You can earn $95k and still live in a slum

What 'affordable' housing gets you

There’s a serious lack of affordable one-bedroom apartments in Sydney. I know this, because I’m currently looking for one.

The cheapest rentals in the previously accessible suburbs of Newtown, Redfern, Glebe and Marrickville are now going for over $550 a week. That is, unless, you’re willing to share a fetid bathroom in a boarding house with a bunch of divorced dads.

And what will you get for your $550? A shoebox with a Murphy bed, or something like this unsafe grubby converted office hellhole on Redfern’s busiest street.

This is your bedroom, living room and kitchen

It comes with stylish metal security doors and bedraggled curtains which must always stay closed.

In Australia, we say a person is in rental stress if they are spending more than 30% of their income on housing. To sensibly afford these dilapidated apartments, your wage should be around $95,000. That’s a meaty salary, and it will afford you a slum.

So what do you do if you’re making significantly less than that?

Well, if you’re not making a lot of money, and you do your blood rituals and ceremonial dances just right, a rental designated for low or moderate earners may pop up.

Like this small-but-neat unit in the back of Coogee.

To be eligible to rent this property, you must be making under $86,400 as a single person, or $129,600 as a couple.

So it must be cheap, right?

Wrong!

Wrong wrong wrong!!

The one-bedroom is listed for $720 a week. If you’re applying as a single person within the eligible threshold, that’s more than half your take-home pay. You’d have just $587 left over for everything else.

If you’re a couple making $129,600, that’s $1151 or just $575 each. With that money, you must pay for electricity, internet, groceries, transport, and any health expenses that pop up. With inflation, you’d be on the red line.

Frankly, it could even be classed as irresponsible to lease the apartment to people in this income bracket.

In terms of helping the housing crisis, this is like seeing a flaming train wreck, pouring a glass of water to help extinguish the flames, and then setting the cup on fire.

In fact it’s helping so little, it begs the question: what the fuck is going on?

This is where things get interesting. Well. Interesting in the way a greasy pig suddenly materialising in your house and wreaking havoc is interesting.

In New South Wales, affordable housing can be classed as a property which is:

– proportion of a household’s income : Often 25-30% of your gross income

– discount to market rent: Usually 20-25% less than rentals in that area

This Coogee apartment is obviously in the second category.

It’s worth noting here that social housing and affordable housing are two different things. Affordable is, in this instance, relative to one’s income and the surrounding area. Which, as we know, is utterly cooked.

So in order to qualify, you just have to meet the registered housing provider’s criteria. Which brings us to HomeGround Real Estate.

To be clear, these are not bad guys.

They’re a branch of the enormous entity called Bridge Housing, which is a community housing provider. Any of the profits HomeGround make (which come from managing these so-called affordable properties) get invested back into much-needed social housing. This is a good thing.

HomeGround Real Estate is trying to tackle rental affordability from the supply side. They want landlords to know about the tax incentives they’ll get for leasing their property mildly under market rate. More cheap houses earmarked for people on moderate incomes, in theory, is a good thing.

Unfortunately those tax breaks are, in my opinion, bonkers.

As HomeGround Real Estate points out, you can treat the discounted rent as a donation, which lowers your taxable income. There’s no minimum discount or lock-in period.

In addition, if you rent your property at least 20% below market for three years or more, you could qualify for a 60% capital gains tax exemption.

HomeGround Real Estate provides the following example:

“You could save on taxes if your property’s market rent is $560 per week, but you’re leasing it for $420 per week. If you sell an investment property with a purchase price of $500,000 and a sale price of $600,000, the 60% capital gains tax exemption could result in significant tax savings.”

This is a great deal. For landlords.

But this doesn’t seem to be really helping renters.

$720 for a one-bedroom is still criminally expensive, especially if you’re on less than $87k. Assuming they’re not working cash-in-hand, the successful applicants for this property will be under significant financial strain.

Were the apartment priced at $500 (the threshold for a tenant on $87k to not be in rental stress) this would be a different story.

I see no philanthropy here. Just a system that is, once again, enormously geared towards subsidising people with money and assets.