My older sister owns a house. Whenever I visit, I’m struck by how nice it is to own a home. She and her husband have made upgrades. They’ve started a garden. When they recently had a son, they could readily make modifications to make the house safer and more comfortable for their baby.

I have this yearning too – to be able to make a place my own. To have a home, to make it an expression of who I am, to put down roots in a community.

It’s not uncommon for people like me, who rent, to harbour such desires. In our current system, you’d be mad to want to be a renter forever. But is it ownership that renters are after? Or just decent homes?

Governments are promoting homeownership

In response to a housing affordability crisis, governments are trying to make it easier for first home buyers (FHBers) to enter the market. For example, the Federal Government is allowing FHBers to tap into their super. In its latest budget, the ACT Government scrapped stamp duty for FHBers.

Perhaps these measures make sense. There are many benefits to homeownership. Homeowners are happier, for one. [1]
Living on a pension is a lot easier if you’re not also paying rent. But who do these measures actually benefit?

Government responses benefit the least needy renters

A lot of people are locked out of homeownership. Yet when governments subsidise FHBers, they are providing support to the least vulnerable people in this community.

People who are helped into homeownership by such policy responses are what we might call ‘marginal’ home buyers. As a consequence of these policies, they go from not being able to buy – thus, presumably, renting – to becoming homeowners.
They escape.

But what about all the renters for whom homeownership is just a fantasy? The people who miss out on FHBer benefits are the ones most in need of policy support. This is a diverse community, and it’s hard to generalise about their situation. But we do know that they are trapped in the private rental market – possibly for life. Currently that means a lack of control over their home; the ever-present risk of eviction; and very likely having to endure an energy-deficient ‘glorified tent’ that harms their health or drives up their power bills.

With more people locked out of homeownership, more people are locked into the private rental market. It’s not enough to help a lucky few to escape. Instead, we should be embedding the benefits of homeownership in the rental market itself

Making renting a genuine alternative to homeownership

This isn’t too different from what the Grattan Institute suggested in their 2018 report on housing affordability. [2] ‘Housing affordability’ doesn’t just mean making ownership cheaper. It also means improving housing outcomes more generally. This can – and must – include improving outcomes for people who rent.

This is arguably a more targeted and fairer response than measures promoting ownership. It’s also a lot cheaper to abolish unfair evictions than it is to dish out grants to FHBers. We can see from countries in Europe, such as Germany, that strong rights for renters can go hand-in-hand with a sustainable private rental sector, even one populated by small-scale landlords. [3]

What would this look like?

What would it take to make renting more like homeownership? At Better Renting, we think of it in terms of stability, affordability, and liveability. Stability means giving renters more control over how their lease ends by eliminating eviction without grounds and moving towards open-ended leases. Suddenly, people who rent get security and can think longer-term about their home and being part of their community.

Affordability is a tricky one, and it isn’t necessarily as simple as regulating rents. But it certainly looks like limiting the frequency of rent increases (as the ACT has done) and perhaps putting the onus on the landlord to justify any rent increase above CPI. It also wouldn’t hurt to increase the supply of housing: it stands to reason that more supply will reduce rental competition and help to slow rent increases. More public housing couldn’t hurt here, and many academics argue that loosening planning restrictions makes housing supply more responsive to increased demand.  [4]

Liveability is what homeowners can achieve because they have agency: they can adapt their home to suit them, instead of the other way around. This could mean ensuring that rental properties meet minimum standards, and giving renters a positive right to make minor modifications and keep pets. Suddenly, your rental property begins to feel more like your home.

This idea is, literally, a foreign concept. Rather than dismiss this idea as unrealistic, we should look to countries like France, Germany, and Sweden. In these countries, people who rent aren’t desperately trying to get a foot on the property ladder. They don’t need to. They don’t need to because their quality of life isn’t dependent upon their form of tenure. These examples show that improving rights for renters is not the end of the private rental sector. It’s just the end of the sector as we know it. It’s the start of a better, fairer system.

Decent homes

I can imagine a future in which, like my sister, I’m lucky enough to own a home. I’ll put in ceiling insulation. I’ll plant fruit trees. If the bathroom exhaust fan isn’t working, I’ll replace it. I’ll make my home work for me.

But this just doesn’t sit right with me. Renters worse off than me don’t have this option. So the only decent response to the housing affordability crisis is to think of them and what will make their lives better.

If we want to improve housing outcomes, we should stop trying to turn renters into owners. Instead, we should be turning rental properties into homes. Governments should be making sure that – whether you rent or own – you can live in a home
that is stable, affordable, and liveable. It’s what all Australians deserve.

By Joel Dignam, Executive Director, Better Renting. This article was originally published in ACTCOSS Journal Issue 85: Housing Futures.

References

[1] M Wade, ‘Home owners are happier than renters: survey’, The Sydney Morning Herald, 1 June 2018

[2] J Daley, B Coates & T Wiltshire, Housing affordability: reimagining the Australian dream, 2018.

[3] Martin, C., Hulse, K. and Pawson, H. with Hayden, A., Kofner, S., Schwartz, A. and Stephens, M. (2018) The changing institutions of private rental housing: an international review, AHURI Final Report No. 292, Australian Housing and Urban Research Institute Limited, Melbourne, https://www.ahuri.edu.au/research/final-reports/292, doi:10.18408/ahuri-7112201.

[4] E Glaeser & J Gyourko, ‘The Economic Implications of Housing Supply’, Journal of Economic Perspectives, vol. 32, 2018, pp.3-30.