Header image
Report Private rental Housing assistance and policy

Demand-side assistance in Australia’s rental housing market: exploring reform options

Final Report No. 342

Date Published: 29 Oct 2020

Authors: Rachel Ong Hal Pawson Ranjodh Singh Chris Martin

This research examines possible cost-effective reforms of Commonwealth Rent Assistance (CRA) that could improve housing outcomes for low-income renters. CRA is payable to households who qualify for specified social security payments and are renting from private landlords, community housing providers or Indigenous housing organisations, and are paying more than a minimum rent threshold. 

This research shows that CRA simply does not go far enough in reducing housing stress for significant shares of low-income private renters. Over one-third (34%) of low-income CRA recipients still carry a net housing cost burden (i.e. a tenant’s net rent (i.e. rent less CRA) expressed as a percentage of their income unit income) of more than 30 per cent after CRA is deducted from their rents. Nearly one in five carry a net housing cost burden of over 40 per cent and nearly one in ten bear a severe housing cost burden of 50 per cent after deducting CRA from rents. 

This research modelled three reforms to CRA and found that changing CRA eligibility to reflect housing need would achieve the greatest affordability improvements at the lowest cost, generating annual cost savings of $1.2 billion and reducing CRA expenditure to $3.4 billion ($4.44 billion in 2018–19). 

It would see a shift in the composition of people who benefit from CRA; reduce the number of income units whose rents fall below the moderate housing stress benchmark; and increase the number of income units whose rents exceed the benchmark. This would result in 246,000 beneficiaries from the reform and 330,300 who would see their position deteriorate as a result of the reform. Constitutional barriers will need to be overcome to change the CRA eligibility rules to reflect housing need.

DOI: 10.18408/ahuri8120801

Published by: Australian Housing and Urban Research Institute Limited

ISSN: 1834-7223

ISBN: 978-1-922498-08-3

 

Citation: Ong, R., Pawson, H., Singh, R., and Martin, C. (2020) Demand-side assistance in Australia’s rental housing market: exploring reform options, AHURI Final Report No. 342, Australian Housing and Urban Research Institute Limited, Melbourne, https://www.ahuri.edu.au/research/final-reports/342, doi:10.18408/ahuri8120801.

RIS CITATION