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Whulf, Maryanne --- "Rent Assistance Recipients and the Private Rental Market: Who Are They and How Do They Fare?" [2003] FlinJlLawRfm 18; (2003) 7(1) The Flinders Journal of Law Reform 75

RENT ASSISTANCE RECIPIENTS AND THE PRIVATE RENTAL MARKET: WHO ARE THEY AND HOW DO THEY FARE?

MARYANNE WULFF[†]

I INTRODUCTION AND CONTEXT

In the past five years a substantial amount of Australian research has focused on the private rental market. Previously, this housing sector received such little attention from the research community that it was described as the ‘Cinderella’ of Australian housing tenures (Maher 1997:6). For the most part, researchers preferred to study aspects of the dominant (and desirable) tenure, home ownership, and to a lesser extent, public rental, the tenure seen to serve the housing needs of low income families. Private renting, in large part, was assumed to be a transitional tenure that provided housing for young people, a ‘stepping stone’ housing arrangement prior to an eventual move into home ownership. Basically the private rental sector existed in an information vacuum.

Recent figures from the Australian Bureau of Statistics (‘ABS’) reinforce the fact that this tenure is growing faster than home ownership and now accounts for just over 20 per cent of all dwellings (ABS 1999). Research has documented the unique structure and nature of Australia’s private rental market. The most unusual feature, by international standards, is the dominance of individual landlords, most of whom own only one or two properties (Berry 2000; Beer 1999). About three fifths of dwellings are rented out by individual landlords and others by small, family based partnerships or small companies (Berry 2000). Moreover, Australian landlords generally use rental properties to supplement their income, rather than provide their main source of income. In other words, they are not full-time landlords, but earn their living elsewhere. Indeed about 20 per cent have been described as ‘accidental landlords’, who end up renting out an inherited property or even their own home temporarily (Beer 1999).

This profile of Australian landlords becomes relevant when considered in light of the changing characteristics of private renters. The consequences of economic restructuring and government policy have introduced a number of new households in the sector. In the past, private renters were largely young adults leaving home and starting out in the housing market. Private rental was described as ‘an important entry point in the housing market’ (Kendig 1981:42). The ‘new’ private renters include both affluent and poor households and a growing proportion who view renting as a long term, not necessarily transient, housing option (see, for example, Wulff 1997 and 1998; Wulff and Maher 1998).

This paper focuses on an increasingly sizeable group in the private rental market — low income social security recipients who receive a supplementary government payment called Rent Assistance. (For a description of the policy shift in housing assistance from public to private rental, see Yates 1996). It is estimated that anywhere between 30 to 50 per cent of private renter households receive a rent assistance payment (Wulff 2000; ABS 1999). This is a phenomenal figure and given the size of this group and the massive government expenditure on the program (total expenditure in the 1999–2000 was $1.5 billion http://www.abs.gov.au/ausstats), it is not surprising that national data collections have begun to collect some detailed information on this group. The stated objective of the Rent Assistance program is to help social security recipients with the costs of private rent, in recognition that social security recipients in public rental pay heavily subsidised rents (DSS 1997: 9). As at July 2000, 941,278 social security clients received some rent assistance.

The landlord tenant relation takes on a new importance in light of the growing share of private renters who are reliant on social security payments. It raises questions about the role of landlords, the importance to tenants of holding a lease, and the issues confronting Tribunals. Tooher (2000) points out one of the dilemmas that Tribunals may face in cases where applying certain provisions of the Residential Tenancies legislation may cause hardship (of a ‘physical, mental, personal or proprietary nature’). The example she gives is as follows:

An unemployed tenant with children could use this power to resist immediate eviction in a situation where an order for possession would mean that the tenant and the tenant’s children would be rendered homeless. It would be hoped that in such difficult situations the Tribunal would be careful not to exercise its power such as to make individual landlords a provider of social welfare (p 155).

Yet, in many respects, the demands now being placed on the private rental sector suggest that this may be the case more often than not.

The central aim of the program, improving affordability for social security clients, is not examined in this paper. This is not to understate its significance, but instead to raise considerations about other overlooked aspects of the rental market situation. A number of studies have examined affordability and government reports suggest that it ‘assists’ but does not solve affordability problems (FaCS 2000. Others have pointed to the bleak rental situation for low income renters, given the decline in low rent stock and the rising number of households requiring it (Yates and Wulff 2000).

As indicated in the title, this paper asks a number of questions about ‘Rent Assistance’ private renters:

• Who are they? — the first part of the paper draws upon national survey data to translate Rent Assistance recipients from administrative ‘income units’ into socially meaningful units for study — households.

• Who are the private renters? — the paper then examines the broad definition of ‘private rent’ used in the Rent Assistance program and highlights a ‘hidden’ group of renters that may not come under the umbrella of Residential Tenancy legislation.

• How do they fare? — finally, the paper examines the nature and extent of tenancy agreements held by Rent Assistance private renters and compares this with the situation for other private renters. It questions whether some recipients are more likely than others to hold a lease.

A Data Sources

Two national surveys provide the data for this analysis. The first, the ‘National Survey of Rent Assistance Recipients’ was conducted in September and October 1998 and included telephone interviews with a sample of 3,807 Rent Assistance recipients. This survey was commissioned by the Commonwealth government and the fieldwork carried out by A C Nielsen. Because this survey was the first of its type, the aims were to provide fairly general information about household characteristics, landlords, and dwellings occupied by people receiving rent assistance. None of this information was held on the government’s administrative data base. Although only 3,807 recipients were interviewed, the end sample was weighted by A C Nielsen to represent the national population of Rent Assistance recipients (891,000 recipients). (For further information on this survey, see Wulff 2000).

The Australian Housing Survey was conducted by the Australian Bureau of Statistics in 1999 and the unit record file was released on request to university researchers in July 2001. This survey consisted of face to face interviews with a national sample of 13,788 households and 27,688 persons aged 15 years or older living in the selected households. The survey was intended to collect information on social, economic and demographic characteristics of the respondents as well as detailed housing information including housing costs, dwelling structure and adequacy, and housing histories. The Australian Bureau of Statistics has applied weights to correct for non-response and to estimate the total number of dwellings and persons in Australia.

In the tables and figures that follow, the weighted estimates from each survey are presented.

II FINDINGS

A Who Are They?

In the past, one of the key difficulties with trying to understand the impact of Rent Assistance on the private rental market is the fact that ‘recipients’ do not equate to households. The income unit is an administrative device that ‘attempts to group people according to whether or not they have an independent spending capacity and, if they do, whether they are a married couple, a single parent or a single person’ (ABS 1992:18–19). In Australia, the recipient of social security is classified under one of four income unit types: couple, couple with children, single, or single with children. Figure 1 presents the distribution of Rent Assistance recipients by type of income unit and represents the limited extent of personal information required for administering the rent assistance program. In contrast a household, as consistently defined by ABS in all data collections, is either a person living alone or a group of people living and eating together. Income units are quite distinct from households and misleading impressions can be conveyed when the terms are used identically. In order to understand the impact of this group in a housing market sense, it is essential to convert income units into the more meaning social category of household. It is at the household level that people make decisions about housing accommodation and location, negotiate landlord or rental arrangements, experience dwelling conditions (such as crowding or housing quality) or express a given level of housing satisfaction.

One of the problems with income units is that households may contain more than one income unit such as in the case of an older couple with one or more adult children still living at home. In administrative terminology, these are ‘multiple income unit households’.

Figure 1: Number of RA recipients by income unit type, 1998 (total recipients = 940,104)

(Source: Commonwealth Department of Family and Community Services unpublished data, September Quarter 1998) Note: ‘Dependent’ is defined for Family Allowance payment purposes. A dependent child can be ‘a natural, step, adopted or foster children of the customer aged under 16 years or aged 16 to 18 years and a full time secondary student’ (FaCS survey definitions)

Figure 1 shows the limited social profile offered by the income unit classification. Well over half are simply classified as ‘singles with no dependent children’. This has led even the ABS to state that most Rent Assistance recipients in private rental are lone persons. In actual fact, as later analysis demonstrates, ‘singles’ rent accommodation under a variety of circumstances.

One of the first efforts from the National Survey of Rent Assistance recipients was to convert income units into separate households. This was possible because the survey (unlike administrative data) asked the respondent to identify all other persons in the dwelling and describe his/her relationship to them.

The results are in Table 1. The estimate of separate households from the National Rent Assistance Survey was 80 per cent of all income units^[1]. In order to be defined as a separate household, the interviewee had to be either the partner or spouse in a couple household, the parent in a one parent household, or the person in a single person household. This follows standard ABS conventions in defining households (ABS 1997:64).

Table 1 points out a hitherto unknown aspect of Rent Assistance renters, that is, that approximately 15 per cent live in someone else’s household and in administrative terms are described as boarders or lodgers (but again the definition of boarding or lodging differs considerably from usual research conventions.) About 4 per cent of Rent Assistance recipients live in non-private dwellings, including nursing homes, retirement villages and/or boarding houses.

Table 1: RA income units into households, 1998:

(Source: National Survey of RA Recipients 1998; weighted sample).

Table 2: Selected characteristics of RA income units (by household type):

(Source: National Survey of RA Recipients 1998; weighted sample).

The youngest groups of Rent Assistance recipients are those with dependent children, both couples and single parents. The oldest are couples only and singles living alone. The major benefit type to which the Rent Assistance payment is attached is provided to highlight some of the reasons why these recipients receive social security. If more than one benefit is listed next to a particular household type, it appears in order of importance. Unemployment (Newstart Allowance) is the single most important cause of social security reliance, followed by age. Among all types of ‘singles’, unemployment is the most frequently received benefit. For families with dependent children, the benefit depends upon whether it is a couple or single parent. Couple families, for the most part, receive the Family Allowance payment and this can be paid to low income working families. Most of these families have at least one earner in the workforce, albeit on a low wage. For single parents, the most common payment is the single parent pension (now referred to as parenting payment).

Table 3 provides information on a previously hidden group of Rent Assistance recipients, people who do not form their own households but live in another’s household. From Table 3, it can be seen that unemployment and disability are the two major benefit types received by this group. Further, most live with a relative (in most cases, a parent) and the dwelling in which they reside in is owner occupied. The latter is one of the reasons that this group has been disguised in housing research on the private rental market: they are in fact living in an owner occupied dwelling.

Table 3: Living in another’s household, selected characteristics:

(Source: National Survey of RA Recipients 1998; weighted sample).

B Who Do They Rent From?

In the Rent Assistance program, the term ‘private rental’ is used in a broader sense than standard research definitions of the tenure. For example, in Rent Assistance terminology, private rent encompasses ‘boarders and sub-renters in the private rental market, in owner occupied housing and in non-private dwellings such as boarding houses’ (DSS 1997:5). In contrast, ABS restricts the definition of private rental to those who pay rent to a private landlord or real estate agent. It applies to all households who are renting dwellings, ‘including caravans etc. in caravan parks’ (ABS 1996:184) and where the owner or purchaser of the dwelling is not a usual resident of the dwelling (author’s emphasis). The non-resident landlord may be ‘a real estate agent, a parent or other relative … or another person’ (ABS 1997:64).

For tenants, the security and stability of their residential environment ultimately rests with the landlord and prior to the National Survey of Rent Assistance Recipients, the range of landlords was unknown.

Table 4: Landlord arrangements of RA recipients:

(Source: National Survey of RA Recipients 1998; weighted sample.

Table 4 reveals that Rent Assistance recipients pay rent to a number of different landlords. Most commonly, rent payments are made to estate agents and other private landlords. Another six per cent pay rent to a relative, who lives elsewhere (‘non resident relative’). These first three landlord categories define ‘private rental’ as conventionally used in housing surveys. Together they account for 78 per cent of Rent Assistance recipients.

Fifteen per cent of recipients pay rent to a person living in the same dwelling — and, as indicated previously, this person was usually a relative. Smaller proportions pay rent to social housing landlords, or to the manager of a non-private dwelling (such as a boarding house or nursing home proprietor).

Table 5 considers only Rent Assistance recipients in the formally defined private rental market and compares the landlord arrangements with those of private renters generally.

Table 5: Private renter households by landlord type, RA renters and all private renters:

(Source: *National Survey of RA Recipients 1998; weighted sample; **ABS Housing Survey unit record file 1999).

Rent Assistance renters are slightly less likely than other renters to rent from an estate agent. As a consequence, the share renting from private landlords is higher than average. Similar proportions rent from non-resident relatives. While the reasons for the greater inclination to rent from private landlords are unclear, there may be some implications of this pattern for Rent Assistance renters. Private landlords, as discussed earlier, are not professional landlords and tend to own one or two properties. Moreover, being a landlord or property manager is not a full time occupation for them — and this may have some impact on the relationship with the tenant or the maintenance of the property.

For this reason, it is important to consider the tenancy arrangements between Rent Assistance recipients and landlords. Although the topic of residential tenancies has been studied and written about from a legal perspective, remarkably little sociological or housing research has been conducted into this issue. It is worth noting that in order to receive Rent Assistance, the recipient is not required to have a lease. (As an aside, the program does not in fact require the recipient to spend the additional sum of money on housing). The following analysis is somewhat speculative since this issue has not been investigated. It is possible that low income tenants, particularly if they expect to be renting for a long time, are more likely to demand secure tenure. On the other hand, do landlords perceive low income renters to present higher risk with respect to rent arrears, maintenance, and management costs and therefore insist on a formal lease?

C Do They Hold A Lease?

The following tables examine whether there are difference in the lease arrangements held by private renters with and without a Rent Assistance payment. What emerges is a quite serendipitous finding that many renters, whether or not in receipt of Rent Assistance, describe themselves as having an ‘indefinite tenure’. The size of this category (26 per cent for those with Rent Assistance and 21 percent without) raises questions about the meaning of this undefined category to the tenant and the actual situations to which it pertains. While a formal lease provides an expressed statement of rights and obligations between the landlord and the tenant, it is uncertain what is provided under an ‘indefinite tenure’.

Figure 2: Tenancy arrangements by whether private renter receives rent assistance, 1999:

(Source: ABS Housing Survey unit record file 1999).

Before exploring the issue of ‘indefinite tenures’, it is important to note that the majority of Rent Assistance renters and other private renters do hold formal leases. This notwithstanding, Rent Assistance renters are less likely than other renters hold a lease. Overall, however, very few renters, whether or not in receipt of Rent Assistance, state that they do not have any formal lease arrangement with the landlord.

Returning to the category, ‘indefinite tenure’, this term appears to have emerged for the first time in the 1999 ABS Housing Survey. Respondents were asked the following: ‘which of these best describes your household’s current renting arrangements?’ From a flash card, the respondent then is asked to select one of the following categories: 12 month lease; 6 month lease; other fixed period lease; month by month basis; indefinite tenure (other than lease), other. The term ‘indefinite tenure’ is not defined in the accompanying survey material. In the 1994 ABS Housing Survey, respondents were also asked a vaguely worded question: ‘do your (or your spouse/partner) have a current lease or other form of secure tenure?’ In both cases, these questions are examples of poor measurement and lack of operation definition. It remains unclear what exactly the respondent is saying when answering ‘indefinite tenure’. It is of concern in that it may represent an informal (and therefore potentially insecure) tenure arrangement between the tenant and the landlord. Or, does it automatically refer to a situation where an initial lease on a property expires and the tenant continues on without signing a new lease? Tooher states with respect to the Victorian Residential Tenancy legislation that ‘when a fixed term tenancy ends and the tenant remains in occupation, the tenant is deemed to occupy the rented premises under a periodic tenancy agreement’ (Tooher 2000:159).

Table 6 provides further detail on the nature and timeframe of lease arrangements as reported in the 1999 Housing Survey.

Table 6: Type of lease by whether private renter receives rent assistance 1999:

(Source: ABS Housing Survey unit record file 1999).

Table 6 indicates that most formal leases are for less than 12 months and this pattern holds irrespective of receiving rent assistance. The ‘periodic tenancies’ to which Tooher refers above seem to be covered in the ‘other fixed period’ or the ‘month by month’ lease categories. Renters not receiving Rent Assistance are more likely to state a ‘month by month’ lease, whereas a greater number of Rent Assistance recipients describe their tenancy as ‘indefinite’ (but not a lease).

Full explanations for these differences are beyond the scope of this analysis, but the final table makes a first step at uncovering the reasons. Table 7 presents information on tenancy arrangements by household type in order to determine whether certain types of households are singled out for leases, or tend not hold a lease.

Table 7: Type of lease by household type by whether rent assistance 1999:

(Source: ABS Housing Survey unit record file 1999).

The most striking figure in Table 7 relates to people living alone. Over two fifths of lone person households with Rent Assistance describe their tenure as indefinite and this group are the least likely of any renter group to hold a formal lease. Single parents receiving Rent Assistance also have a lower than average probability of holding a lease and 28 per cent describe their tenure as indefinite.

While Table 7 raises more questions than is possible to address in this paper, it is worth speculating on some of the factors that might explain the situation. The first is a concern as to whether private renters in fact are aware of whether or not they hold a lease. Does the idea of ‘indefinite tenure’ provide a false sense of comfort in a private market where tenants can be given notice for a number of reasons, and where they must rely on landlords for maintenance and repairs to their homes? Or, alternatively, do private arrangements with landlords offer a strong sense of security to the tenant, equivalent to signing a lease? Other factors that will be considered in future research include the length of residence in the same dwelling, as long term tenancies may evolve into a permanent arrangement with the landlord.

III CONCLUSIONS

The main aim of this paper has been to highlight the fact that more than 30 per cent of private renter households rely on social security for income. Moreover, another 15 per cent of households include a person (not the reference person) receiving Rent Assistance. New demands are being placed on a tenure previously considered to supply transitional housing for young people. Private rental is encountering the consequences of a declining home purchaser rate in Australia and a stagnant supply of public rental housing.

This paper has been exploratory rather than definitive, as it has considered the role of the Rent Assistance household within the private rental market in terms of landlord and tenancy arrangements. It is probably one of the only times that Rent Assistance has been discussed without raising the question of affordability. The opportunity to speak at a conference on Tenancy Tribunals prompted this new direction, but in doing so, I have been moving into unfamiliar terrain. This is most evident in trying to interpret or assess the significance of some of the data presented. For example, does it make a difference to tenants whether they rent from estate agents or private landlords? This paper suggests that it may — but further research would be required to substantiate this view. It also appears significant that Rent Assistance renters are more likely than others to say that their tenure is indefinite. Does this signal an insecure housing status or merely a private, but stable landlord tenant relation? Conversely, it may reflect the problem of poor questionnaire design, in which case, the definition of tenancies is best accomplished not in isolation as social scientists but in discussions with bodies such as the Tenancy Tribunals.

This paper provides the perfect platform to call for further research into the social and housing issues related to residential tenancies, particularly with respect to low income Rent Assistance recipients. Several issues deserve consideration, including the length of time that someone receives rent assistance and whether reliance on social security is a short or long term phenomenon. Although there are differences in the landlord arrangements between RA recipients (with fewer renting from estate agents or holding a lease than other renters), these differences are not striking and do not portray the Rent Assistance renters as marginalised within the sector. But certainly, a more complete picture of the housing situations, and importantly, security of tenure of Rent Assistance renters, is required before any firm conclusions can be reached. This paper has started this process by discussing Rent Assistance recipients, not simply as income units (which implies they reside in a bureaucratic never-never land), but as real households within the private rental market representing various life course stages, renting from landlords, and holding (or not) leases. Seen in this light the evidence requires more serious consideration of whether or not the private rental market works for low income households.

REFERENCES

ABS (Australian Bureau of Statistics) 1992, A Guide to Australian Social Statistics, Cat. No. 4160.0, AGPS, Canberra.

ABS 1997, Housing Occupancy and Costs 1995–96, Cat. No. 4130.0, AGPS, Canberra.

ABS 1999, Australian Housing Survey, unit record file.

Beer, A. 1999, ‘Housing investment and the private rental sector in Australia’, Urban Studies, vol. 36, pp. 255-69.

Berry, M. 2000, ‘Investment in rental housing in Australia: Small landlords and institutional investors’, Housing Studies, vol. 15, pp. 661–81.

DSS (Department of Social Security) 1997, Inquiry into Housing Assistance, Submission to the Senate Community Affairs References Committee, Canberra.

FaCS (Department of Family and Community Services) Annual Report 1999-2000, Group 2.1 Housing Support, Table 18, Canberra.

Kendig, H. 1981, Buying and Renting: Household Moves in Adelaide, AIUS Publication No. 91, Australian Institute of Urban Studies, Canberra.

Maher, C ‘The changing context of the private rental market: issues to address’, pp. 5–13 in C. Maher, M. Wulff and J. Yates (Eds.) Australia’s Private Rental Housing Market: Processes and Policies, Working Paper 9, Australian Housing and Urban Research Institute, Melbourne.

Tooher, J. 2000, ‘Recent developments in Residential Tenancy Law in Victoria: the Residential Tenancies Act 1997 (Vic)’, Australian Business Law Review, vol. 28, pp. 150–65.

Yates, J. 1996, ‘Changing directions in Australian housing policy: the end of muddling through?, Housing Studies, vol. 12, pp. 265–77.

Yates, J. and Wulff, M. 2000, ‘W(h)ither low cost private rental housing?’, Urban Policy and Research, vol. 18, pp. 45–64.

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Wulff, M. 1998, ‘The changing face of private rental housing’, pp. 63–74 in T. Burke (Ed.), Responsive Jurisdictions for Changing Times, Papers from the Third Australasian Conference of Tenancy Tribunals and Associated Bodies’, Published by the Centre for Urban and Social Research, Swinburne University of Technology, Hawthorn, Victoria.

Wulff, M. and Maher, C. 1998, ‘Long term private renters in the Australian housing market’, Housing Studies, vol. 12, pp. 83–98.

Wulff, M. 2000, ‘The 1998 National Survey of Rent Assistance Recipients: A Report on Key Findings’, Commonwealth Department of Family and Community Services, Housing Support Branch: Canberra.

[†] Associate Professor, School of Geography and Environmental Sciences, Monash University.

[1] Based on other data sources, including the 1999 ABS Housing Survey, and on the national composition of private renter households, this estimate appears too high. The over-estimate is likely the result of an overweighting of certain income unit types in the survey. Relative distributions of characteristics within the survey require the use of weights, but estimates comparing Rent Assistance survey to total census figures should be avoided.