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The sobering reality of trying to rent in Canberra on a low income

Rebecca Vassarotti 27 November 2019 50
Rental Affordability

A couple on minimum wage in the ACT need to use 34 per cent of their income to cover rent. Photo: File.

This week, National Shelter has released its annual Rental Affordability Index and unfortunately, there are no surprises in this report. It has found that the ACT (and the rest of the country) continue to experience a rental affordability crisis for people on the lowest incomes.

The report details the downward trend in housing affordability in the ACT over the period from 2011.

Today, Canberra is only surpassed by Greater Sydney in the race to be the most unaffordable capital city in Australia to rent in if you are a low-income household. At a time when more people than ever are renting rather than buying their own home and when we know rents are rising, the report presents the sobering reality of what sorts of Canberra households are really struggling to keep a roof over their heads.

This annual analysis looks at the proportion of low-income households (that is, the lowest 40 per cent of households across all income bands) who have housing costs that are more than 30 per cent. It’s generally accepted if you are paying more than 30 per cent of your income on housing costs and you are on a lower income, it’s likely that you don’t have enough income to cover other essential items such as food, energy, health services, medications, travel, education, household goods and debt repayments. In considering this, it is useful to know across all households, renters are generally spending about 20 per cent of their income on housing costs. This compares to owners with a mortgage who need to use 16 per cent of their income to cover their housing costs.

One of the most useful things that this report does is provide a picture of the situation for different types of households. It profiles what housing (un)affordability means for both working and non-working people and for different types of households including single parent and dual-income families.

As was the case in previous years, the situation is particularly dire if you are on Newstart, or if you are a pensioner. If you are on Newstart, rent is more than 100 per cent of your income (115 per cent). Single pensioners don’t fare too much better, with this group of households needing to allocate 75 per cent of their regular income to cover the rent. Pensioner couples in the ACT need to hand over 50 per cent of their income to cover the rent.

Having a job doesn’t necessarily take the pressure off for particular households. A single part-time worker parent getting benefits in the ACT needs to provide 62 per cent of their income to cover the rent. A couple on minimum wage in the ACT need to use 34 per cent of their income to cover rent, and the ACT is the second least affordable city for hospitality workers to rent a home, with 39 per cent of income going towards housing costs.

If you are studying and renting as part of a share house, the ACT joins greater Sydney as the most unaffordable place to rent, with 35 per cent of income going to the rent. Life is better if you are a single parent full-time worker, with 24 per cent of income going towards rent. However, it is acknowledged for these households, there are often additional costs for things like transport, childcare and education. Single income families come just under the threshold at 27 per cent, and dual-income households with children are faring best, with around 13 per cent of income going towards housing costs.

This report is yet another significant piece of data that highlights the real issue around rental affordability in this town. This is a crisis that is growing and becoming an issue for larger groups of Canberra households. With a decline in homeownership, there is a need for us to move quickly to provide more affordable rental options. While last week’s announcement that the trial to provide a rebate to private landlords prepared to rent their properties below market rent, there is a need to continue to work together to identify creative solutions to address this urgent and growing issue.

What are your ideas about how to deal with Canberra’s rental affordability crisis?

Rebecca is a board member of Community Housing Canberra, an affordable housing organisation. She is an active member of the ACT Greens and ran as a candidate in the 2016 Territory election.


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50 Responses to The sobering reality of trying to rent in Canberra on a low income
Phemie Phemie 10:38 am 02 Dec 19

The rise of homelessness and poverty in Australia is truly shocking. The whole political system is moving to the extreme right – including the so called ACT Labor government. What are the ACT Government spending their rates, land tax and diverse other money grabs on? We are becoming a nation divided into those that are in extreme poverty and those that have excessive wealth.

    bj_ACT bj_ACT 7:40 pm 02 Dec 19

    Great post. So sad how all persuasions of Government only pretend to help the working poor.

    Acton Acton 7:13 am 03 Dec 19

    The Barr Labor government is responsible for housing unaffordability in Canberra and the reasons have been explained on many occasions by former Labor Chief Minister Stanhope. Why is it so difficult to understand that rising rates and taxes results in rising rents and housing costs which makes housing unaffordable for many more?

    bj_ACT bj_ACT 11:35 am 03 Dec 19

    Who would have thought that increasing Government Rates and Land tax on the property by $100 a week would have flowed onto the tenant to pay in their weekly rent?

    ACT Government Ministers and Treasury officials argued the costs wouldn’t flow on to tenants. But every other Canberran with half a brain knew that the costs would flow down to renters.

Robert Thomson Robert Thomson 9:24 pm 30 Nov 19

Sobering,sobering for who,its daylight robbery,sobering for real estates who rob the country.

John Nevin John Nevin 4:51 pm 29 Nov 19

High rates and land taxes have to be recovered and are added onto rents producing the inflated costs. For a house that I rent, these costs are $12,000 per year, or almost $250 per week.

    Christian Greten Christian Greten 5:45 pm 01 Dec 19

    I second this, after the "greedy" landlords pay their bills, there's not much left over that would make the sacrifice of saving for a deposit, paying off a mortgage and shouldering the risk of a housing downturn worth it. You can't even rent out a granny flat without being hit with land tax!

Carole Ford Carole Ford 8:18 am 29 Nov 19

The enormous amount of housing that the government has allowed should have included a compulsory percentage of affordable public housing. Unfortunately for those who need it, the ACT Labor Government seems to have largely ignored those needs.

Paul Clancy Paul Clancy 6:21 pm 28 Nov 19

No profit it in . Also govt way of getting low social economic to decentralise and move to areas where they can afford to rent ( ie out of big cities)

    Anna Francesca Clancy Anna Francesca Clancy 8:37 pm 28 Nov 19

    Paul Clancy I’m talking about government subsidising the rent and/or doing deals with developers as part of the application approval to hold a certain number for low income individuals/ families. Government is not expected to make money from the poor or homeless and developers are making a massive profit in Canberra at the moment. It is possible. It should not all be about profit. More thought needs to be given to well being and a better society.

Acton Acton 5:00 pm 28 Nov 19

Labor/Greens = high rates = high rents = housing unaffordability for everyone.

    rationalobserver rationalobserver 8:52 am 02 Dec 19

    How else will they pay for socialist follies like the toy tram and bicycle super highways and the rainbow roundabout?

Maz Davie Brown Maz Davie Brown 4:47 pm 28 Nov 19

Hobart is just as bad....

Anna Francesca Clancy Anna Francesca Clancy 2:48 pm 28 Nov 19

We have so much land and so much development. Why aren’t some of these big developers who are making a motza out of apartment precincts all over Canberra being made by ACT government, to put aside a quota of appartments for low income either to be bought by govt or subsidised in rent? Especially as a number of these developments are being built on what used to be public housing estates!! Also how about setting land aside for environmentally sustainable and cost effective pod houses. Short and long term. It’s being done elsewhere, why not here???

    Jorge Gatica Jorge Gatica 8:01 pm 28 Nov 19

    Anna Francesca Clancy money has no friends

    HelpNow Rodney HelpNow Rodney 8:16 pm 28 Nov 19

    They set aside a block amount for Community Housing and Social Housing each part. The difficulty is that there is not enough stock. Return on Investment isn't high on a developers investment.

    Peter Fosters Peter Fosters 1:41 pm 01 Dec 19

    Blame your ACT government for the unaffordability crisis. No investor in their right mind would go to Canberra with the huge, greedy land tax regime of the govt.

Samia Goudie Samia Goudie 11:45 am 28 Nov 19

Rates in Canberra make it impossible mine are over 100 a week just for the government to get money fir me to live and buy a house

Even if I pay off my house o still have to come up with that ? Before anything else - there that’s why

Samia Goudie Samia Goudie 11:42 am 28 Nov 19

Worked since 14 sometimes 3 jobs

No family support no trust funds no partner

And Aboriginal - managed to but at 52

Didn’t go fur public housing others need that more I thought - I’ll be ok -

I’m

Not

Now I’m disabled 60 on my own

Huge morgage - not able to get pension .....

I’ll be on the street

Next door

Couple - housing commission home - 2 new 4 wheel drives

3 mth cruise every year to pacific

House just renovated free by housing

It was their mothers - so somehow they got it

Lucky them .... whilst others live on the street

If u want cheaper rent houses need to cost less so people can pay mortgages it’s trickle down

I rent a room occasionally and that covers my electricity and gas bills and that’s about it .....

how anyone can survive as a penishoner or on new start is impossible

We are the second lowest standard of life and financial stability fir pensioners in the list of about 100 countries done not first works and we are just above Zimbabwe

It’s not just camberra

bj_ACT bj_ACT 11:06 am 28 Nov 19

Great article. So the ACT Government takes away Bus services from the most vulnerable people in the outer suburbs, whilst also selling off inner city public housing to rich property developers.

The Labor/Greens Government talk big on helping the less well off, at the same time as they implement policies that hurt them.

Shona Barber Shona Barber 11:02 am 28 Nov 19

I'm paying more than half my pension every fortnight in rent. Makes it almost impossible :(

noid noid 10:57 am 28 Nov 19

Lack of public housing, gouging land taxes and rate raises for property investors, you don’t need to be a rocket scientist to see this coming unless you are the current government of course.

    Spiral Spiral 6:53 pm 28 Nov 19

    Renting is expensive partially because land is extremely expensive in the ACT. In many areas of Canberra land is up around $1,000 per square meter. The price of land is influenced by the policies of the government.

    So if you believe it is important for kids to have yards to play in, trampolines and swing sets to encourage exercise, gardens to experience etc, use the power that the Greens get as being part of a coalition with Labor to release more land and develop other policies to reduce land prices. Of course that wont happen because the government wants high property prices to drive high rates to bring in money.

    On the other hand, if you don’t care about the above factors, just come clean about wanting everyone (except for the wealthy overlords) to live in high rise apartments and then build heaps of cheap poorly constructed buildings.

    Of course it would make sense to build those high rises near the city where lower income people can easily and cheaply get access to facilities. That could be a bit of a problem as the government seems determined to remove as much affordable living from those areas as they can.

    Instead the policy seems to be to shunt them to outer suburbs, in areas with poor public transport, thus encouraging them to use cars. Of course that goes in hand with raising parking prices so they are disadvantaged yet again.

    And just to add insult to injury, we then have community “leaders” who berate those people for being irresponsible enough to drive. They are seemingly eager to shout their moral superiority without walking a mile or two in the shoes of those they look down on.

    JS9 JS9 9:39 am 29 Nov 19

    To be fair, there is nothing wrong with higher density housing in apartments if done properly. Large swathes of the world live moreso in apartments then detached housing – even very good performing countries on wellbeing measures and the like. Like everything, its about doing it properly – which governments of all persuasions across the country struggle with.

    bj_ACT bj_ACT 12:35 pm 29 Nov 19

    Further to your point. There was a good article in the Financial Review about a week ago highlighting that the kind of multi unit dwellings we are building in our Australian cities are not delivering the reduced Green claims and reduced infrastructure and reduced government support costs that are often claimed.

    The costs of changing the built infrastructure to suit the new developments is proving much more more financially and environmentally expensive than greenfields development.

    Surprise surprise. Developers are building to maximise their own profit NOT to improve the environment or save money for government.

Geoff Cooke Geoff Cooke 9:27 am 28 Nov 19

As a landlord reoccupying my property three days into the quarter, I found out the tax system doesn’t pro-rata land tax. This resulted in the gov collecting all received rent for the quarter and charging a few hundred on top for the privilege. This is in addition to the tax on my property being calculated on an unimproved land value 200k above the market value my property is valued at. The gov is not helping the cost of rent.

    Juliet Jackman Juliet Jackman 9:40 am 28 Nov 19

    I agree with you Geoff Cooke.

    Landtax and weird rates calculations for units make investing in Canberra too expensive.

    Chele Forest Chele Forest 10:02 am 28 Nov 19

    I got stung the same way. And I was reoccupying because it was costing me more in tax etc than the property was pulling in rental income so I couldn't afford to keep it in the rental market (thanks to cost of living my job income couldn't cope with negative gearing). It was the tripling of land tax that killed me. The only other option was to Jack up the rent and quite frankly the property is not worth what the rent would have needed to be to break even.

    Sher Young Sher Young 10:24 am 28 Nov 19

    Geoff Cooke absolutely, the hike in rates has made owning an investment property unattractive. Landlords have to increase rents to break even. Lots of investment properties have been sold, sadly not at affordable prices due to the lack of suitable housing for families. We need more townhouses and small homes in Canberra.

    Raffy Sgroi Raffy Sgroi 12:46 am 29 Nov 19

    Juliet Jackman totally agree, everything is overpriced, wages are higher then everywhere else

    Phil Andrews Phil Andrews 9:00 am 30 Nov 19

    Geoff The ACT Labor/Greens Govt is the root cause of this problem

    Annette Shaw Annette Shaw 8:09 pm 01 Dec 19

    This. Perhaps if owners were able to publish how much rent goes to ACT Govt, agents and corp body, people would understand.

Peter Martens Peter Martens 9:11 am 28 Nov 19

Kaylene Martens you know what that means

Jeremy Anthony Jeremy Anthony 8:04 am 28 Nov 19

Impossible. That's why we had to move out of Canberra

Lauryn Roberts Lauryn Roberts 7:59 am 28 Nov 19

Raise lowest wages.. obviously not enough.

Amanda Adams Amanda Adams 7:49 am 28 Nov 19

That’s not solving any problems,really don’t need to be told practically all our income is going towards rent,What are they going to do about it?

    Lauryn Roberts Lauryn Roberts 8:00 am 28 Nov 19

    Amanda Adams nothing we all have to upskill and all become ceos.... 😂 if we want to succeed...

    Amanda Adams Amanda Adams 8:09 am 28 Nov 19

    Lauryn Roberts agree ,if we can’t,tough luck ,don’t know who’s going to do all the mundane jobs, we all work so hard to do ,or who’s going to look after them in the future when they don’t have a job

    Sher Young Sher Young 10:18 am 28 Nov 19

    Amanda Adams vote BARR out!

    Jill Lyall Jill Lyall 10:24 am 28 Nov 19

    Sher Young do you really think the Libs care about low income people??😂

    Doris Andrews Doris Andrews 5:49 pm 28 Nov 19

    We need to give Libs a chance. Too much time with Labour arrogance

Monique Knight Monique Knight 7:34 am 28 Nov 19

Because owners have to pass on the ridiculously high land tax charges

    Shiva Sapkota Shiva Sapkota 7:40 am 28 Nov 19

    Monique Knight they are selling in waves. Less rental properties will be available in future.

    Kurt Halbauer Kurt Halbauer 7:50 am 28 Nov 19

    Monique Knight don't forget the skyrocketing rates as well... we were warned that they would triple 🤔

    Justin Mendham Justin Mendham 8:23 am 28 Nov 19

    Taxes coupled with seemingly unregulated body corporate makes it unfeasable to rent units out at a sensible rate.

    Justin Watson Justin Watson 8:48 am 28 Nov 19

    If we didn't have land taxes, the properties wouldn't even get rented out. That is the issue they have in Sydney where properties are just left vacant, because negative gearing and capital gains tax discount is how people make money on property in sydney. This tax means is makes it unaffordable to leave vacant. Also high housing prices generally mean higher rents. Housing is unaffordable so rents will be unaffordable. This is happening all across the country and isn't a Canberra only thing. The land tax in the ACT is the easy target, but that doesn't explain why Hobart has the most unaffordable rents.

    Chele Forest Chele Forest 10:07 am 28 Nov 19

    Justin - if the land tax were half what it is and a penalty applied if rental properties sat unoccupied; would be a better more affordable system. The land tax on my property tripled when they changed the way they calculate it.

    Monique Knight Monique Knight 12:07 pm 28 Nov 19

    Chele Forest so did ours I know so many people in Canberra that sold their investment property as it was not sustainable to keep it unless they doubled the rent

    Kathryn Cousins Kathryn Cousins 6:36 pm 02 Dec 19

    Monique Knight Land Tax adds on our property $70per week which is added to the rent. That's why rents are so expensive.

    Monique Knight Monique Knight 7:17 pm 02 Dec 19

    Kathryn Cousins mine is about the same I think $80

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