CHEAPEST: A staggering number of vacant houses has driven down rent, much more in some suburbs than others.
CHEAPEST: A staggering number of vacant houses has driven down rent, much more in some suburbs than others.

Rental system failing people on Newstart Allowance

MORE than 150,000 of Australia's poorest people continue to pay more than half their income on rent despite the National Rental Assistance scheme, a study by National Welfare Rights has found.

The study, released on Friday, details how the rental assistance system is failing people on the Newstart Allowance, who pay more than 50% of their weekly income just to keep a roof over their head.

Under the national scheme, increases to rental assistance are not indexed to the rising cost of average rents, leading to many struggling families and older single women unable to afford rent.

The study compares the indexed increases of 2.7% each year to the average rental increase of 10% a year, according to data from the Australian Bureau of Statistics.

National Welfare Rights Network's Maree O'Halloran said the study found more than 157,000 Australian households were spending more than half their weekly incomes on rent.

"Two in five people on income support payments are living in 'housing stress' defined as paying over 30% of their income in rent," she said.

"Over one in 10 are experiencing 'severe housing stress', paying more than 50% of their income in rent."

The report found since 2011, the number of people living in "housing stress" rose by nearly 10% to 480,000, while the number of people on Newstart in rental stress rose 62% in the decade to 2012.

"Unemployed people on Newstart and students on Youth Allowance are twice as likely to be experiencing 'rental stress' and paying 30% of their income in rent than either Age Pensioners and Disability Support Pensioners," Ms O'Halloran said.

"However, the report also shows that people on the pension are also doing it tough. This was particularly true for single women in the private rental market receiving the Age Pension."

The study also found those on Newstart and Youth Allowance were three to four times more likely to be paying more than half of their income on rent than those on pension payments.