fixing up, so it became a private house.

People like this do not deserve public housing.. ! If they want to trash a house this badly they should be forced to live in shelters. And have the cost of repairs taken out of their Centrelink payments/Tax Return.

My sister is in a Govvie house and pays a % of her Centrelink payments, her house is kinda messy and is amazed how the house passed the inspection last week because of this, yet her yard failed as she pulled out a rose bush that had been planted. Go figure… ??

sloppery 9:12 am 12 Apr 10

From the CT on the weekend it looks like there are plans in the pipeline to demolish and redevelop the big public housing blocks on Ballumbir St in Civic. Hopefully this works out by selling the land to the developers for a LARGE sum, which will then be used to build a mix of nice new public housing around the place.

jmac 8:44 am 12 Apr 10

harley said :

miz said :

Sepi to clarify, I meant, for equivalently priced private rentals in this area (chisholm/gilmore), those amenities as the norm (per all homes) – but not in govvies in those areas. Yet the market rent is assessed as if they are of the same standard. This means the govt is ripping people off.

Forgive the insensitvity of the question, but if you are truly paying market rates, what’s preventing you from going private and getting all those bits and bobs you feel you are paying for?

Sorry, but i don’t mean to sound insensitive either, but i still don’t understand the argument? If at the end of the day you are frustrated that you are paying the same rent as private properties then move into one. And join the other thousands of people who have to move around as well. When i was in rental properies, we went through a few places with reasons ranging from landlords putting the place on the market and selling it through to the rent increasing and we had to look for something cheaper. Unfortuantely that’s just the reality for most people.

altkey 6:22 am 12 Apr 10

braddonchick said :

So how does this so called ‘salt and pepper’ approach to public housing work in Canberra? They are currently building some kind of public housing project on the corner of Ijong, Ipima and Henty St in Braddon (if anyone knows exactly what it is please chime in – the DA just said ‘supportive housing’).

If you look on a map this is approximately 100 metres away from another government housing project. Which in turn is only about 80 metres from another government housing project on the other side of Northbourne Avenue in Turner!

That sounds like the lid fell off the shaker and the salt all fell out in a lump!

I remember seeing somewhere (I am pretty certain it was the Chronicle) that this particular block would have a mixture of residents, a third of which would be public housing tenants, another third being supportive tenants (aged care from memory) and a third student housing. ACT Housing would own a percentage of properties in the block but not all, with not-for-profit and private investors owning the rest.

Having lived in this area though, I did think it was a bit odd that this development had been approved given the density of public housing nearby. Unlike some of the stories coming out of Sydney and Melbourne though, I would not be shocked if our local decision makers had rolled over and begged when Kevin and Julia stumped up the money as part of their nation building extravaganca.

miz 2:12 pm 11 Apr 10

Harley, because I have had to constantly move around in private rental. Simple as that. As I said, I don’t care that I don’t have those things, (psht, who wants to clean another bathroom?) but I just should not be paying a rental rate that assumes I do simply because private rentals in my area do.

harley 10:55 am 11 Apr 10

miz said :

Sepi to clarify, I meant, for equivalently priced private rentals in this area (chisholm/gilmore), those amenities as the norm (per all homes) – but not in govvies in those areas. Yet the market rent is assessed as if they are of the same standard. This means the govt is ripping people off.

Forgive the insensitvity of the question, but if you are truly paying market rates, what’s preventing you from going private and getting all those bits and bobs you feel you are paying for?

cleo 2:04 am 11 Apr 10

Most of the time when you move into public houing, there has been no work done to repair damages, they are supposed to take photo’s before and after you move in and out, my daughter and myself wrote a letter to the housing director asking for a security door and peep hole for the front door, all ground floor units are supposed to have all security windows, doors, I told my daughter the unit was not secure, well the letter never reached the manager, as I checked, one of the employee’s found the letter, it was still in their file, she than said to me oh this is serious, guess what the department denied the letter ever reached there and said so and so has never worked their, WHAT A COVER UP, I wish I had my old computer as it is buried in it.
The unit was a f..king mess when she moved in, the carpets were thread bare with dog hairs, all doors scrapped as the previous tenant was in a wheel chair, clothes line broken, we asked if there was work going to be done, they just said NO, thats the way it is. My daughter improved the unit, having it painted in the loungeroom and hallway, when the flat was handed back no one called to say oh you need to do this or that, and SPOTLESS had the hide to send out a bill for $1,400 plus, this would not stand up in court, we have the condition report before and after, housing never inspected the premises, just went on what had SPOTLESS said, I know as I was a property manager, I intend to expose them in the near future.

miz 10:06 pm 10 Apr 10

Sepi to clarify, I meant, for equivalently priced private rentals in this area (chisholm/gilmore), those amenities as the norm (per all homes) – but not in govvies in those areas. Yet the market rent is assessed as if they are of the same standard. This means the govt is ripping people off. And while it still appears to be reasonably common for young chn to share bedrooms, it is very unusual for teens these days.

sepi 1:58 pm 10 Apr 10

Braddon girl = supportive housing might be for old people. There was an ad in the paper for oldies in public housing (using up a whole house) to consider moving to small, low maintenance inner city govt places designed for those getting older and needing bars in the bathroom etc.

sepi 1:55 pm 10 Apr 10

I’m in a private house and we only have one bath, one toilet and kids sharing rooms… not everyone is in a mini mcmansion. We do have curtains and a nice garden though. It is a pity they have taken away the ‘rent to buy’ scheme. I have a friend who would love to buy her housing place too.But you have to pay for your own valuation, and then the govt can choose not to accept it, so they pretty much don’t want people to do this anymore.

And some public housing tenants really do completely destroy properties. One in our street was left with holes in floors, walls and ceilings, most doors had been removed, flyscreens were in bits all over the yard, the bathroom walls were rotten from the floor up, the shower had been pulled off, and under the house was a dead dog. There were piles of rubble outside bedroom windows (window used as rubbish bin, I think). They did have foxtel outlets though, amongst the rubble in the lounge. The complete trashing was a blessing in disguise though, as when the tenants disappeared, housing had to sell the place off, as it was way beyond fixing up, so it became a private house.

miz 10:49 am 10 Apr 10

As a public housing tenant, I can assure you that most tenants are good tenants who are reliable rent payers and would buy their home if only they could get a loan. While there are the od few who ‘trash’ houses or fall behind in the rent (both private and public rental), this is not the norm and there ARE consequences for Housing tenants who do so.

Unfortunately, there are also down sides to public housing for tenants that Rioters may be unaware of.
One is that the government assesses the rental to be paid on a ‘market rent’ basis. This might seem sensible on paper, but actually govvies are of a much lower standard than the houses surrounding them. For examples, it is very rare for there to be covered car acccommodation or more than one shower or toilet; and there is also an expectation that govvie tenants children/teenagers of the same sex should share bedrooms, which is no longer the societal norm (and it certainly drives my two teenage daughters, and me, crazy). So, now that I too am paying ‘market rent’ I am somewhat annoyed that I am now paying for an ensuite and garage I ain’t got (this wouldn’t be an issue if the allegedly independent ‘market rent’ assessment factored this in, but it doesn’t appear to do so).

Also, it is extremely problematic to households such as mine that the HOUSEHOLD income is assessed, not just the tenancy holder. What this means for me personally is that my rent has been increased to ‘market rent’ simply because my 18 y o son now earns second year apprenticeship wages and our HOUSEHOLD income have gone over some magical cut off threshold (mine has not changed). This is unfair as my son cannot afford to contribute to the rent at all as he has had to take out a car loan to get a reliable second hand ute, and he has to pay for petrol to get him from Tuggers to Franklin/Forde every day. Ergo, our household is now considerably worse off. This policy is clearly inequitable, just as the UK poll tax was.

Plus, of course, the highly inflated housing market in Canberra dictates what is considered to be ‘market rent’. FFS.

You also may not be aware that the public landlord gets away with things a private landlord would never be allowed to do, such as never providing window furnishings (the tenant is expected to tack up sheets until they can afford $$$blinds/curtains). To make matters worse, if a previous tenant has improved the property, on their vacating it Housing remove all the improvements (dishwasher, curtains etc). When I moved in, I found that a Tastic, a pergola and a garage had been removed. Sometimes you can strike it lucky if you have moved into what Housing call a ‘spot buy’, ie a govvie house that was bought off the private market and not built by housing, but these are few and far between.

Nor will Housing have anything to do with landscaping, which seriously sh!ts those tenants (like me) who spend years and $$$ on same as they thought they would be there forever under security of tenure. Now they find that the govt has changed the policy and they are now expected to relocate to some scummy semi when the kids move out. So you can see the Housing system has a few systemic disincentives for tenants that they would do well to iron out.

T1G3R 1:12 am 10 Apr 10

Haha who says people on public housing have no money. Anyone can be on the list for public housing. Unfortunately the department does have drop kicks and they do have ways of recovering costs such as selling trashed houses to those brave enough to clean and renovate it. What the department needs to do is have a better system of managing debts and chasing them up as a private entity would.

Giving out cheques to get into the private market wont resolve the issue of the housing crisis and landlords will only get greedier.

The department also doesn’t just demolish anything, some of those northbourne shoebox flats are heritage listed 😛

braddonchick 11:27 pm 09 Apr 10

So how does this so called ‘salt and pepper’ approach to public housing work in Canberra? They are currently building some kind of public housing project on the corner of Ijong, Ipima and Henty St in Braddon (if anyone knows exactly what it is please chime in – the DA just said ‘supportive housing’).

If you look on a map this is approximately 100 metres away from another government housing project. Which in turn is only about 80 metres from another government housing project on the other side of Northbourne Avenue in Turner!

That sounds like the lid fell off the shaker and the salt all fell out in a lump!

Felix the Cat 9:24 pm 09 Apr 10

Aurelius said :

debts are enforced the same as with any landlord/tenant debts.

Grail has already pointed out that they don’t have any money – that’s why they are in public housing – so how can rental arrears or other debt such as repairs of malicious damage be recovered?

A subsidy or whatever you want to call it paid to private landlords by the govt (no good paying it to the tenant, they will most likely spend it on booze and/or drugs) and a guarantee to repair any damage inflicted by the the tenants could work but I doubt there would be enough LLs willing to take up the offer – there’d be a few I reckon, just not enough.

The appreciating asset thing is a good point but does the govt ever follow through and sell properties? They demolished some of the blocks of flats on Northbourne Ave and built new ones a while back, I wonder how much that cost, wouldn’t of been cheap.

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