Renters deserve a longer lease on life

The basic human need for safe housing applies regardless of whether a person buys their own or rents from another. At a time when the number of people who can afford a first home is dwindling, there is much to applaud in the proposal being considered by the state government to offer renters long-term leases, perhaps up to 10 years.

At present, most renters are offered 12 month leases. Such an arrangement might be fine for somebody who expects to move regularly for work, or just wants to try out a location without committing. But the common assumption that renters are single people looking for flexibility is outdated. A study last year found families rent about 42 per cent of all privately leased homes. In the early 1980s, families made up only a quarter of all rentals.

For many, plans need to be worked out years in advance. The decision about where to send children to school is the most obvious example, with many parents loath to disrupt their children's education. But it is not only families. The crisis in housing affordability and relatively short-term rental habits can have a corrosive effect on communities, making it harder for people to commit to local social clubs or sporting organisations. Research from Swinburne University has found almost 40 per cent of private tenants have moved three or more times in five years, which is hardly conducive to a vibrant sense of belonging. 

It is timely that the Andrews government is examining Victoria's rental laws to ensure they are in line with community habits and experience. Saving for a home is not easy, and is only getting harder. Roughly one in four Australians now rents, compared to an estimated 18 per cent two decades ago. The Age reported last week that a first home buyer in the market for a house and land across Melbourne in the past year would need to put aside as much as an extra $200 every week for a deposit to account for spiralling property prices. The situation is little better for those hunting for a unit to buy.

The proposal for long-term leases should acknowledge changing dynamics in the market, but should not be seen as surrendering efforts to make housing more affordable. For example, a frank evaluation of the negative gearing system is needed to understand its effect on inflating property prices and, as a consequence, rents. Governments should adopt measures to help ensure the great Australian dream of owning a home remains attainable, while recognising that the rental market offers people somewhere to sleep in the meantime.

The government's review is welcome, and whether the eventual recommendations suggest decade-long leases or options such as two or three years, the aim should be to give renters the chance to feel secure and comfortable under their own roof. There must also be measures to provide security for landlords, who are themselves making long-term investment decisions when purchasing property. Misbehaviour by tenants, such as deliberate damage, must remain a trigger for early termination of a lease.

The European experience has been for guaranteed income with built-in rental increases, and this merits close examination because it gives a measure of certainty for tenants and landlords alike to plan their finances. A better balance must be struck between providing renters security of tenancy and accommodating a landlord's ownership rights.

Editorial, The Age, Friday 26^th June 2015