Housing Crisis an Immediate Solution

There is a housing / accommodation crisis right now in Australia. Following the immutable economic Law of supply and demand, a demand higher than supply for both sale and rental of property / accommodation has driven prices for sale and rent up to unaffordable levels. The Reserve Bank high interest rates continue to add to the cost of housing for both renters and borrowers, with no short-term reductions in sight.

The “Build more houses / units!” solution offered looks like wishful thinking while the population continues growing with new migrants, high interest rates constraining purchases and builders lacking both materials and labour to increase supply.

Increasing the number of houses built at reasonable prices for home buyers and investor buyers to rent out at affordable rates are at best a long-term solution and at worst an impractical and expensive one.
One requiring substantial Government / taxpayer financial support.

Immediate Solution Needed

Clearly, we need an immediate and relatively inexpensive solution that can be implemented by current government departments nationally.

Think Tank Solution

I put the Housing question to an informal think tank that I am a member of called Grey Matters. A group of retired / semi-retired guys who enjoy discussing a wide range of topics and ideas. They came up with the practical solution of simply making better use of the properties we already have and a practical idea for doing it immediately.

Making Better Use of Existing Properties

In essence the proposal is that the Federal Government offer a significant incentive and practical support for the 1.2 million old age pensioners currently living alone, (ABS data) to share their houses with rent paying tenants. Currently this sizeable group are reluctant to take in renters / boarders / lodgers for two reasons. Firstly, the potential loss of pension payments against income received from renters /boarders.
Secondly the fear of being vulnerable physically and financially, in the event of relationship problems and disputes. Some of course are quite happy living alone.

Pensioners Financially Stressed and Lonely

Many single pensioners even with fully owned properties are struggling financially and an additional income would be welcomed providing it did not affect the pension.
Many of these pensioners also struggle physically with the cleaning and maintenance of their properties as well as cooking, and with the mental difficulties of loneliness. All of these problems potentially solved by sharing their homes with others unable to find or afford a place to live.

The incentive proposed would be for the rental payments to be free from tax and not affect the old age pension payments. It is envisaged that the scheme and finances would be administered by Centrelinkwho would handle both rental payments from tenants and the passing of those funds to the pensioner’s bank account.
A small standard administration fee could be deducted from the rental payment by Centrelink. Any payment defaults by tenants would be handled by Centrelink.

Manage The Service and Relationships

On-going management is an essential part of the concept which could we propose, befacilitated through contracted third parties, possibly seniors related charitiesin return for a portion of the rental paid.
A national organisation would be ideal.

Critically this management role would involve:

Matching Tenants and Pensioners

Obviously, the selection of an appropriate matched tenant is an issue, and the equivalent of a dating app is envisaged. A pensioner, home owner, might chose from prospects with the same age group, younger, or with particular interests, like cooking or gardening. Some may even like the idea of having a family and children joining them, and both parties benefitting from a Grandmother / Grandfather relationship.
It is envisaged that this dating app, ongoing communication and a website would be part of the Management Organisation’s role.

Married Pensioners Too

The concept need not be confined to pensioners living alone as there are (ABS data) 3.9 million couples over 65 living in their own houses who could also accommodate one or two renters.

Relatives Benefit

An additional stakeholder group could also benefit from the proposed scheme, namely the relatives / offspring of the home owner. The presence of a virtual “carer” can alleviate the concern about an elderly parent living alone. Similarly their prospective legacy, of the property, would be maintained and potentially improved with additional rental income and renter involvement.

Standard Agreements + Modifications

Standard Residential Tenancy Agreements are already in use and with some modification could be used to define the obligations and responsibilities of both the homeowner and potential renter. The management of the standard agreements would form part of the Administration organisation’s role.

Summary

Current proposals being considered nationally are difficult to implement, expensive and have no effect on the current problem. The proposal detailed, even if taken up by a relatively small percentage of pensioner homeowners would have an immediate result in reduced homelessness. And at the same time benefit the single and married pensioners involved financially and mentally.

Up-date 3 December – SBS E-News
11 x page feature article covering rooms rented out by older home-owners and concerns they have that stop them making the extra income they need. Also covers the need of older renters for longer term and secure accommodation that is reasonably priced. Mentions organisation www.flatmates.com.au providing a linking service. The organisation seems to focus on younger renters looking for rooms / shared houses, rather than the older demographic of 75 plus.

Up-date 9 December – Sunday Mail
Qld Government announced that first-home owners will be able to rent out a room from the day they moved in without losing grants and concessions, effective from 7th December. This move does not include tax breaks or other benefits and focusses on room rental, probably for singles in the main. However it is an indicator that expanding the rental market availability, with current properties, is a real option for governments that is worth considering.