What's more, one-fifth of low-income private rental households don't receive any rent assistance despite being in housing stress, according to new research from the Australian Housing and Urban Research Institute (AHURI).

The report, ‘Demand-side assistance in Australia’s rental housing market: exploring reform options’, found that rent assistance isn't well-targeted, with 18% of low-income households not receiving any rent assistance despite being in housing stress.

Housing stress in this instance is defined as spending more than 30% of gross (pre-tax) income on rent or mortgage repayments.

AHURI found that raising the CRA maximum rate by 30% could lift 40% of low-income households out of housing stress. 

Meanwhile, changing CRA eligibility criteria to target those in housing stress would reduce the number of low-income households struggling to pay rent by 370,000 - many of whom are currently ineligible for CRA.

Buying a home or looking to refinance? The table below features home loans with some of the lowest variable interest rates on the market for owner occupiers.

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LenderHome LoanInterest Rate Comparison Rate* Monthly Repayment Repayment type Rate Type Offset Redraw Ongoing Fees Upfront Fees Max LVR Lump Sum Repayment Additional Repayments Split Loan Option TagsFeaturesLinkComparePromoted ProductDisclosure
5.69% p.a.
6.16% p.a.
$2,899
Principal & Interest
Fixed
$0
$530
90%
  • Available for purchase or refinance. 90% LVR
  • Fast turnaround times. Can meet 30-day settlement
  • No monthly or ongoing fees, split with low-rate variable loan
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5.99% p.a.
5.90% p.a.
$2,995
Principal & Interest
Variable
$0
$0
80%
Apply in minutes
  • No application or ongoing fees. Annual rate discount
  • Unlimited redraws & additional repayments. LVR <80%
  • A low-rate variable home loan from a 100% online lender. Backed by the Commonwealth Bank.
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6.09% p.a.
6.11% p.a.
$3,027
Principal & Interest
Variable
$0
$250
60%
  • No annual fees – None!
  • Get fast pre-approval
  • Unlimited additional repayments free of charge
  • Redraw freely – Access your additional payments when you need them
  • Home loan specialists available today
 Disclosure
Important Information and Comparison Rate Warning

Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. However, the ‘Compare Home Loans’ table allows for calculations to be made on variables as selected and input by the user. Some products will be marked as promoted, featured or sponsored and may appear prominently in the tables regardless of their attributes. All products will list the LVR with the product and rate which are clearly published on the product provider’s website. Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you. *The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Rates correct as of . View disclaimer.

Important Information and Comparison Rate Warning

To be eligible for CRA, you must be receiving social security or veterans' income support and/or more than the base rate of Family Tax Benefit Part A and pay or be liable to pay more than the specified rent thresholds.

Changing the eligibility criteria would mean that 240,000 households in housing stress would become eligible for CRA while 330,000 would lose their entitlement to receive CRA because they're not in housing stress - saving the economy $1.2 billion per year. 

Professor Rachel Ong ViforJ from Curtin University said while changing the CRA eligibility rules offers the biggest benefits in terms of targeting those who need it most, there would be constitutional complications in implementing this reform.

"Currently the Australian Government is constitutionally limited to only paying CRA as a supplement to people who receive certain other social security benefits such as JobSeeker or the Age Pension," Professor ViforJ said. 

"Nevertheless, there could be constitutional ways of overcoming these constraints, such as using the external affairs power to effect the internationally recognised right to housing; expanding the Australian Government’s constitutional powers to make provision for housing benefits; or reforming CRA as a Commonwealth-State and Territory program, with the Australian Government making grants to state and territory governments to pay rent assistance to eligible persons.

"Care would need to be taken to ensure it retains its form as a cash payment to tenants, not landlords."

The research found that a 30% increase in the CRA maximum rate would lift 40% of low-income households out of housing stress.

"This would reflect a much-needed increase in CRA for low-income renters. CRA maximum rates simply have not kept pace with rent increases over time."

But the report warned that in severely disadvantaged areas, up to one-third of an increase in the CRA maximum rate could be captured by landlords lifting their rents. 

"Policies that increase the flow of new housing supply in low-value market segments would be important to counteract this effect," said Professor ViforJ.



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