Housing costs are a major expense and for those on low incomes meeting rental costs or mortgage repayments can be a strain on finances. Similarly, for those who aspire to home ownership, saving a deposit and accessing finance can be difficult. Governments help make it easier for people to access affordable housing by providing financial assistance through:
- Commonwealth Rent Assistance Program (CRA) and through jurisdictional Private Rent Assistance (PRA) programs
- First Home Owners Grants (FHOG) and Home Purchase Assistance (HPA) programs.
Commonwealth Rent Assistance (CRA)
CRA is an Australian Government payment to people on low or moderate incomes who are renting in the private housing market. To be eligible, tenants must first qualify for a social security income support payment and meet the residency requirements of their pension, allowance or benefit.
CRA is a non-taxable income supplement, payable fortnightly to eligible income support recipients and people who receive more than the base rate of the Family Tax Benefit Part A. CRA is paid at 75 cents for every dollar above a minimum rental threshold until a maximum rate is reached. The minimum threshold and maximum rates vary according to an income unit's household composition, including the number of children.
CRA may be payable to people living in community housing or Indigenous community housing and, in some jurisdictions, state owned and managed Indigenous housing (SOMIH).
CRA is not payable to people renting housing from state or territory housing authorities, as these housing authorities separately subsidise rent for eligible tenants.
Payment of CRA continues as long as recipients meet income and asset tests for their primary payment and CRA eligibility conditions.
Between 2009–10 and 2013–14, the Australian Government's nominal expenditure for CRA increased by 34%, from $2.9 billion to $3.9 billion. Over time, expenditure remained highest in New South Wales, followed by Queensland.
As at 30 June 2014, almost 1.32 million income units received CRA, compared to 1.27 million in 2013. The number of income units receiving CRA has risen by 41% since 2000 (up from 937,100 income units). The median CRA payment was $124 per fortnight.
Of CRA recipients (the person in the income unit to whom the CRA is paid) in 2014:
- two in five (41%) were aged 30–49 and almost one quarter were aged 60 and over (24%).
- only 12% were aged 24 and under (almost 200,000 income units).
- most were single with no dependent children (54%), followed by those who were single with one or more dependent children (21%).
- 22% were receiving Newstart Allowance, 20% were receiving a Disability Support Pension and 18% were receiving the Age Pension.
- 4% were Indigenous (over 58,000 income units).
- 67% would have paid more than 30% of their income on rent if they were not assisted by CRA payments.
In 2014, New South Wales had the highest number of CRA recipients (435,000), followed by Queensland (329,000) and Victoria (300,800). Tasmania (33,800) had almost 3 times as many CRA recipients as the Australian Capital Territory (11,600), despite having a population that is only 25% larger than the Australian Capital Territory. This largely reflects differences in average household incomes with proportionally less demand in the Australian Capital Territory.
Rental stress is defined as more than 30 per cent of household income being spent on rent.
As at June 2014, 67% of CRA recipients would have paid more than 30% of their income (a commonly used threshold for measuring financial stress among low-income households) on rent if CRA were not provided. However, with CRA provided, this proportion was reduced to 40% of CRA recipients.
Between 2010 and 2014, the proportion of income units paying more than 30% of their income in rent after receipt of CRA remained steady at around 40%. Between special needs groups, such as those aged 24 and under, those aged 75 and over, and those with a disability support pension, the proportion of income units paying more than 30% of their income in rent after CRA varies. However, trends over time within special needs groups have remained fairly stable.
- The proportion of older Australians (75+ years) experiencing rental stress after receiving CRA decreased from 30% in 2009 to 23% in 2014.
- Young people (24 and under) were the most likely to experience rental stress despite receiving CRA. This has increased from 55% in 2009 to 59% in 2014.
Private Rent Assistance (PRA)
PRA is financial assistance provided by state and territory governments to low-income households experiencing difficulty in securing or maintaining private rental accommodation. Types of assistance include bond loans, rental grants, subsidies and relief, and relocation expenses.
In 2013–14, PRA assisted over 122,300 recipients, compared to 117,800 in 2012–13. Of PRA recipients:
- nearly one third (31%) were aged 25–34, and almost one-quarter (22%) were aged 24 and under
- 11% were from an Indigenous household
- 62% were earning a gross income of less than $700 per week
- only 19% reported employee cash income as a source of income.
In 2013–14, South Australia reported the highest number of households receiving PRA, with 47,500 recipients (39%). This was followed by Queensland (27,100 or 22%) and New South Wales (21,100 or 17%). The Northern Territory reported the lowest number of households receiving PRA, with almost 300 recipients (less than 1%).
In 2013–14, almost 3 in 5 (60% of) households receiving PRA were households in Major cities, with 24% in Inner regional areas, 15% in Outer regional areas and less than 2% in Remote and Very remote areas.
In 2013–14, some households received multiple types of assistance. Bond loans were the most common type of PRA, assisting 81,200 households, followed by rental grants, subsidies and relief (37,500).
There are two main types of government housing assistance available to home buyers:
- First Home Owner Grant (FHOG), a national scheme funded by the states and territories.
- Home Purchase Assistance (HPA), administered by states and territories.
First Home Owner Grant (FHOG)
The national First Home Owner Grant (FHOG) scheme was introduced on 1 July 2000 and is funded by the states and territories and administered under their own legislation. Under the scheme, a one-off grant is payable to low-income first home owners who satisfy eligibility criteria.
In 2013–14, 61,200 first home owner grants were paid in Australia (excluding the Australian Capital Territory), down from 114,800 in 2011–12. This decrease is due to changing eligibility requirements surrounding the FHOG scheme, such as grants only being administered to newly constructed dwellings across many jurisdictions.
- First home owner grant numbers not available for ACT at time of publication.
Source: State and Territory Revenue Office data (unpublished).
Home Purchase Assistance (HPA)
HPA is administered by each jurisdiction and provides a range of financial assistance to eligible households to improve their access to, and maintain, home ownership.
HPA can include:
- Direct lending
- Concessional loans
- Mortgage relief
- Interest rate assistance
- Deposit assistance
- Other assistance grants
In 2013–14, states and territories provided home purchase assistance to 44,200 recipients across Australia. This compares to 40,300 recipients in 2012–13.
Of HPA recipients:
- almost half (49%) were aged 25–44
- 50% were earning a gross income of less than $700 per week
- only 1% were identified as being Indigenous.
The number of households receiving HPA in the form of direct lending has increased between 2010–11 and 2013–14 (from 37,600 to 38,900). The number receiving interest rate assistance and 'other' types of assistance has also increased slightly over the same period.
|Type of assistance||2010–11||2011–12||2012–13||2013–14|
|Interest rate assistance||3,070||3,350||3,290||3,288|
- The data includes all households that commenced receiving home purchase assistance in the financial year, all households that commenced receiving an ongoing form of home purchase assistance in a previous financial year that continued to receive assistance in the financial year and all households that had outstanding balances remaining on repayable assistance for some portion of the financial year.
- Total number of instances of assistance. This does not equal the total households assisted because households may receive multiple types of assistance.
- ‘Other’ includes mortgage relief, deposit assistance and other assistance.
Source: AIHW National Housing Assistance Data Repository 2013–14.
In 2013–14, the highest number of households that received HPA were in Western Australia (20,500), followed by South Australia (19,100). Tasmania reported the lowest number of households receiving HPA (92—or less than 1% of all households assisted).
While 72% (31,600) of households that received HPA were in Major cities in 2013–14, 14% (6,100) were in Outer regional areas and 1 in 8 (12%, or 5,500) were in Inner regional areas. Very few were located in either Remote (2%) or Very remote (less than 1%) areas.