The Australian Government is facing pressure to review its rental assistance scheme after increasing payments by just $1 a week, despite the nation’s median rent increasing by $24 a week since the start of 2021.

Across 2021-22, the Australian Government is projected to spend more than $5 billion on rent assistance to people who already receive family tax benefit or social security payments, such as the aged pension.

However, the under-whelming increase in rent assistance payments announced by the Australian Government on 13 September has brought increased scrutiny on the scheme.

Families and Social Services Minister Anne Ruston announced that the maximum fortnightly rental assistance payment for singles would increase from $140.80 on 20 March to $142.80 on 20 September - in other words a $1 a week rise over six months. 

A couple with no children will see their rent assistance increase by $1.80 a fortnight to $134.60.

These increases are well below the latest available data on rent increases across Australia.

According to CoreLogic, in the six months to 30 June, Australia’s median rent has increased by 5.4 per cent, causing a $24 a week increase. The story is even bleaker in regional areas, where rents have jumped by 7 per cent, or $29 a week, over the same period.

However, the Commonwealth rental assistance scheme is not tied to rental market changes, with increases instead linked to the general consumer price index.

As a result, a number of recent studies - including by the Productivity Commission in 2017 - found that the value of Commonwealth rent assistance has fallen well behind rent inflation. Monday’s announcement will continue this trend.

SEE DOWNSIZING.COM.AU'S MARK SKELSEY TALK TO IAN YATES FROM THE COUNCIL ON THE AGEING ON THIS ISSUE

What’s more, the scheme provides a flat-rate payment Australia-wide, and therefore doesn’t reflect the widely varying cost of rent across the country.

First introduced in 1958, many hundreds of thousands of Australian pensioners rely on Commonwealth rental assistance (CRA) to be able to afford private or community housing rents, or live in a land lease or seniors’ rental community. It’s not available to social housing tenants.

Over time, more pensioners are expected to be reliant on CRA, due to an expected 70 per cent increase in over 55 private renters between 2016 and 2031.

COTA Australia chief executive Ian Yates told seniors-focussed website YourLifeChoices the increase in rents around Australia had escalated  from “a recurring problem to a crisis”.

“The issue of rent assistance persists. It has been pointed out in inquiry after inquiry, including the federal government’s Retirement Income Review (RIR), and really needs to be addressed,” Mr Yates said.

“We had earlier pushed, based on advice from the Grattan Institute, for a 40 per cent increase to the maximum, but it actually needs to be more than that – which the RIR concluded as well.”

CoreLogic’s Head of Research Australia Eliza Owen said rent increases in the three months to June were the highest in a decade.

“Following subdued rental performance through much of the 2010s, the Australian rental market has seen an increase in values due to many of the same factors that have led to the current housing price upswing,” Ms Owen said.

“These factors include increased government stimulus through COVID-19, accumulated household savings through lockdown periods, the swift economic recovery seen as restrictions eased, and a lack of rental supply in some markets have also exacerbated rental price increases, particularly in major centres of regional Australia.”

One piece of good news for pensioners is that the aged pension, which is directly linked to cost pressures on its recipients, has increased by $14.80 a fortnight for singles to $967.50 and $22.40 a fortnight for couples combined to $1,458.60.

Comment from our CEO

Commenting on this story, Downsizing.com.au CEO Amanda Graham said: “With the ageing demographic, we are seeing more and more older Australians searching for affordable rentals, particularly older women who are reliant on the aged pension.”

“It’s difficult enough to find affordable rental housing for pensioners at any time, and these rent rises during COVID make it even harder.”

"The government rental subsidy is a very important aspect of our social security system, and this failure to keep up with rent increases will result in more pensioners becoming homeless.

“As a response to rising demand for rental accommodation, we’ve already set up free Senior Flatmates listings on Downsizing, to make it easier for older tenants to find compatible flatmates and share the rent."

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ARE YOU AN OVER 50 SUFFERING BECAUSE OF THE LOW RATE OF RENT ASSISTANCE? CONTACT US ON [email protected]