Gabriel_etal_The_environmental_sustainability_of_Australia_s_private_rental_housing_stock.pdf

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Unformatted text preview: The environmental sustainability of Australia’s private rental housing stock authored by Michelle Gabriel, Phillipa Watson, Rachel Ong, Gavin Wood and Maryann Wulff for the Australian Housing and Urban Research Institute Southern Research Centre Western Australia Research Centre RMIT Research Centre Swinburne-Monash Research Centre December 2010 AHURI Final Report No. 159 ISSN: 1834-7223 ISBN: 978-1-921610-59-2 Authors Gabriel, Michelle University of Tasmania Watson, Phillipa University of Tasmania Ong, Rachel Curtin University Wood, Gavin RMIT University Wulff, Maryann Monash University Title The environmental sustainability of Australia’s private rental housing stock ISBN 978-1-921610-59-2 Format PDF Key Words Environmental, sustainability, Australia, private, rental, housing, stock Editor Jim Davison Publisher Australian Housing and Urban Research Institute Melbourne, Australia Series AHURI Final Report; no. 159 ISSN 1834-7223 Preferred Citation Gabriel, M. et al. (2010) The environmental sustainability of Australia’s private rental housing stock, AHURI Final Report No. 159. Melbourne: Australian Housing and Urban Research Institute. AHURI National Office i ACKNOWLEDGEMENTS This material was produced with funding from the Australian Government and the Australian states and territory governments. AHURI Limited gratefully acknowledges the financial and other support it has received from these governments, without which this work would not have been possible. AHURI comprises a network of universities clustered into Research Centres across Australia. Research Centre contributions, both financial and in-kind, have made the completion of this report possible. The authors would like to thank Clinton McMurray from Curtin University for research assistance on Chapter 2 of the report. This paper uses unit record data from the Household, Income and Labour Dynamics in Australia (HILDA) Survey. The HILDA Project was initiated and is funded by the Australian Government Department of Families, Community Services, Housing and Indigenous Affairs (FaCHSIA) and is managed by the Melbourne Institute of Applied Economic and Social Research (MIAESR). The findings and views reported in this paper, however, are those of the authors and should not be attributed to either FaCHSIA or the MIAESR. DISCLAIMER AHURI Limited is an independent, non-political body which has supported this project as part of its programme of research into housing and urban development, which it hopes will be of value to policy-makers, researchers, industry and communities. The opinions in this publication reflect the views of the authors and do not necessarily reflect those of AHURI Limited, its Board or its funding organisations. No responsibility is accepted by AHURI Limited or its Board or its funders for the accuracy or omission of any statement, opinion, advice or information in this publication. AHURI FINAL REPORT SERIES AHURI Final Reports is a refereed series presenting the results of original research to a diverse readership of policy makers, researchers and practitioners. PEER REVIEW STATEMENT An objective assessment of all reports published in the AHURI Final Report Series by carefully selected experts in the field ensures that material of the highest quality is published. The AHURI Final Report Series employs a double-blind peer review of the full Final Report—where anonymity is strictly observed between authors and referees. ii CONTENTS LIST OF TABLES .......................................................................................................... VI ACRONYMS ................................................................................................................. VII EXECUTIVE SUMMARY ................................................................................................ 1 1 INTRODUCTION ...................................................................................................... 6 1.1 Research and policy significance ............................................................................. 6 1.2 Research themes and questions ............................................................................. 7 1.3 Research design ...................................................................................................... 7 1.4 Summary of early project findings ............................................................................ 8 2 HOUSING TENURE AND ENERGY CONSUMPTION: THE PRINCIPAL-AGENT OR SPLIT-INCENTIVE ISSUE ................................................................................ 9 2.1 Introduction .............................................................................................................. 9 2.2 Review of literature ................................................................................................ 10 2.3 Method ................................................................................................................... 17 2.3.1 Data and sample design ............................................................................. 17 2.3.2 Variable measurement and modelling approach ........................................ 17 2.4 Summary................................................................................................................ 29 3 POLICY AND COMMUNITY INITIATIVES TO IMPROVE THE SUSTAINABILITY OF PRIVATE RENTAL HOUSING ........................................................................ 32 3.1 Overview ................................................................................................................ 32 3.2 Research methods ................................................................................................. 32 3.3 Sustainable private rental housing programs ......................................................... 34 3.3.1 Overview of policy framework .................................................................... 34 3.3.2 The Federal Government’s Home Insulation Program ............................... 36 3.3.3 Energy and Water Taskforce (Vic) ............................................................. 39 3.3.4 Glenorchy Greenhouse Action Energy Rebate Project (Tasmania) ........... 41 3.3.5 Just Change (Victoria) ................................................................................ 43 3.3.6 Goes Green (Victoria) ................................................................................ 44 3.4 Key lessons from program review and consultation .............................................. 45 3.4.1 Institutional frameworks and incentives in place ........................................ 45 3.4.2 Delivering agencies .................................................................................... 46 3.4.3 Broad-scale or targeted approach .............................................................. 47 3.4.4 Engaging with private rental tenants and landlords .................................... 48 3.4.5 The role of real estate agents ..................................................................... 49 3.4.6 Policy horizon: Mandatory disclosure ......................................................... 50 3.4.7 Policy horizon: Minimum rental standards .................................................. 51 3.5 Summary................................................................................................................ 52 4 VIEWS OF PRIVATE RENTAL INVESTORS ........................................................ 54 4.1 Overview ................................................................................................................ 54 4.2 Research methods ................................................................................................. 54 4.3 Profile of private rental investors ............................................................................ 55 iii 4.4 Attitudes towards environmental sustainability ...................................................... 55 4.5 Knowledge of environmental sustainability ............................................................ 57 4.6 Action to improve environmental sustainability ...................................................... 58 4.7 Barriers to uptake................................................................................................... 60 4.7.1 Cost ............................................................................................................ 60 4.7.2 Lack of financial incentive .......................................................................... 61 4.7.3 Property damage ........................................................................................ 63 4.7.4 Disinterested tenants .................................................................................. 63 4.7.5 Property access .......................................................................................... 64 4.7.6 Owners’ corporation ................................................................................... 65 4.7.7 Condition of building ................................................................................... 66 4.7.8 Investor situation ........................................................................................ 66 4.7.9 Lack of awareness ..................................................................................... 66 4.7.10 Local planning regulations .......................................................................... 67 4.8 Drivers.................................................................................................................... 67 4.8.1 Reduce impact on the environment ............................................................ 67 4.8.2 Increase comfort and reduce cost for tenant .............................................. 67 4.8.3 Attract and retain good tenant .................................................................... 67 4.8.4 Moving into property ................................................................................... 68 4.8.5 Regulatory environment ............................................................................. 68 4.9 Satisfaction with existing policy settings ................................................................ 68 4.9.1 Lack of targeted information ....................................................................... 68 4.9.2 Changing policy settings. ........................................................................... 69 4.9.3 Profiteering and fraudulent practices .......................................................... 70 4.9.4 Inadequate incentives for solar energy ...................................................... 70 4.9.5 Contradictory policy settings ...................................................................... 71 4.9.6 Land tax ...................................................................................................... 71 4.9.7 Positive comments on existing policy ......................................................... 72 4.10 Policy options and preferences ............................................................................ 72 4.10.1 Targeted communication strategy .............................................................. 72 4.10.2 Independent sustainable housing body ...................................................... 73 4.10.3 Landlord association .................................................................................. 73 4.10.4 Landlord education ..................................................................................... 74 4.10.5 Tenant education ........................................................................................ 74 4.10.6 Financial assistance through rebates and taxation system ........................ 75 4.10.7 Engaging real estate agents ....................................................................... 76 4.10.8 Continued access to environmental assessments ..................................... 77 4.10.9 Address concerns of multi-unit dwellings ................................................... 78 4.10.10 Secure policy framework .......................................................................... 78 4.10.11 Incentives for solar energy ....................................................................... 78 4.10.12 A green minimum standard ...................................................................... 79 iv 4.11 Investor responses to mandatory disclosure ........................................................ 79 4.12 Is there a market for sustainable properties? ....................................................... 84 4.13 Summary .............................................................................................................. 86 5 CONCLUSION ....................................................................................................... 88 5.1 Project findings ...................................................................................................... 88 5.1.1 Early project findings .................................................................................. 88 5.1.2 Current project findings .............................................................................. 88 5.2 Concluding remarks and future policy and research directions ............................. 91 5.2.1 Synthesis of findings .................................................................................. 91 5.2.2 Policy directions ......................................................................................... 92 5.2.3 Research directions .................................................................................... 94 REFERENCES ............................................................................................................. 96 APPENDIX ONE: STAKEHOLDER INTERVIEW SCHEDULE ................................... 98 APPENDIX TWO: MAJOR SUSTAINABLE HOME IMPROVEMENT SUPPORT SCHEMES BY STATE AND TERRITORY .......................................................... 100 APPENDIX THREE: PRIVATE RENTAL INVESTOR INTERVIEW SCHEDULE ...... 103 v LIST OF TABLES Table 1: Summary of project findings ........................................................................... 2 Table 2: Literature review of energy consumption studies using microdata ............... 11 Table 3: Energy expenditure model variables............................................................. 21 Table 4: Mean and median annual energy expenditure of owners and renters, by dwelling type and number of bedrooms, 2006, dollars ........................................ 23 Table 5: Descriptive statistics: Column percentages or means .................................. 25 Table 6: Energy expenditure model results: households in all urban, regional and remote areas of Australia..................................................................................... 27 Table 7: Energy expenditure model results: Households in capital cities only ........... 29 Table 8: Overview of sustainable housing programs reviewed ................................... 33 Table 9: List of organisations that participated in stakeholder consultation ................ 34 Table 10: Owner and renter claims of HIP rebate, Victoria and Tasmania ................. 38 Table 11: Summary of project findings ....................................................................... 90 Table A 1: Major sustainable home improvement support schemes by state and territory............................................................................................................... 100 vi ACRONYMS ABS Australian Bureau of Statistics AHURI Australian Housing and Urban Research Institute ANAO Australian National Audit Office ARIA Accessibility/Remoteness Index of Australia BCA Building Code of Australia CDD Cooling degree days CPRS Carbon Pollution Reduction Scheme DEWHA Department of Environment, Water, Heritage and the Arts DPAC Department of Premier and Cabinet EEHP Energy Efficient Homes Package FaCHSIA Families, Community Services, Housing and Indigenous Affairs FG Focus group GAER Glenorchy Greenhouse Action Energy Rebate GCCR Garnaut Climate Change Review HDD Heating degree days HES Household Expenditure Survey HILDA Household, Income and Labour Dynamics in Australia Survey HIP Federal Government’s Home Insulation Program LEAPR Low Emission Assistance Plan for Renters LHS Left Hand Side MIAESR Melbourne Institute of Applied Economic and Social Research NFEE National Framework for Energy Efficiency NGO Non-government organisation OLS Ordinary least squares RECS Renewable Energy Certificates RHS Right Hand Side SEIFA Socio-economic Indexes for Areas SLT Sustainable Living Tasmania TCCO Tasmanian Climate Change Office VCOSS Victorian Council of Social Service VEET Victorian Energy Efficiency Target vii EXECUTIVE SUMMARY This project contributes to present debates about the sustainability of Australian cities by focusing attention on the opportunities for and barriers to improving the environmental sustainability of Australia’s private rental housing stock. The Australian Government, in partnership with state and territory and local governments, is currently committed to delivering a 60 per cent cut in carbon emissions from 1990 levels by 2050. At the household level, this has translated into a commitment to improving the energy efficiency of residential housing stock and to assisting residential households to reduce their resource consumption (DEWHA 2008). While early research and policy initiatives in Australia have been directed towards the construction industry and new homes, less attention has been granted to the existing dwelling stock, including private rental housing. In contrast, private rental housing has been the focus of policy and research attention in the United Kingdom and Europe, and to a lesser extent Canada and the US (See positioning paper /download/40560_pp, pp.10–15). This research project addresses this gap. Improvements in the environmental sustainability of Australia’s private rental housing offers advantages for the community in terms of achieving substantial reductions in emissions from Australia’s residential sector, as well as potential long-term economic benefits for landlords and improved health and well-being of tenants. However, improving the environmental sustainability of private rental housing poses unique policy challenges. Of central concern is the 'principal-agent' or 'split incentive' problem. While the landlord (or the principal) is generally responsible for purchasing the energy-using facilities in the home, the tenant (or the agent) is generally responsible for the payment of recurrent energy bills (GCCR 2008, p.456). This situation potentially discourages landlords from investing in the infrastructure required in order to protect private rental tenants, particularly low-income tenants, from rising energy and water costs. The role of the ‘split incentive’ and other potential barriers, such as cost and lack of information, in constraining property adaptation is examined through quantitative modelling work and consultation with stakeholders and private rental investors. A summary of the five research questions and the major findings is provided in Table 1 below. 1 Table 1: Summary of project findings Research question Major findings 1. How does the current policy and legislative framework operate to facilitate or discourage investment in environmentally sustainable private rental housing stock? There are substantial barriers to advancing the environmental sustainability of private rental stock and limited incentives and programs in place (relative to UK). 2. What is the impact of the carbon emission trading scheme (i.e. higher energy prices) on private rental tenants’ energy bills, particularly low-income tenants? Low-income households are vulnerable to higher energy costs and CPRS would have a regressive impact on households. 3. Does market failure ...
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