Rental market

<html><body>
EXPERT INSIGHT

Many Australians whose jobs were decimated by the COVID business shutdowns will soon be waking up to new income shocks and the prospect of rental stress. This is because people whose employers can’t afford to keep them on will suddenly lose more than A$300 per week when the <a href="https://www.ato.gov.au/general/jobkeeper-payment/">JobKeeper</a> scheme <a href="https://www.ato.gov.au/General/JobKeeper-Payment/JobKeeper-key-dates/">ends on March 28</a>. Worryingly, this income shock will happen just days before the payment to people on the <a href="https://www.servicesaustralia.gov.au/individuals/services/centrelink/jobseeker-payment">JobSeeker</a> benefit is effectively <a href="https://www.ideas.org.au/blogs/jobkeeper-jobseeker-what-has-changed#:%7E:text=The%20JobSeeker%20Payment%20replaced%20the,This%20was%20announced%20in%20November.">cut by $100 per fortnight</a>.

At that point, all income support recipients – more than 2.6 million people – will be below the poverty line and many will face extreme rental stress.

This income shock has been anticipated for some time, but what does it means for rates of rental stress, particularly in Victoria? Despite <a href="https://www.theage.com.au/politics/federal/victoria-s-economic-recovery-to-outstrip-all-other-states-as-nation-bounces-back-20210115-p56ufo">promising signs of recovery</a>, Victorian jobs lost in the COVID-induced recession, such as in the hard-hit <a href="https://www.theage.com.au/national/victoria/business-tourism-on-its-knees-as-covid-19-casts-long-shadow-over-events-20210203-p56z2j">business tourism</a> and <a href="https://www.theguardian.com/culture/2021/feb/22/more-job-losses-ahead-for-australian-live-music-industry-operators-warn">live music industries</a>, have not bounced back at the same rate as others.

What will happen to rental affordability?

To illustrate this point we have modelled housing affordability for single people who were on either the full-time or part-time JobKeeper rate. In this scenario, they could also get JobSeeker payments at a part-rate because of the temporary increase in the <a href="https://www.propertyobserver.com.au/https://www.servicesaustralia.gov.au/individuals/topics/income-test-jobseeker-payment/29411">income-free threshold to $300</a>. This made them eligible for <a href="https://www.dss.gov.au/housing-support/programmes-services/commonwealth-rent-assistance">Commonwealth Rent Assistance</a> too.

The chart below shows the impacts on income and rental affordability when JobKeeper and <a href="https://www.servicesaustralia.gov.au/individuals/services/centrelink/coronavirus-supplement">Coronavirus Supplement</a> payments end. Their incomes and the amount of rent they can afford are roughly halved.

<img alt="" height="278" src="https://s3-ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/pictures/article-images/jobkeeper_poverty.jpg" width="754">

Full-time and part-time single workers were able to afford weekly rent of $265 and $245 respectively before the withdrawal of JobKeeper. Afterwards, affordable rent goes down to $115 per week. That’s about $110 less than the <a href="https://www.dhhs.vic.gov.au/sites/default/files/documents/202011/DHHS%20Rental%20Report%20September%20quarter%202020.docx">$450 median rent</a> ($225 per person) for a two-bedroom share house in Melbourne.

Based on <a href="https://theconversation.com/city-share-house-rents-eat-up-most-of-newstart-leaving-less-than-100-a-week-to-live-on-123772">our earlier calculations</a>, this leaves these renters with only $17.57 per day to meet basic costs. They have a lavish $3.57 per day more than they did before the pandemic to pay for food, utilities and job-seeking costs such as mobile phone plans and travel cards (A$4.40 a day in Melbourne).

What is different now than for pre-COVID unemployment was that business shutdowns thrust people who had reliable earnings – and accompanying high rents and mortgages in metropolitan areas – onto JobSeeker and JobKeeper payments.

The chart below shows the change in rental affordability for a number of household types before the pandemic and during the Coronavirus Supplement stages (i.e. payments of $550, then $250, then $150).

<img alt="" height="391" src="https://s3-ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/pictures/article-images/jobkeeper_poverty_2.jpg" width="754">

For example, when their income was highest during the $550 stage, two singles sharing could afford rent of $430 per week. Once the supplement ends and is replaced by the <a href="https://www.smh.com.au/politics/federal/it-breaks-my-heart-jobseekers-hit-back-at-25-a-week-dole-increase-20210225-p575p9">$25-a-week increase in JobSeeker</a> payment, affordable rent declines to only $230 per week or $115 each.

Rental affordability for single-parent households is notable here because the COVID Supplement was payable to one person only. Once the supplement is withdrawn, they will again be disadvantaged relative to other households because they will not be receiving the increase in the JobSeeker payment.

What sort of job losses can we expect?

It is hard to predict exactly how many people will lose their jobs when JobKeeper ends. What we do know is the economic recovery in Victoria has lagged behind the other states. We also know that at the end of December 2020 <a href="https://theconversation.com/victorians-struggle-to-exit-jobkeeper-as-the-schemes-end-looms-155288">1.55 million people</a> were on JobKeeper and a large proportion of them (626,000) were in Victoria.

Economist Jeff Borland <a href="https://drive.google.com/file/d/1kE4f5qxNQwdh5Xp_6l2Cu-HrjiZvfkrB/view">conservatively estimates</a> national job losses could range between 125,000 and 250,000. It is reasonable to expect as many as half of these could be in Victoria.

Our analysis also shows there are worrying signs that the economic recovery celebrated in the January labour force data was not sustained in February. The latest data provided to a <a href="https://www.aph.gov.au/Parliamentary_Business/Committees/Senate/COVID-19/COVID19">Senate inquiry</a> into COVID-19 show JobSeeker recipients increased by 7,267 between <a href="https://www.aph.gov.au/DocumentStore.ashx?id=60c91b42-dde2-415f-9f9b-7d5fd3935cb6">January</a> and <a href="https://www.aph.gov.au/DocumentStore.ashx?id=9c1805cb-fe51-419b-8a7b-61315c64c302">February</a>. The increase in Victoria could be attributed to the temporary Christmas retail boom, but in states like New South Wales and Queensland claims decreased slightly.

While <a href="https://www.propertyobserver.com.au/https://www.abc.net.au/news/2021-03-17/jobkeeper-end-will-hit-these-postcodes-hardest/13242400?nw=0">fewer people</a> will lose their jobs in other states than in Victoria when JobKeeper is withdrawn, they are not immune to this income shock. We created the chart below to show the overall scale of the coming problem of rental stress when the fortnightly $150 Coronavirus Supplement disappears and is replaced by the $50 JobSeeker increase.         

Once the supplement reduced to $250 per fortnight, singles and single parents with two children were below the poverty line.  When it was reduced to $150, the number of household types in poverty increased again. From April 1, all income support recipients – covering more than 2.6 million people including children – will be waking up to poverty and the prospect of extreme rental stress.

What can be done to avoid this?

So how can governments prevent people from falling off the rental cliff? It is unlikely to be achieved by introducing <a href="https://www.propertyobserver.com.au/https://www.abc.net.au/news/2021-03-10/tourism-coronavirus-pandemic-assistance-package-cheap-flights/13235432">cut-price flights</a> to Far North Queensland.

A new range of strategies will be needed. These include options <a href="https://www.acoss.org.au/wp-content/uploads/2021/03/Strengthening-Income-Support-Bill-2021.pdf">advocated by ACOSS and others</a> to increase the maximum rate of Commonwealth Rent Assistance by 50%, increase the JobSeeker base rate above the poverty line and introduce rental stress grants targeted at individuals who need help.

Over the longer term, there is also a need to adopt strategic approaches to increase the supply of affordable rental housing such as those <a href="https://www.ahuri.edu.au/housing/policy-analysis/increasing-affordable-rental-supply">recommended by researchers</a> at the Australian Housing and Urban Research Institute (AHURI).<img alt="The Conversation" height="1" jamjgoj="" src="https://counter.theconversation.com/content/157244/count.gif?distributor=republish-lightbox-basic" tblrv1n7b="" width="1">

<a href="https://theconversation.com/profiles/simone-casey-130516">Simone Casey</a>, Research Associate, Future Social Service Institute, <a href="https://theconversation.com/institutions/rmit-university-1063">RMIT University</a> and <a href="https://theconversation.com/profiles/liss-ralston-295934">Liss Ralston</a>, Adjunct associate, <a href="https://theconversation.com/institutions/swinburne-university-of-technology-767">Swinburne University of Technology</a>

This article is republished from <a href="https://theconversation.com">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/at-least-2-6-million-people-face-poverty-when-covid-payments-end-and-rental-stress-soars-157244">original article</a>.
</body></html>

Many Australians whose jobs were decimated by the COVID business shutdowns will soon be waking up to new income shocks and the prospect of rental stress

At least 2.6 million people face poverty when COVID payments end and rental stress soars

<html><body>
GUEST OBSERVER
One of Australia’s biggest comparison sites finder.com.au reveals ‘lifestyle renting’ is sweeping the housing market, and warns the trend is putting some under dangerous housing stress.
According to the new research, Australians are shelling out up to 38 percent of their weekly income to rent in desirable locations – well above the 30 percent threshold for housing stress.
The finder.com.au analysis showed across the capital cities, renting a house in Sydney takes a staggering 37.9 percent of the NSW average wage. On average, Melbourne renters are handing over 30.7 percent of their weekly earnings on rent. Brisbane rent was also a potential source of stress, requiring 28.4 percent of the average Queensland wage. Renting an inner-city property that is close to trendy bars, cafes and work trumps the home ownership dream for a growing number. This new generation of renters are not renting while they save for their dream home – they are renting their dream home instead. It’s alarming that they are overstretching themselves. It’s a case of ‘keeping up with the Joneses’ for some who are living in properties they can’t afford. Interestingly Sydney renters spend a higher proportion of their weekly income paying rent than what some people are committing to their mortgages.
<a href="/images/2016/02/10/Screen%20Shot%202016-02-10%20at%2010.01.03%20AM.png" target="_blank">Click to enlarge</a>
<img src="/images/2016/02/10/Screen%20Shot%202016-02-10%20at%2010.01.03%20AM.png" alt="" width="806" height="785">
If you’re forking out more than 30 percent of your income to pay for housing, then you are considered to be in housing stress. The old real estate belief that people rent because they couldn’t afford to buy was not the case anymore. Some have just become accustomed to the ‘good life’ of being close to everything and are not prepared to give that up to get onto the property ladder. ‘Rentvesting’ is also becoming a more popular option for Australians – this is where people buy an investment property in a more affordable suburb as a way to enter the property market sooner, and proceed to rent in their desired location. Data from the Australian Bureau of Statistics shows an increase in households who are renting over the past two decades. In a 2013-14 report on Housing Occupancy and Costs, the ABS noted that 25.7 percent of households were renting their home privately, up from 18 percent in 1994-95. The proportion of private renters will likely continue to increase, with renters avoiding the hidden costs of homeownership, which include maintenance, council rates and insurance, Ms Hassan says. Hobart was identified as the most affordable capital city to rent where you will sacrifice 25.2 percent of your weekly wage on rent. Ms Hassan says renters could be forced out of capital cities with rents between 4.9 and 15.5 percent higher than regional areas in those states. The biggest gap was in New South Wales where the proportion of the average weekly wage to rent in the capital city (37.9 percent) was 15.5 percent higher than regional areas (22.4 percent). Renting in areas outside of the capital cities was much more affordable with the percentage of weekly earnings ranging from a modest 19.9 percent (in Victoria and Tasmania) up to 23.1 percent (in Queensland). Queenslanders pay the highest proportion of their average weekly salary on renting a home outside of the capital cities, where the average weekly salary is $1512.20 and median rent is $350. But even then, this is well within the housing stress threshold making regional living, unsurprisingly, an attractive option for some renters.
<a href="/images/2016/02/10/Screen%20Shot%202016-02-10%20at%2010.02.32%20AM.png" target="_blank">Click to enlarge</a>
<img src="/images/2016/02/10/Screen%20Shot%202016-02-10%20at%2010.02.32%20AM.png" alt="" width="837" height="763">
Top 5 tips on how to reduce housing stress
Rental costs increase almost exponentially the closer you get to the city centre, so moving a couple of train stops further away could save you hundreds of dollars a month.
If you have a good relationship with your landlord, it's always worth asking for a rent reduction if you're prepared to sign a longer term lease.
Put more aside for rent than the required amount. This will give you a buffer if you are faced with challenges.
Be in the habit of budgeting before you start a tenancy. Know what you can afford and only rent what’s reasonable. 
Give yourself a financial makeover. Go online and compare what you're paying for things like contents insurance and utilities to make sure you aren’t paying too much.
Bessie Hassan is consumer advocate at <a href="https://www.finder.com.au/" target="_blank">finder.com.au</a>.
</body></html>

jchancellor-FAypfDUnLy

Lifestyle renters suffering ‘housing stress’, new research reveals: Finder.com.au's Bessie Hassan

<html><body>
<img src="https://counter.theconversation.edu.au/content/65712/count.gif" alt="The Conversation" width="1" height="1">
GUEST OBSERVER
Saving energy is a win-win. You reduce greenhouse emissions and you reduce your energy bills. However, improving energy efficiency is not an option for a significant number of people in Australia – renters. 
This is important not only because rental properties account for 29.6 percent of Australian houses, or 2.3 million homes, but because the high proportion of low-income households in rental properties are particularly vulnerable to rising energy prices.
<h2>Those who can, and those who need to but can’t</h2>
In Victoria, only 58 percent of private and 55 percent of public rented homes have some insulation. In contrast, 95 percent of owner-occupied homes have insulation. 
In 2009 the Victorian government found the use of electric heaters is much higher in rental properties, and that half of all rental households report difficulty heating their homes.
The relationship between low incomes and higher rates of renting is a long-term trend in Australia. More than 20 percent of long-term renters regularly pay more than half of their income on rent, and 17 percent of all private renters are on government pensions or allowances. The proportion of people with a disability, a group with higher-than-average energy needs, is also much higher in rental properties.
As energy prices continue to rise, the gap between those who can afford to improve the energy efficiency of their property and those who cannot is growing. Those who are most vulnerable to energy price increases are the people with the least capacity to improve the energy efficiency of their home.
<h2>What is getting in the way?</h2>
Internationally, split incentives (when two parties engaged in a contract have different goals and levels of information) are recognised as a key barrier to improving energy efficiency in rental properties. 
The International Energy Agency estimates that, globally each year, over 3,800 petajoules of energy (roughly 65 percent of Australia’s total energy use in 2013-14) is not saved due to split incentives.
In Australia, several additional legislative barriers prevent improvements to rental properties. 
For example, landlords can offset the entire cost of any repairs made to rental properties against their income in the same financial year. But any repair has to be like-for-like.
So if a gas hot-water system broke down in a rental property and the landlord decided to replace it with a solar hot-water heater it would be classed as an improvement, not repair. The entire cost of improvements cannot be offset in the same financial year, which deters landlords from replacing broken appliances with more efficient versions.
Many state tenancy laws require tenants to return the properties to the same condition as when they rented the property. This means even willing renters are discouraged from improving properties themselves, or engaging in energy efficiency programs offered by external parties.
The majority of leases in Australia are for six to 12 months. In Victoria you cannot get a lease longer than five years. 
Therefore, tenants who do have the income and permission to improve the energy efficiency of their properties cannot be sure they will live in the property long enough to pay off the initial investment through energy savings.
<h2>Hope for change</h2>
In our 2015 study we aimed to identify solutions for the barriers to energy efficiency in rentals. We surveyed 230 tenants and landlords and interviewed five real estate agents.
We found two possible solutions that received a high degree of support from all stakeholders. 
The first solution, which received over 90 percent support from both landlords and tenants, is to change the classification of energy efficiency improvements to repairs under tax law. This would allow landlords to offset the entire cost of the improvement in the same financial year. Real estate agents were also convinced this solution would work, with no repercussions for tenants.
The second solution that all stakeholders supported was mandatory minimum efficiency standards for rental properties. Over 90 percent of tenants and 70 percent of landlords supported this solution. 
However, fewer landlords strongly disagreed with a mandatory standard if it was combined with tax offsets for energy efficiency improvements. Real estate agents agreed that the combined solution could be effective. 
Interestingly, if the mandatory minimum energy efficiency standard were enacted, it could allow landlords to claim tax offsets for energy efficiency improvements in the same financial year. This is because spending required to make a property satisfy regulatory requirements falls into the repairs classification.
The results of this study show that despite the different goals of landlords and tenants there are combinations of solutions that could overcome the barriers to improving the energy efficiency of rental properties. 
If landlords and tenants can find some common ground, surely politicians across multiple levels of government can work together to find solutions for some of the most vulnerable people in our community.
Robert Crawford is senior lecturer in Construction and Environmental Assessment, University of Melbourne and author for The Conversation. He can be contacted <a href="https://theconversation.com/profiles/robert-crawford-14921" target="_blank">here</a>.
Koel Wrigley is community engagement consultant, Capire Consulting Group, University of Melbourne and author for The Conversation. She can be contacted <a href="https://theconversation.com/profiles/koel-wrigley-301797" target="_blank">here</a>.
</body></html>

Renters are being left out in the cold on energy savings: here’s a solution

<html><body>
<img src="https://counter.theconversation.edu.au/content/77324/count.gif?distributor=republish-lightbox-advanced" alt="The Conversation" width="1" height="1">
GUEST OBSERVER
A growing proportion of Australian households depend on the private rental sector for accommodation. This growth has occurred despite substantial insecurity of tenure under the law, unlike other countries with high private rental rates, such as Germany. 
Our newly published research on the impacts of long-term or even lifelong insecurity on Australian private renters found their responses range from lack of concern to constant fear and anxiety.
So, how many people are affected? Back in the 1990s about one-fifth of us rented our homes from private landlords. Now this has swelled to more than one-quarter. 
Historically, renting was usually a transitional step in the life cycle. Most people rented for a while and eventually bought a home. 
While this housing pathway is still dominant, a growing number of Australians cannot make this transition. At least one in three private renters are long-term private renters (ten years or more). This equates to at least one in 12 households.
Australian households rent accommodation under a regulatory framework that provides little protection against landlord-instigated “forced moves” or untenable rent increases. The initial written agreement/lease rarely extends beyond a year. Once it ends, the tenancy typically shifts to a “periodic” basis, and notice to vacate can be given without reasons.
The period of notice ranges from 42 days to 26 weeks – depending on the state or territory. Thus, beyond the initial lease, all private tenants are subject under the law to ongoing insecurity.
Drawing on 60 in-depth interviews, we explored the impacts of this de jure housing insecurity on long-term private renters in different housing markets (low, medium and high rent, with 20 interviews in each) in Sydney and Melbourne. We identified three typical responses to ongoing insecurity:
<ul>
<li>
incessant anxiety and fear;
</li>
<li>
lack of concern; and
</li>
<li>
concern offset to an extent by economic/social capital, with renting sometimes seen as the only means of living in a desired area. 
</li>
</ul>
We discuss these responses in turn.
<h2>Incessant anxiety and fear</h2>
For one group of interviewees, the insecurity was a persistent source of stress. They were constantly anxious about the possibility of being asked to leave their homes or incurring an untenable rent increase. 
Low-income interviewees in the low-rent outer suburban areas had limited economic and sometimes social capital. A notice to vacate invariably caused great anxiety as they had minimal resources to find alternative accommodation. 
Interviewees solely reliant on government benefits for their income were especially vulnerable. Frieda, 40, a single parent with five children, described her perceptions and experiences:
"At any minute I can get the letter to say, ‘Sorry, but you’ve got to move’ … The last house before this one … was supposed to be a long-term but he decided to sell that house. And then we got [another] one … and then [the owners] wanted the house back … We got notice [to vacate] but [were] still trying to, you know, find somewhere … For a while there, I was thinking we’ll be out on the street."
Nigel, 35, lived alone in a low-rent area in outer western Sydney. He had been receiving workers’ compensation, but when interviewed relied entirely on Newstart for his income. He was confident that his landlord would not ask him to leave, but needed all his income to pay his rent. This was a source of intense insecurity and he was not coping.
"I’m getting $661 a fortnight, my rent is $660 [a fortnight], so if it wasn’t for friends, you know … Stress is gone beyond a joke … You don’t know what you’re going to do the next day."
Christine, 57, also depended on Newstart for her income. She had lost her job a couple of years earlier after falling ill. Fear and anxiety were woven into her comments:
"A renter – you’ve always got that fear that you’re not going to have a roof over your head … Yes, I’ve been here 16 years, but you never know. The house can be sold and new owners can say, ‘No, we want you to go.’ You don’t have money for a bond for another premises or, you know, Housing Department can’t help you because you’re not what they consider to be [in] an urgent, desperate situation."
<h2>Not a concern</h2>
At the opposite end of the spectrum were interviewees who had deliberately chosen long-term private renting and were unconcerned about the possibility of a landlord-instigated forced move. “Renters by choice” tended to be single people or couples without children who lived in high-rent areas. They usually had ample economic and social capital and saw the flexibility associated with renting as an advantage. 
Sarah was living in a high-rent area in inner Melbourne:
"And I do have enough money to buy quite a nice apartment, but I’d rather use the interest and the share money [dividends from shares] and stuff to travel."
Angela and her partner lived in the same area. They had no children and preferred not having a lease:
"So the insecurity doesn’t bother me … It’s more to do with my freedom within that. It means that I can just leave whenever I want if I want to."
Astrid felt totally at ease with her long-term renter status in high-rent inner Sydney. In her late 30s and single, she had a reasonable income and strong social capital. She had rented for all her adult life:
"It doesn’t bother me [being asked to vacate] … If they come and say they’re going to sell, well, there’s a reason. It was meant to be, so yeah … There’s always somewhere to stay. So it suits my lifestyle. I wouldn’t want to buy anything even if I had the money."
<h2>Moderate concern</h2>
Interviewees in high and medium-rent areas were typically in a different position to tenants in low-rent areas. Their economic capital enabled them to rent (but not buy) in an area with good public schools and amenities, and to move if need be.
However, they were reluctant long-term renters and troubled by their housing insecurity. This was especially so if they had school-going children. 
Moira (high-rent area, Sydney), married with two children and in her mid-40s, was pleased with her rental situation. She paid an unusually low rent for her three-bedroom apartment. Alongside the area’s high-quality amenities, the quality of the public schools was a major drawcard.
However, the ever-present possibility of having to vacate was a concern:
"The fact that you don’t know how long you’re going to be there for and, you know, that was a massive thing when we were choosing a school … If we have to move, are we going to be able to be within distance … to keep him there? … And it [the lack of security] is a cloud that’s there always."
The main reason Glenn and his partner rented a small semi-detached house in a high-rent area in Sydney was to ensure their son had a good schooling:
"We need to stay in the area for our son and we balanced that against sending him to a private school, so in that way it’s cheaper to live here even though the rent’s high."
<h2>A crisis of affordability and insecurity</h2>
The interviews indicated that the de jure insecurity associated with private renting in Australia doesn’t necessarily translate into de facto insecurity. 
However, for at least one in four of our interviewees, the chronic de jure insecurity associated with private renting imbued everyday life with ongoing anxiety and stress. 
The intensifying crisis of rental affordability in Australia’s major cities means these negative outcomes of long-term private renting are likely to affect growing numbers in the years ahead.
<a href="https://theconversation.com/profiles/alan-morris-13337" target="_blank">Alan Morris</a> is research professor, University of Technology Sydney.
<a href="https://theconversation.com/profiles/hal-pawson-147969" target="_blank">Hal Pawson</a> is associate director - City Futures - Urban Policy and Strategy, City Futures Research Centre, Housing Policy and Practice, UNSW.
<a href="https://theconversation.com/profiles/kath-hulse-228874" rel="author">Kath Hulse</a> is research professor, Swinburne University of Technology.
</body></html>

The insecurity of private renters – how do they manage it?

<html><body>
SPONSORED POST
Where once it was a niche investment, student accommodation has now become a global asset class.
According to the latest Savills World Student Housing Spotlight, 2015 was a record year for investment in student housing with US$14.9 billion invested globally in the sector.
The Local Market - Australia
The Australian market continues to attract significant attention and is a particularly popular destination for international students. Students from China and India together supply nearly 40 percent of international students, an increase of more than 13 percent and 15 percent respectively in 2015.
With Australia featuring in the list of favoured destinations in the world’s top outbound markets for international students, plus a fast-growing domestic population, student numbers have risen 37 percent in the last eight years. With 30 Australian institutions appearing in the top 750 of the QS World University Rankings, up from 25 in 2012, demand is likely to continue and, as a consequence significant new stock will be required.
The strong growth potential in Australia is set against a general shortage of supply; at the moment there is only enough purpose-built student accommodation (PBSA) available to accommodate 6 percent of the student population. In response, more than AU$2 billion of capital has been earmarked for development projects in student accommodation since the start of 2015.
Around the World
The Savills World Student Housing Spotlight has found that cross border investment in this fast maturing asset class accounted for 40 percent of all global investment activity. International investors who are seeking to diversify their portfolios have been attracted by the fact that US and UK student housing REITs have outperformed their All REIT indices by 19 and 16 percentage points respectively.
The first half of 2016 has seen lower total global volumes compared with 2015, but in mainland Europe investment levels have continued to rise off a low base. By the end of July, German student housing had attracted €350 million of investment – more than double the total invested in the whole of 2015 – while in France €345 million has been transacted in the year to August 2016.
<a href="/images/2016/10/18/Major%20Student%20Housing%20Markets%20at%20a%20glance-2.jpg" target="_blank">Click to enlarge</a>
<img src="/images/2016/10/18/Major%20Student%20Housing%20Markets%20at%20a%20glance-2.jpg" alt="">
Investors have been attracted by mainland Europe's strong investment potential. Its combined student population of 20 million, and the very low provision in some markets of purpose-built student accommodation (PBSA) despite growing demand from international students attracted by an increasing number of courses taught in English, place it on an upwards trajectory.
A Resilient Asset Class
Growing international student numbers are therefore set to secure the market for a premium PBSA product, but there also remains a huge untapped market for more affordable private accommodation. High land values and development costs will impede this in many markets, but upgrading of existing university stock or establishment of new models may be a route in.
In either case, student housing has proven itself to be a resilient asset class and, with its counter-cyclical fundamentals, many institutional investors will continue to turn to the sector where they can achieve strong occupancy and rental growth.
To learn more about the trends in the current student accommodation market, view <a href="https://www.savills.co.uk/research_articles/188294/207929-0" target="_blank">Savills World Student Housing Spotlight 2016</a>.
Savills is a leading global real estate service provider offering the full spectrum of services from strategic advice to managing assets and projects and transacting deals. To learn more about Savills student accommodation services, visit <a href="https://www.savills.com.au/services-and-sectors/student-accommodation.aspx" target="_blank">savills.com.au/studentaccommodation</a>.
</body></html>

The rise – and rise – of global student housing investment

<html><body>
SPONSORED POST
Signing your business up for a property lease is a lot different than renting a home to live in.
Here’s nine things you should keep in mind when taking out a commercial lease.
1. Is the rent appropriate?
Exactly what space are you renting? Does it include common areas such as hallways, rest rooms, and elevators? How does the landlord measure the space –some measurement practices include the thickness of the walls. Also keep in mind that commercial lease agreements usually provide for an annual percentage-based rent increase.
2. Set cost parameters from the start
Negotiate with the landlord for a cap on the percentage increase to avoid unmanageable costs later on with the rent going up when you least need it. Check to see if there is a use clause. Many lease agreements will incorporate a use clause to define the activity the tenant can engage in on the premises.
3. Who’s responsible for what?
Who will maintain and repair the premises, including the heating and air conditioning systems? Responsibilities for the building and any equipment are often shared between landlord and tenant. The agreement should spell this out clearly.
4. Set your own timeframe
Most landlords prefer long-term lease agreements. If it’s a new business, it might pay to ask the landlord for a short-term lease with an option to renew. This may raise the rent you pay, but it could be a better alternative than agreeing to a lengthy term.
5. Can you make changes to the property?
A lease should address what improvements or modifications can be made to the property, which party will pay for the improvements, and whether the tenant is responsible for returning the unit to its original condition at the end of the tenancy. It should also spell out who will own the improvements when the lease expires.
6. Remember the little things
If the business needs it, make sure that the lease agreement does not prohibit putting up signs that are visible from the street. Agree on who is responsible for rates, taxes, insurance and other outgoings; for example, contents insurance or council and water rates. It’s also important to check if the lease agreement allows subletting. This is important because the lessee is still responsible for paying the rent if the business fails or relocates. An assignment or sublet clause in place allows the business to find someone else to cover the rent.
7. Know your rights
Does the lease have a Right of Assignment clause? If you have to sell the business, a Right of Assignment clause gives you the option of transferring the lease to a new tenant. Is there an option to renew the lease or expand the space you are renting? How would the lease be terminated? Is there a notice requirement? Are there penalties for early termination?
8. Seek financial advice
Before you sign, you should check the deductibility of rent and your tax liabilities with your financial adviser. If the agreement requires the business to purchase leased goods or equipment, it could invalidate your right to claim rent as a tax deduction. A financial adviser is essential here.
Check rent deductibility and tax liabilities with a financial adviser before you sign a lease.
9. Are there additional clauses?
If you are leasing premises in a shopping centre, it’s worth asking whether you have to comply with the centre’s fit out rules (shopping centres can often be more restrictive), whether you are required to contribute financially to the centre’s marketing and promotional activities and whether your business would be affected by any ownership plans to redevelop or expand the centre.
So there you have it: A solid checklist to get started.
For more information, <a href="https://bs.serving-sys.com/BurstingPipe/adServer.bs?cn=tf&amp;c=20&amp;mc=click&amp;pli=18755997&amp;PluID=0&amp;ord=%5Btimestamp%5D" target="_blank">click here</a>.
ABOUT REALCOMMERCIAL.COM.AU: realcommercial.com.au is the leading website in Australia for commercial property, attracting an average of 1.7 million visitors a month (Source: Nielsen Online Market Intelligence, Total Traffic, average calculation May-July 2015, includes app traffic from Omniture Site Catalyst as Nielsen doesn’t report on app). It is owned and operated by realestate.com.au Pty Ltd, a subsidiary of ASX-listed REA Group Limited ACN 068 349 066 (ASX:REA).
</body></html>

9 things to remember when taking out a commercial lease 

<html><body>
GUEST OBSERVER
The proposed housing affordability package in the May budget will target people relying on social housing as well as those trying to break into the market, Treasurer Scott Morrison has said.
Morrison said housing would be a very strong focus of the budget and he stressed the rental side.
“It won’t just deal with the challenges faced by first home-owners,” he said. “You have got to remember that over 30% of Australians actually live in homes that are rented, and when people are finding it hard to get into the housing market that puts a lot more pressure on the rental market.”
Noting that the number of people on low incomes in rental stress had gone up, Morrison said: “I am as much concerned about someone who is on a low income struggling with their rent as I am with someone who I know wants to get on the home-ownership market themselves. They are both important challenges for Australians.”
Morrison renewed his criticism of “one of the most disgraceful failures of public spending” – the National Affordable Housing Agreement. This was “a one-way cash ATM to the states which asks for nothing in return.
"We are handing over A$1.3 billion every year and the number of people on public housing waiting lists has gone up. The number of social housing dwellings which are owned by the state governments has gone down. We have basically shelled out billions and billions and billions for a program that isn’t achieving anything,” he told Sky. These were matters that would be addressed in the budget.
“We have to spend that money better. We don’t necessarily need to spend less on that. It is a very important issue,” he said.
He was frustrated as treasurer that while serious money was spent on a lot of problems, “the debate is so often that you need to spend more here. No, just spend what you are spending really well and more effectively and get the outcomes that we are accountable for.”
He said social housing often got overlooked in the debate, and he was “quite passionate” about it.
The Victorian government at the weekend announced relief from stamp duty for first home-buyers purchasing properties below $600,000. Investment properties would not be eligible. 
There will be a concession, applied on a sliding scale, for properties between $600,000 and $750,000. The exemption and concession applies to both new and established properties and the state government says it will help 25,000 Victorians with first homes.
Morrison also highlighted the problem of flat wages growth and the consequences that brought.
“Whether it is the NDIS [National Disability Insurance Scheme], whether it is schools, whether it is hospitals, whether it is Medicare – at a time when wages growth is admittedly and regrettably flat, Australians – particularly hard-working Australians on middle incomes – rely more and more and depend more and more on these services,” he said.
“And so the budget does need to signal, and the government has been signalling this, the need to ensure that people can feel confident about the support for those services.”
He made it clear that any improvement in commodity prices or wages growth would be used for budget repair rather than for new spending.
With an eye to the imperative that the budget must be convincing to the ratings agencies, Morrison said: “We have to deal with the political environment that we work in. You can’t just go out there and announce a whole range of things which you don’t have a reasonable prospect of being able to implement.”
He said Labor seemed “to be engaged in a very cynical process of sabotaging the budget to try and crash the AAA rating”.
“They won’t engage in getting spending under control, they want to see the nation’s welfare bill be higher. They want to tax people more to pay for a higher welfare bill.”
Michelle Grattan is professorial fellow, University of Canberra, and author for The Conversation. She can be contacted <a href="https://theconversation.com/profiles/michelle-grattan-20316" target="_blank">here</a>.
</body></html>

Scott Morrison says budget will remember the renters

<html><body>
<img src="https://counter.theconversation.edu.au/content/57114/count.gif" alt="The Conversation" width="1" height="1">
GUEST OBSERVER
Average house rents in metropolitan Melbourne have increased by 5.3 percent, with apartment rents growing by 2.8 percent, over the last three months.
A lack of affordable rental properties is a problem in Sydney too. This has fuelled speculation of a housing bubble, particularly in the wake of falling investor demand for new high-priced CBD apartments in these capital cities and others.
But beyond the headlines lies a difficult policy task for all three levels of government, in conjunction with the private sector and civil society. They need not only to create more affordable housing, but to keep it affordable in the long run.
Recent discussions with private developers and investors suggest there is growing willingness to collectively tackle the problem. However, some common misapprehensions remain about who needs affordable housing and how those needs might be met.
Looking beyond the stereotypes
There continues to be two quite different stereotypes about the people who need affordable housing:
<ul>
<li>First, there is the older single man with mental health and/or addiction issues, who may need therapeutic assistance and housing.</li>
<li>Second, there is the “key worker” individual or couple – young, working in education, medicine or emergency services – who just simply need “more supply”.</li>
</ul>
The reality is that there are many different kinds of households requiring affordable housing. Many different mechanisms will need to come into play to meet their needs.
Penny the pensioner is living in poverty, like one in three older women. She spent many years bringing up two children full-time and did not accumulate retirement savings or assets. As a very-low-income person, she receives Commonwealth Rent Assistance. However, she is among the 35,000 Victorians on the waiting list for public housing.
Penny can no longer afford to live in or near Port Melbourne, her home for her entire life. This is because there are simply no rental apartments available there for A$165 per week, which is what she could afford.
Penny wonders if Australia’s largest urban redevelopment project next to Port Melbourne, Fishermans Bend, could have an apartment for her sometime soon. But with no new Commonwealth affordable housing program in place, no inclusionary zoning or financial incentives at the state level, and rate capping at the local government level reducing capacity to invest in affordable housing, at most 1.3% of the total 40,000 projected housing units will be available to middle-income households – let alone low-income people like her.
Even if new units were developed in Fishermans Bend, a 50m² apartment would cost about $300,000 to build, given land, construction and financing costs. Rates, water, maintenance and management would cost about $9,000 a year per unit to deliver.
These costs could not be recovered fully through Penny’s rent, even if construction was completely subsidised. There would need to be a combination of lower-cost land, subsidised construction, guaranteed finance, rate relief and ongoing subsidy to make her living unit viable for the private sector to deliver and a community housing provider to own and manage.
Naresh is a nurse. He would be classified as a moderate-income earner. He lives with his wife Nadira. They recently had a child; Nadira is a full-time parent.
Because he is a shift worker, Naresh’s public transport options are not reliable. He would prefer to live within walking or cycling distance of his workplace, even in a smaller unit, as he does not own a car.
Naresh can afford to pay 30% of his $60,000 annual gross income on rent, which works out to $340 per week. This is still below the average rent in Melbourne for a 70m² two-bedroom unit.
A few two-bedroom apartments are available for that price – about an hour’s public transport ride away from his job. However, he works in a well-serviced but conservative inner suburb, where new apartments aren’t being constructed and existing flats are rented by much-higher-income households.
Naresh would have to add the cost of buying and maintaining a car to his rental cost and a long commute to an already difficult work-life balance. This is hardly affordable or family-friendly living.
Even if new apartments were being constructed where they are most needed, it would cost at least $400,000 to build and require about 50% construction subsidy for a community housing provider to be able to rent to Naresh and Nadira. The alternative would be short-term renting in the private market with the likelihood of having to relocate every year or two.
Signs of progress
Across Australia, there was a shortage of 122,000 affordable and available dwellings nationwide in 2011. This was a 40 percent increase from 87,000 in 2006. The problem has worsened since the last census in 2011.
There are some signs of progress across Australia. After a cross-party Senate inquiry into affordable housing in 2015, the Affordable Housing Working Group is looking at “innovative financial models” to scale up production.
Several states are taking concrete actions. Western Australia was the first cab off the rank and had attained its ten-year targets by 2015. New South Wales has established the Social and Affordable Housing Fund. Queensland’s Affordable Housing Strategy is at the discussion stage.
In Victoria, the previous Coalition government’s strategic plan for metropolitan Melbourne is being “refreshed”, including a greater emphasis on housing need. In advance of a promised affordable housing strategy, the current Labor government recently announced a $150 million “housing blitz” for women and child survivors of family violence.
Several local governments in Melbourne have also led the way in donating land to affordable housing, particularly the City of Port Phillip.
The trick is going to be combining various actions by Commonwealth, state and local government to support private developers and community housing providers in not only developing new housing, but keeping it affordable for hundreds of thousands of Australians.
 
Carolyn Whitzman is professor of Urban Planning, University of Melbourne and author for The Conversation. She can be contacted <a href="https://theconversation.com/profiles/carolyn-whitzman-9944" target="_blank">here</a>.
</body></html>

Where do record rental prices leave low-income earners?

<html><body>
GUEST OBSERVER
The Real Estate Institute of Queensland (REIQ) rejected Federal Treasurer Scott Morrison’s suggestion that curbing negative gearing was a responsible fiscal alternative to raising the GST.
Negative gearing was well established as a vital tool to encourage investors into the property market, where their continued investment was vital to ongoing rental affordability.
Removing negative gearing from property investment will only serve to drive investors to other assets such as shares, where the offset would remain intact.
This would further impact affordability as there would be fewer houses available to meet rental demand
A review of history would confirm this, with the Hawke government removing gearing benefits in in 1985 only to reinstate them in 1987 when rents surged approximately 24 per cent. 
Removing or scaling back negative gearing would actually hurt the most vulnerable in Queensland, with middle and low-income families unable to afford the resulting rising rents as stock dwindled.
In Queensland more than a third of our population is in rental accommodation, so it’s crucial that supply is maintained for this large section of the community.
If private rentals were drastically reduced this would place enormous strain on the limited resources in public housing.
In its 2013 report Housing 2020, the Queensland State Government outlined its public housing strategy to limit its public housing new builds and to actively transition residents through its public housing, moving them towards private rentals or home ownership.
The Government recognises that the private sector is able to gain more efficiencies in the housing market and the public sector is more costly and less efficient.
The Government strategy focuses on moving residents away from “a view that social housing is a home for life” and instead, places “greater emphasis on social housing as a transitional period on the path to private rental or home ownership”.
If supply was limited to the private rental market and public housing was being scaled back, the social consequences would be significant and detrimental.
Instruments such as negative gearing encouraged individuals to save and invest in property, and this boosted financial self-sufficiency for individuals later in retirement, a key plank of government policy.
There was a common misconception about investors who access negative gearing benefits and capital gains tax concessions, as very wealthy with a vast portfolio of property.
Recent ATO statistics, provided by the Property Council of Australia, revealed that about 70 per cent of investors who benefit from negative gearing earn less than $80,000 and about 73 per cent own just one investment property.
In Queensland, owner occupiers account for two-thirds of the residential dwelling market, with investors making up about a third (34 percent).
ANTONIA MERCORELLA is CEO of the <a href="https://www.reiq.com/" target="_blank">REIQ</a>.
 
</body></html>

Negative gearing cuts no solution to budget hole: Antonia Mercorella

<html><body>
<img src="https://counter.theconversation.edu.au/content/77098/count.gif?distributor=republish-lightbox-advanced" alt="The Conversation" width="1" height="1">
GUEST OBSERVER
Renters are already the weak party at the negotiating table because they cannot ignore their need for a place to live.
But a new series of apps that pit renter against renter will only further tip the balance of power in favour of landlords, making it even harder to get a house.
The fierce competition in the rental market often results in renters paying more than is necessary. Over 150,000 tenants pay more than 50 percent of their incomes for housing. 
These apps may seem like they give renters more power – they are marketed using words like “fairness” and “transparency”, but they also note that landlords are missing out on “millions and millions”. 
Renting is a zero-sum game. Every dollar that a landlord gains is a dollar out of the tenant’s pocket. And in a market already tilted in favour of landlords, these apps could further push up rents.
To address the problem of renting affordability we need technologies that promote more cooperation between renters, rather than competition.
The apps
There are several different rent bidding apps, and they all work in different ways.
Live Offer asks prospective tenants to fill out forms and these are then ranked for the landlord to choose. The prospective tenants can see where they are in the rankings, in real time.
Rentberry is more of a real-time auction site. Prospective tenants submit bids, can see what the current highest bid is and how many bids there have been. 
With Rentwolf, prospective tenants set up extensive profiles, as they would with AirBnB, and then apply for properties through the marketplace.
What is the right price?
Real estate is worth what people are prepared to pay for it. But tenants will always be the weak party at the negotiating table. 
At least as far back as David Ricardo in 1817, economists have theorised that landlords take what is left over once other costs are deducted from the tenant’s income. In other words, rent is as much as tenants are able to pay.
Even before that, Adam Smith recognised that all real estate is a monopoly for landowners. This is because the supply of land is strictly limited, giving excessive negotiating power to whoever owns it. 
But these apps overwhelmingly rely on auctions, which can itself be a problem due to what is called the “winner’s curse”.
Studies have shown that so long as there are at least two motivated bidders, the winning bid tends to either equal the value, or be one bid above it. In other words, the winning bidder in an auction will often overpay and will “suffer” for having won. 
In the case of renters, this means paying excessive rents throughout the lease. Even worse, as more people bid similarly, the ruinous rents become accepted as normal. They become the market rent.
This same phenomenon has been shown in everything from jars of coins to oil-drilling rights and, yes, real estate.
Some research has further shown that in an auction the second-highest bid could be the “rational price”. 
My own controlled experiments have shown that people are easily encouraged by necessity to bid excessively in auctions. This is despite full knowledge of the ruinous consequences. 
This is because people have only a limited capacity to vary their needs. We all need to live somewhere, and our culture limits the options. If the option is sharing with relatives or accepting a lower standard of living due to high rents, then our sense of independence will often prompt our willingness to tighten our belts.
These rental apps will play into these stresses and uncertainties, making it more likely people will overbid in the auctions. This is why these rental apps are likely to result in higher rents.
How technology can reduce rents
Some time ago researchers suggested that renters might be able to reduce rents by banding together.
Working together, renters would be able to create the equivalent of there being only one buyer in the market – a monopsony. A monopsony works like a monopoly, but for buyers rather than sellers. For real estate rents, if land owners enjoy a natural monopoly-like advantage, then tenants have to behave like a monopsony to negate the power imbalance. 
The current crop of rental apps do not address this imbalance. They only inform bidders as to what other, similarly stressed people, are bidding. It stresses them to bid higher.
Already, we are seeing the power of Facebook to build communities around renting. There are groups that help people find flatmates, for example. If the internet is to tackle the problem of renting affordability, then we need to extend this community, for renters to act in unison on rent.
Without a service that seeks to unite renters, rather than have them compete, housing affordability will only get worse. Rent bidding apps will increase landlord revenues and do so at the expense of tenants.
Garrick Small is associate professor, CQUniversity Australia and author for The Conversation. He can be contacted <a href="https://theconversation.com/profiles/garrick-small-369026" target="_blank">here.</a>
</body></html>

Rental market

Editor's Picks

Have something to contribute?

Developments

New apartments

New townhouses

News

Rental market

Editor's Picks

Receive the latest news stories to your inbox

Have something to contribute?

Developments

New apartments

New townhouses

News