Charging Rent Policy
Last published 22 Oct 2018
The Department of Communities and Justice (DCJ) requires all tenants living in a property owned or managed by DCJ to pay rent. DCJ charges rent on a weekly basis.
This policy is to explain how DCJ determines rent charges. The Tenancy Charges and Account Management Policy Supplement provides further information to support this document.
This policy applies to all tenants living in a property owned or managed by DCJ including tenants of the Aboriginal Housing Office.
3. Policy statement
DCJ is able to charge rent in accordance with the provisions of the Residential Tenancies Act 2010.
DCJ charges market rent for all its properties. This is the maximum rent a public housing tenant can be charged. DCJ may only vary the market rent in accordance with the Residential Tenancies Act 2010.
If a household has a low or moderate income the tenant can apply for a rent subsidy. The rent subsidy will reduce the amount of money the tenant has to pay in rent. DCJ has the authority to grant a rent subsidy under the provisions of the Housing Act 2001.
Types of rent charges
Market rent is the amount of rent that a real estate agent or landlord would charge each week if the property were rented in the private market.
A rent subsidy is the difference between the market rent and the rent a tenant pays based on their household's assessable income and rent assessment rules. DCJ does not pay the rent subsidy to the tenant but deducts it directly from the market rent.
Calculating market rent
DCJ bases the market rent for a public housing property on the rent a tenant is likely to pay for a property in the private rental market that:
- is in a similar geographical location, and
- is a similar size, and
- has similar features.
DCJ determines market rent using a number of sources, including property valuations, rental bonds and current trends in the private rental market. The Valuer General and the Rental Bond Board provide this information to DCJ.
DCJ does not value every public housing property, instead it values a carefully chosen subset of properties. DCJ uses these values, (also known as benchmark assessments), to calculate the market rent for all other properties. It does this by comparing the characteristics of each property, such as suburb, property type, age, number of bedrooms, yard, cladding and type of parking space to a benchmark property.
DCJ also groups suburbs into a smaller number of benchmark localities, or markets, to ensure that rent variances within a suburb are minimised. However, different properties in the same area may have different rents. This is because the type of property and the features of the property may vary.
Each year the Audit Office of NSW checks DCJ' process of setting market rents for its properties.
Calculating subsidised rent
DCJ calculates subsidised rent according to the tenant's household size, type and gross assessable income. There are a number of household income limits and rent assessment rules that determine how much rent a tenant will pay. For information on household income limits, go to Current income eligibility for a rent subsidy. For information on rent assessment rules, go to rent assessment rules.
If a household is eligible for a rent subsidy, the tenant will pay between 25% and 30% of their household income as rent.
The minimum amount of rent a tenant or a household member will pay is $5 per week. This will only occur where a tenant or household member:
- is not eligible for Centrelink benefits, for example, because they are in custody, or
- enters a nursing home, rehabilitation centre, respite care, refuge (or other safe place) and is required to pay for that accommodation. For more information go to Eligibility for $5 Minimum Rent.
Tenants must substantiate all claims for the minimum $5 rent.
The $5 minimum rent will not apply in the situations outlined in the No statutory income or reduced statutory income section below.
For more information, go to the $5 minimum rent criteria.
Assessing income and assets to calculate subsidised rent
DCJ has decided what types of income and assets to include and exclude when calculating a tenant's eligibility for a rent subsidy and the amount of rent they will pay. The income DCJ uses is the gross assessable income of the household.
When applying for a rent subsidy a tenant must complete a Rent Subsidy Application by completing a Tenancy Online Form or download a copy from the DCJ website, they must also provide proof of all assessable income received by all household members aged 18 years and over. Proof of income can be lodged by original documentation, electronically, such as fax or email or can be requested through the Income Confirmation Scheme for Centrelink income. If the documents are provided electronically, DCJ may still request the original documents. For more information, go to Proof of income and assets.
Assessable income and assets
Assessable incomes are incomes that DCJ includes when calculating a tenant's eligibility for a rent subsidy and the amount of rent they will pay. Income that DCJ usually considers as assessable includes payments received for general living expenses, for example:
- most pensions, benefits and allowances paid by Centrelink and the Department of Veterans' Affairs. These income types are also known as statutory income.
- wages, salaries and some work allowances such as overtime, bonuses, shift allowances and penalty rates. These income types are also known as non-statutory income.
- other income such as superannuation, compensation, overseas pension, interest from savings and maintenance. These income types are also known as non-statutory income.
For more information, go to rent assessment rules.
Non-assessable income and assets
Non-assessable incomes and assets are incomes and assets that DCJ does not include when calculating a tenant's eligibility for a rent subsidy and the amount of rent they will pay. Income that DCJ usually considers as non-assessable includes payments received for a specific purpose, such as allowances received to assist with a particular life circumstance or disability.
For more information, go to rent assessment rules.
How DCJ assesses certain types of income, reduced income, or no income
The section below outlines how DCJ assesses certain types of income, reduced statutory income, or no income at all.
Assessing income for self-employed clients
DCJ calculates the income for self-employed clients by taking the gross income less legitimate business expenses. DCJ classes legitimate business expenses as any expense essential for producing an income. Some items may be allowable as tax deductions but DCJ may not consider them legitimate business expenses. For more information on legitimate business expenses go to Legitimate business expenses.
Assessing income from wages
Where a person has just started a regular job, or has been in continued employment and will be receiving the same gross amount of income each week, DCJ will assess the subsidy on this gross amount.
Assessing irregular wages
Where a person will receive a varying income such as income received through casual work, DCJ will discuss with the tenant how best to predict that person's future weekly income. DCJ may do this in one of two ways:
- averaging the income according to the amount of time the person has worked within a 26 week period, or
- using the actual amount received in the first pay and reassessing the rent subsidy in two months time. If a tenant wishes to use this assessment method they will have to resubmit a second Rent Subsidy Application and evidence of actual income received so that DCJ can conduct the re-assessment. If this method is used, and the estimated income is lower than the actual amount of income received DCJ will adjust the subsidy and the tenant will need to make up the difference in rent payable.
Assessing eligibility for the Start Work Bonus where a tenant or any member of the household over the age of 18 starts a paying job
The Start Work Bonus was introduced to encourage DCJ tenants to move into paying jobs. Under the scheme the household is eligible for a grace period of up to 26 weeks within a financial year before DCJ adjusts their rent subsidy to take account of the change in income when the tenant or any member of the household starts a paying job.
DCJ reserves the right to limit or decline a request for the Start Work Bonus to be granted where the household employment history indicates a misuse of the grace period assistance.
DCJ calculates the grace period as the number of weeks the household is eligible for the Start Work Bonus following the tenant or a household member having commenced employment.
The rent payable grace period for Start Work Bonus:
- is applicable to the household's rent payable
- is any number of weeks up to 26 weeks in a given financial year (1 July to 30 June)
- can be several short grace periods in a financial year where the employment starts and ends or the household member eligible for the Start Work Bonus changes
For more information see Eligibility for the Start Work Bonus.
Assessing Commonwealth Rent Assistance
Aboriginal Housing Office (AHO) tenants and other household members may be eligible to receive Commonwealth Rent Assistance (CRA) as they do not pay government rent according to Centrelink and Department of Veterans' Affairs criteria. Under these criteria, where the tenant receives a rent subsidy AHO household members who are over 18 years of age pay CRA as part of their rent assessment.
On behalf of the AHO, DCJ will:
- impute the CRA entitlements for AHO households so as to maximise the CRA received by those households, and
- assess the CRA at 100% for all household members treated as paying rent, and
- add each household member's CRA to the rent for the household.
As no household can be charged more than market rent, DCJ may adjust the amount of CRA assessed for particular household members so that the rent for the household is no more than market rent.
Assessing income where a tenant or a household member receives an amount that is less than a statutory rate
DCJ will assess people who receive an income that is less than the Newstart Allowance (or other benefit to which they would otherwise be entitled), as though they receive the appropriate statutory benefit for their age and household composition. This includes people who receive wages, salaries, or who are self-employed.
Assessing income where a tenant or household member does not receive a statutory income, or receives a reduced statutory income
In some instances a tenant or household member receives no statutory income or a reduced statutory income because they:
- have chosen not to apply for an income to which they are entitled
- are not eligible to receive a statutory income because:
- they have gone overseas
- they receive a Newstart Allowance, have not sought work and have become ineligible for further payments for a specified period
- they have received a compensation or other lump sum payment, or Centrelink deems them to have sufficient resources and Centrelink expects them to use those resources for living expenses
- have breached Centrelink requirements or are repaying a Centrelink debt
- are New Zealand citizens who are in Australia on a non-protected Special Category Visa
In these situations DCJ will assume that a tenant or household member receives a statutory income and will base the rent calculation on the statutory payment to which that person would otherwise be entitled.
Applying a Vacant Bedroom Charge
Tenants are considered to be under-occupying a property when there are more bedrooms than the household needs. Households who are assessed and approved by DCJ for an additional bedroom for children and /or medical needs are not impacted. For more information see Social Housing Eligibility and Allocations Policy Supplement.
Tenants living in Aboriginal Housing Office owned properties are not subject to a Vacant Bedroom Charge.
If a tenant is determined to be under-occupying their property DCJ will apply a Vacant Bedroom Charge to their tenancy by adjusting the tenant’s rent subsidy. As a result the subsidised rent the tenant pays will increase by:
- $20 a week per household for one person aged 16 years and over; or
- $30 a week per household for two or more people aged 16 years and over.
This charge will apply from 26 June 2013 in the following circumstances:
- When a tenant requests a transfer due to under-occupancy and refuses two reasonable offers of alternative social housing or,
- When DCJ approaches a tenant to move due to under-occupancy and they refuse outright to relocate or refuse two reasonable offers of alternative social housing.
Tenants who applied and are approved for a transfer on the grounds of under-occupancy before the 26 June 2013 will not be subject to Vacant Bedroom Charge. Additionally, tenants who have been approached to relocate due to under-occupancy by DCJ prior to 26 June 2013 will not be subject to the Vacant Bedroom Charge.
DCJ tenants, where the management of the property has been transferred to a community housing provider under the Social Housing Management Transfer program, the vacant bedroom charge will continue to be charged by the community housing provider until the end of the lease or the tenant moves to a smaller dwelling.
Reviewing the rent a tenant has to pay
DCJ regularly reviews the market rent it charges for its properties in line with movements in the private rental market.
There are three types of subsidised rent reviews:
- a scheduled group subsidy review initiated by DCJ
- an automatic group subsidy update initiated by DCJ
- an individual review initiated by the tenant
DCJ initiated scheduled group subsidy review
A DCJ initiated scheduled group subsidy review occurs when DCJ decides to review the income details of a group of tenants receiving a rent subsidy and their entitlement to receive this subsidy. This review involves contacting the tenant and asking them to provide up to date income information for their household.
DCJ will send a letter and a Rent Subsidy Application asking the tenant to confirm their current household income.
If the tenant does not return the information by the due date and they fail to make contact, DCJ will charge the tenant market rent until they return the information. Upon returning the information if the tenant establishes their need for a rent subsidy and a reason as to why they have delayed returning the information DCJ will backdate the subsidy to the effective date of the group review. The subsidy will be backdated to the date of change where it is considered reasonable for the tenant to have advised DCJ of the change in circumstances.
DCJ initiated automatic group subsidy update
An automatic group update occurs when DCJ automatically re-assesses rent subsidies by:
- updating Centrelink incomes by applying regular cost of living increases; and or
- carrying forward non-statutory incomes from the previous subsidy without changing the income amounts; and or
- obtaining updated income details from Centrelink for some or all tenants participating in the Income Confirmation Scheme.
Tenant initiated individual subsidy review
An individual subsidy review occurs when a tenant advises DCJ of a change to their household income or complement. In this case, DCJ will reassess the subsidy based on the income information provided to ensure the household is still entitled to the subsidy and is paying the correct rent.
Backdating rent subsidies
When DCJ receives a Rent Subsidy Application notifying of a change to a tenant's household circumstances that occurred some time in the past, it will reassess the rent subsidy to determine whether the household has been paying the correct amount of rent. If there is a difference in the rent subsidy the household is now eligible for, DCJ will backdate the subsidy to the date when the change in household circumstances occurred. This will reflect the correct rent that DCJ should have charged and may result in the tenant owing money to DCJ.
DCJ will backdate a subsidy when:
- it has proven rent subsidy fraud or non-disclosure
- a household member's income has decreased and the tenant would be entitled to a reduction in their rent payable. This will not apply where the income has decreased due to some action or lack of action on the part of the person, including where:
- there has been a Centrelink breach
- there has been a failure to apply for a Centrelink benefit, or the person is not receiving a Centrelink benefit through the person's own fault
- a person in employment has taken leave without pay
- the person has been on a strike.
- a household member is now in some form of employment and they are not entitled to the Start Work Bonus
- an additional person moves into the household
- Family Tax payments have changed due to the birth of a baby.
- there is an unapproved absence from dwelling
- a change in the household income has been identified in a group subsidy review and it considered that it was reasonable for the tenant to have advised DCJ of the change in their circumstances
Advising tenants of changes to rent
DCJ will advise all tenants in writing of any change to their market or subsidised rent and when that change takes effect.
Where a tenant pays the market rent and DCJ increases the rent following a review DCJ gives the tenant 60 days notice of the rent increase in accordance with the Residential Tenancies Act.
Where a tenant pays subsidised rent DCJ will list all the income amounts and assessment rates used when calculating the rent payable for the household.
Payment of rent
DCJ expects tenants to arrange for prompt payment of rent on or before the due date.
Tenants must notify DCJ immediately if they are unable to make payments. Where tenants have difficulty paying their rent DCJ will work with and support that tenant towards resolving their difficulty.
For information on rent payment options see the Tenancy Charges Policy.
Previous policy rules
DCJ has a number of previous subsidy income limits and assessment rates. DCJ uses these previous income limits and assessment rates when it needs to backdate a rent subsidy. For information on previous policy rules go to Previous policy rules and assessment rates.
4. Legislation and compliance
DCJ is able to charge rent in accordance with the provisions of the Residential Tenancies Act 2010 and the Housing Act 2001. DCJ is able to pursue any debt resulting from a rent subsidy cancellation or re-assessment in accordance with the provisions of the Residential Tenancies Act 2010.
It is the tenant's responsibility to satisfy DCJ that they are entitled to receive a rent subsidy. Tenants must advise DCJ of any change to their household circumstances within 28 days of the change occurring, even if they participate in the Income Confirmation Scheme and even if they know that DCJ has planned a group subsidy review in the future.
If a tenant does not tell DCJ about a change to their household circumstances DCJ may investigate their eligibility for a rent subsidy. For more information, see the Rent Subsidy Non-Disclosure Policy.
5. Related documentation
- Tenancy Charges and Account Management Policy Supplement
- Tenancy Charges Policy
- Rent Subsidy Non-Disclosure Policy
- Client Service Delivery and Appeals Policy
6. Further information
Appeals and review of decisions
If a tenant has concerns over rent charges they are encouraged to speak to their client service officer to seek a resolution of those concerns. The next step, if they still believe DCJ made an incorrect decision, is to ask for a formal review of the decision.
Tenants who have had their rent subsidy cancelled or who are no longer eligible for a rent subsidy and are subsequently required to pay the full market rent can apply to the NSW Civil and Administrative Tribunal if they think the rent increase is excessive. They should do this within 30 days of the rent subsidy cancellation taking effect.