The tale of Alan and Annie: living in affordable housing and retiring from paid work

Will this be you? This is a hypothetical, but it could be working itself out in practice any time soon.

Alan and Mary, his partner, are housed by a not-for-profit community housing provider in an inner Sydney suburb. Some years ago, Alan successfully applied for ‘affordable housing’ because he was on a low income and had a long association with his area. However, earlier this year he decided to retire. Once he retired, his main income would be an Age Pension. When he raised this with his community housing provider he tells us that his provider told him he would just need to provide evidence of his reduced income and they will simply vary his rent down. Not a problem.

Just across the way in an adjoining suburb, Annie lives in ‘affordable housing’ managed by another not-for-profit community housing provider. She is a nurse and is deemed a ‘key worker’ who requires housing close to her place of work. She is on a moderate income, but has found herself priced out of the local rental market where rents have climbed markedly in recent years. She loves her unit and has made many friends in the immediate neighbourhood. Earlier this year she started to think about retiring. However, she is petrified that, because she will no longer be working, she may risk losing her unit. She would be unable to buy or rent in the same area and fears that she would be forced out of Sydney where rents are sky high. 

Let’s continue with the hypothetical and suppose that Annie approached the Tenants’ Union for advice. She asks: ‘What happens to an affordable housing tenant when they retire?’ We are aware of Alan’s case, but Annie’s ‘affordable housing’ is managed by a different community housing provider. We don’t know the answer to her question. So, I went to do a bit of digging.

What is affordable housing?

A good starting point is understanding what affordable housing is. It is not social housing.

‘Social housing’ provides housing for people on very low incomes, and is managed either by DCJ Housing (public housing) or a community housing provider (community housing). Tenants generally receive a rent subsidy, so they are only required to pay a percentage (generally 25 to 30%) of their income towards rent.

In ‘affordable housing’ rents are mostly set at a percentage (75 to 80%) of ‘market level’, though the provider should be ensuring the household is not taking more than 30% of the household’s income.  Where rent is set as a proportion of a household’s income, households may be charged between 25 and 30% of their before-tax income for rent, although providers may charge slightly more in some circumstances. 

Nevertheless, eligibility is not based solely on income – it can be specifically targeted to particular groups, such as ‘key workers’. And it is open to a broader range of household incomes – not just low and very low-income households.  In NSW, it is available to people on moderate to low incomes who cannot afford to purchase or own a property or rent in the private market, including key workers for the economy who need housing close to their place of work. Affordable housing may be owned by private developers or investors, local governments, charitable organisations or community housing providers. It is usually managed by not-for-profit community housing providers, and sometimes – though rarely - by private organisations. Most tenants sign a residential tenancy agreement for a fixed term. At the end of the fixed term, the agreement automatically becomes a periodic one.  A good summary of affordable housing can be found here.

When a tenant’s income changes will they lose their housing?

Here’s what my research to date has dug up about how changes in a tenant’s circumstances affect their ‘affordable housing’ tenancy. I was particularly interested in two things – how a change in income or employment might impact a tenant’s eligibility, and secondly how a change in income impacts their rent.

The 'NSW Affordable Housing Ministerial Guidelines 2020/21' set out the policy framework for delivering affordable housing in NSW. The relevant sections of the Guidelines - Part 7 "eligibility" and Part 12 "ongoing eligibility' - don’t appear to stop an affordable housing tenant from continuing to live where they are when their income changes. However, the guidelines do not explicitly spell out what happens when a tenant retires. Also, Part 8.2 specifies that one of the target groups is social housing applicants and tenants seeking another option. It follows that a tenant does not have to be in employment.

I undertook a scan of websites of four NSW Community Housing Providers to see what it might mean for Annie if they were her landlord. We found there was some variation on the policy guidance available on this issue.

• City West Housing (CWH) doesn’t talk specifically about this issue. Their ‘Rent Policy’ does discuss what happens if a household which, after a rent review, exceeds the income limit, but doesn’t address a loss in income. While City West Housing describes themselves on their website as providing affordable housing for their tenants, their Australian Charities and Not-for-Profits Commission Annual Information Statement confirms they provide both ‘Affordable Housing’ and ‘Social Housing’ programs. We believe Annie, if she was a City West Housing tenant, would be able to remain in her housing, and her rent would be adjusted (down) in line with the change in her income after she retired.
• For Bridge Housing, the answer to Annie’s question depends on why a specific building is part of their affordable housing program. For all tenants, if you stop being eligible then they will move to terminate the tenancy. This may be for having too high or too low an income, but also a tenant housed under its Canada Bay Affordable Housing criteria becomes ineligible should they cease to be an employee of Concord Hospital. Bridge Housing also states that they may provide assistance in finding alternative accommodation.
• St George Community Housing provides a detailed ‘Affordable housing’ policy. They make clear they consider affordable housing is not offered as a long-term housing solution [my emphasis]: ‘The aim of the program is to relieve immediate rental stress and support households in the direction of income growth, towards private housing options or home ownership in the future.’ Where a tenant is no longer eligible they state they may end the tenancy.
• Amelie Housing’s website states explicitly that in NSW they target ‘key workers for the economy who need housing close to their place of work.’ However, their policy statement on ‘Rent and Rent Management’ under ‘Policies / Affordable Housing’ is silent on the issue of what happens when a tenant retires from work, except to the extent that it is dealt with under ‘Calculating Rent’.  

We’d like to see all community housing providers who manage ‘affordable housing’ spell out in their policy and procedures publication what happens when an affordable housing tenant retires, especially given that many target key workers and others in employment.

The question is not only about whether the tenant remains eligible and can stay in the property. It is also about whether or not the provider can and will change how the rent is set. What happens if the community housing provider’s only rent policy for affordable housing tenants is a percentage of market rent which the tenant who is retiring will be unable to afford. This is not the case with City West Housing which we referred to previously. In City West Housing, rent is set as income-based rent (or 74.9% of market rent, whichever is lower). However, their rent policy differs from most.

This opens up the question of whether it is possible for community housing providers who provide social housing to re-classify a tenant’s ‘affordable housing’ property as a social housing property. We understand that often the property itself can’t be ‘reclassified’ due to funding arrangements. This amplifies the need to be able to at least transfer the tenant from an affordable housing property to another one of their properties in the same area that is part of their social housing stock. Some providers already state that they may assist tenants who need to move but of course, that depends on their being somewhere for the person to move to!

Can affordable housing tenants be eligible for social housing?

The 'NSW Affordable Housing Ministerial Guidelines 2020/21' allows for the possibility that a person who is eligible for social housing may end up in affordable housing. This is because some affordable housing properties may be available to people who are also eligible for social housing. However, living in affordable housing means that you are regarded as ‘suitably housed’ and therefore no longer eligible to stay on the wait list.

There is no reference to affordable housing tenants applying fresh for social housing in the Department of Communities and Justice Housing's 'Eligibility for Social Housing Policy' here. However, the Affordable Housing Ministerial Guidelines states (at (4)):

If a household on the NSW Housing Register accepts a tenancy in an affordable housing property, they will be regarded as suitably housed and will be removed from the Register.

If, at some time in the future, they needed social housing again, they would have to reapply.

It’s a bit of a conundrum for Annie ... Because she lives in affordable housing, she is not eligible to go on NSW Housing Register! If she moves out, then she can lodge a fresh application for social housing. The waiting list for many inner Sydney suburbs where all her friends and support are is 5 to 10 years for a 1-bedroom property and over 10 years for a 2-bedroom property.

So, the question becomes:  Will Annie – and other tenants of affordable housing providers who retire and are then asked to vacate their premises – be thrown to the wolves in the private rental market and asked to join a long queue for social housing? Hopefully they have an affordable housing provider with a similar policy to Alan’s and Mary’s!

What other information is available?

I thought I'd ask the NSW Registrar of Community Housing Annie’s question. He told us the issue of what happens to older tenants of affordable housing when they retire has never been brought to his attention. In a nutshell, he advised that while there are no specific references in 'NSW Affordable Housing Ministerial Guidelines 2020/21' to what happens to tenants in affordable housing when they retire, the Guidelines maintain that they must continue to meet the specific eligibility requirements of the affordable housing properties they reside in. He also noted that the Registrar was limited in terms of what they could do in relation to this: ‘the beginning and end of our remit is contained in the terms of the in the terms of the National Regulatory Code'.

So, it seems like it’s up to Annie’s housing provider.

Research on affordable housing has generally not looked at this issue. Most work on affordable housing has been focused on the arguments for more non-market housing. For example, a recent Australian Housing and Urban Research Institute (AHURI) report from May 2021 looking at Housing key workers considers affordable housing programs in this context, but does not canvas the issue of what happens to key workers in affordable housing when they retire. But now that we’ve raised this issue with a number of Australian housing academics we know they are keen to hear what we unearth!

A clear policy is needed

It’s clear that Annie’s issue is one that in practice has been allowed to slide. It’s time to place it firmly on the agenda of community housing providers, so Annie and others don’t fret about what happens to their housing when they retire. At the very least, individual community housing providers who are managing affordable housing should develop a policy on Annie’s question and include the answer in their tenants’ handbook and on their websites under their published policies.

The Tenants’ Union would love to see the Affordable Housing Ministerial Guidelines set out a clear policy direction for providers of affordable housing on this question. One that requires clear procedures in place that ensure an affordable housing tenant who retires, or who faces a long-term loss of income because of other changes to their life circumstances, knows they won’t simply be thrown out into the private rental market.

Let’s have meaningful consultation amongst stakeholders and flesh out the various options. And, of course this will vary depending on whether the community housing provider accepts persons eligible for social housing in their affordable housing program, whether they manage both affordable and social housing stock or whether their focus is restricted to solely the provision of affordable house. 

What does this mean for Annie?

I’ve partly answered Annie’s question. But’s it’s over to you now, community housing providers!