Melbourne Unitarian Peace Memorial Church

by Jeff Fiedler, Tenancy Advice/Policy Worker

Affordable housing for older people has been a neglected area of government support for more than two decades. While housing poverty has been on the rise for all people on low incomes, HAAG believes that older people must be prioritised due to the projected growth of an ageing population, many older persons’ reliance on the aged pension and the severe health and aged care consequences of not housing older people adequately. Directed government support is urgently required to address this situation.

The scourge of private rental housing

A lack of government programs to provide affordable housing and a misguided belief in the private market’s ability to supply accommodation for people on low incomes has created an unparalleled housing crisis in 2008. There are a significant number of older people living in great hardship in the private rental sector who are rapidly reaching breaking point where the aged pension simply will not provide an adequate income to pay the rent.

There are three main reasons why private rental housing is failing older people:

1.Limited security of tenure with, at best, 6 or 12 month leases provide inadequate protection for aged pensioners who want to be able to live in their home on a long term basis. Private rental housing denies older people the fundamental right to ‘age in place’.
2.It’s expensive. Single older people pay on average more than half of their income in rent.1 Desperate older people who contact HAAG for assistance are paying as much as 70% of their income in rent. The most recent rental report by the Office of Housing shows that rents have gone up by 12.7% in the last year and the shortage of housing supply has caused some analysts, such as the ANZ Bank, to predict that rents could rise by 10% a year for the next 5 years. People on aged pensions can’t survive that level of rent increases.

3.Older people often live in the lowest cost private rental accommodation housing that is often in very poor condition. There are no minimum housing standards for rental housing in Victoria, and older tenants’ often won’t ask for repairs for fear of rent increases or eviction if they complain. HAAG has documented numerous cases of older people living in squalid and unsanitary housing conditions that impact negatively on their health.

Anna Howe has described “the great divide between the circumstances of older owners and private renters in our society” and that “the main message for (government) policy is that the highest priority should be given to obtaining housing for those who don’t have secure tenure when they reach retirement age”.2

What has caused this problem?

There are 110,000 people over 65 years of age caught in the private rental poverty trap3 and this is largely due to Commonwealth funding for public housing being in decline for the past two decades and by as much as 28% in the last 10 years alone. Waiting times for public housing are now up to 20 years and many older people, faced with this absurd reality, do not even bother to apply.

The other major supply of housing for older people was created by the Commonwealth Government’s Aged Persons Homes Act that built independent living units in joint venture arrangements with non-profit agencies between 1955 and 1986. This housing initiative was aimed specifically at addressing older persons’ homelessness and facilitated the construction of 34,000 dwellings. However, in recent years much of this stock has fallen into disrepair due to the prohibitive capital maintenance costs faced by providers. Major organisations such as the Salvation Army decided to leave the aged care housing field altogether.

So there have been no significant government funded affordable housing initiatives for older people for more than 20 years.

Private market responses

Well, what’s been happening while government owned and funded affordable housing has been shrinking? A major trend has been the growth of the private market into the low income housing sector. One of the options that have developed is rental villages.

Rental villages are clusters of older persons housing units (40-100) where older people can live semi-independently. Residents rent their own unit with limited kitchen facilities and are provided with 3 meals per day and a linen service. They pay no ingoings and rent is typically 85% of their income.

Nearly 90 villages have been established since their inception in 1998, housing about 4000 people across Australia. AHURI research has estimated that this form of housing has been the fastest growing segment of affordable rental housing for older people since the year 2000.4

A couple of years ago HAAG conducted a series of consultations at 5 Village Life villages to find out what residents think of their housing. HAAG found that many older people are attracted to this accommodation for the following reasons: It provides independent housing linked to services; it is a good option for older people wishing to downsize from a large family home; it offers companionship; there are no up front fees; and meals are provided.

However, there were also a number of problems identified. Paying 85% of the pension in rent puts into question whether the accommodation is affordable for those with little or no assets; it lacks security of tenure as it’s covered by the Residential Tenancies Act; a number of residents have reported concerns about the quality of the meals; and resident participation in decision-making is discouraged.

Also, some recent events have put into question whether it is a viable housing model into the future. Things were looking quite good for this form of housing in 2004 when the chairman of Village Life stated that governments and charitable organisations won't be able to satisfy the "desperate need" for affordable accommodation in the future. He said "Everybody wins here; the Government doesn't have to build these sorts of facilities because private capital is doing it, the people investing are making reasonable returns, and those renting the facilities are getting a better environment than they otherwise would have had.” 5

Less than a year later Village Life’s share price plummeted, and was then suspended, when its market value kept spiralling downwards.

Events came to a head in April 2007 when a dispute between the owners of ten villages (MFS Group) and Village Life as the managing operators, sparked an absolute debacle when 450 residents were informed that their villages would be closing. A public outcry and state governments’ intervention brokered a compromise between the parties and the eventual transfer of most of the villages’ management across to a company called Sunny Cove. While the environment appears to be more stable lately, this incident has left residents with a great feeling of uncertainty for their future.

This crisis raised many questions. What if a business has a short term investment outlook for this form of housing? What if they decide that there is more money to be made in providing housing for older people with more assets and income? Who would take responsibility if the business failed altogether and 4000 older people were facing eviction?

This event emphasised the fact that governments ultimately must take responsibility for affordable housing supply to ensure that housing outcomes are driven by the needs of older people, not the profits of private companies.

Aged care initiatives contradict housing policy for older people

The need for government funded older persons’ housing initiatives is even more evident when governments are building an aged care system based on the philosophy of ‘ageing in place’. That is, the belief that older people are more likely to stay healthy, have a positive lifestyle and enhanced sense of well-being if they can live in a stable home, close to services, family and their community.

Home and Community Care (HACC) expenditure has nearly doubled from $743 million in 1996-97 to $1.4 billion in 2005-06. Community Aged Care Packages (CACP) have increased ten-fold from $33 million in 1995-96 to $323 million in 2004-2005. Services now include a range of specialist assistance such as Extended Aged Care at Home (EACH) that provides a high level of care in the home for frail older people. The changing emphasis from residential care to home based care is further demonstrated by the comparative increase in residential care from 2003-2004 to 2004-2005 of $17 million compared with an increase of $189 million for community care.6 In 2004-05, HACC services alone provided care and assistance to over 744,000 people, an increase of 36,800 compared with 2003-2004.7

However, the type and quality of older persons’ housing directly impacts on the quality of care that they receive, and the effectiveness of community care services.8

Expand the ACHA Program

One Commonwealth Government program that does link housing and community aged care, the Assistance with Care and Housing for the Aged (ACHA) Program, was established in 1992 to “assist frail low income older people who are renting, in insecure housing or who are homeless, to remain in the community through accessing appropriate housing linked to community care”. It also aims to prevent premature entry into residential care.

The budget for the ACHA program has been gradually reduced in real terms over its 16 year life. There was a minor additional injection of funds in 2007 for the first time (after lobbying by HAAG and other organisations) but much more is required if the program is to operate effectively. The lack of funding has caused organisations to cut staff hours and others have completely abandoned the program. HAAG has had to reduce staff hours down to one part-time worker whose role is to assist older people across much of the Melbourne metropolitan region. HAAG doesn’t have funds to help a tenant in their transition to new housing so we have to apply for small philanthropic grants just to help pay removal costs for clients. HAAG doesn’t even receive assistance to cover translating and interpreting charges.

Overall, the ACHA program is successful in linking secure housing with community care for frail older people, but the program struggles to achieve its service objectives because of the shortage of affordable-housing options. It’s not a successful outcome if an older person who receives a 60 day NTV in private rental accommodation ends up moving into another private rental flat with the same insecurities, high cost of rent and sub-standard facilities.

Act now or the future will be much worse

Action must be taken urgently on this issue because the number of people aged 65 and over living in low-income rental households is projected to increase significantly in less than 20 years. AHURI research has shown that people aged 65 and over in low-income rental households are projected to double from 195,000 in 2001 to 419,000 by 2026. The greatest projected change is in the 85 and over age range where the number of low-income renters is estimated by AHURI to nearly triple, from 17,000 to about 50,000 in that time.9

The Case for Reform

HAAG believes that it is essential that federal and state governments begin to develop a policy framework that can address the issues of accommodation for older people on low incomes.

The main areas requiring attention are:

1. Improve legislation

Tenancy laws need to be reformed in the three key areas of security of tenure, affordability and minimum housing standards.
Extend the coverage of the Retirement Villages Act (RVA) to any clusters of housing that are provided for retirees, as legal protections in Victoria under the RVA are significantly better than the Residential Tenancies Act.
Legislative reform needs to be at a national level as many of the new forms of private market housing are developing across state legislative boundaries.

2.Increase government action on older persons housing by developing a specific older persons housing policy framework within an overall affordable housing strategy. Initiatives should include:

• Establishing an Older Persons Housing Unit at Federal and State levels.
• Being more pro-active in keeping up with private market trends to ensure that the outcomes are based on the needs of older people and not the profits of providers.
• Integrate housing and aged care policy to ensure that good housing for older people is seen as a component of effective community aged care.
• Build more public housing and target older private renters for special assistance.
• Build creative models of older persons housing following the lead of initiatives such as the Apartments for Life at Ocean Street Project, particularly for the growing over 85’s age group [10]
• Fund HAAG to provide a Housing Options Information Service so that older people can receive assistance to navigate through increasingly complex housing systems.
• Ensure that community agencies and in particular older people themselves are involved in the policy development process.

[1] Australian Bureau of Statistics 1999, Older People, Australia: A Social Report
[2] Howe AL 2003, ‘Housing an older Australia: more of the same or something different?’ Keynote Address to the Housing Futures in an Ageing Australia Conference, AHURI and The Myer Foundation, Melbourne.
[3] Rental Housing Provision for Lower Income Older Australians. Jones, Bell, Tilse and Earl: AHURI 2007
[4] Rental Housing Provision for Lower Income Older Australians. Jones, Bell, Tilse and Earl: AHURI 2007
[5] ‘Grey Money’ The Courier-Mail June 12, 2004
[6] Health and Ageing Factbook 2006, Department of Health and Ageing
[7] Submission 96, Australian Government Senate Standing Committee on Community Affairs Chapter 5 - The Ageing/Disability Interface Dec. 2006
[8] Faulkner, D. et. al. 2002, Housing, housing assistance and well being for older people, AHURI Research and Policy Bulletin, AHURI, Melbourne.
[9] Rental Housing Provision for Lower Income Older Australians. Jones, Bell, Tilse and Earl: AHURI 2007
[10] See http://www.bensoc.org.au/director/whatwedo/olderpeople/oceanstsite.cfm