The impact of the 2018 Families Package Accommodation Supplement area changes on housing outcomes

In this paper we analyse the effects on rents of the substantial April 2018 changes in the Accommodation Supplement (AS) policy. These policy changes adjusted which geographic locations were assigned to each AS-area, and the AS-maxima were increased to reflect the rising costs of housing in each AS-area. The result of these changes was that the maximum AS-payments for recipients in all locations increased, and the increases varied across geographic locations within redefined AS-areas. We exploit the relative changes in maxima that occurred on either side of such AS-area boundaries to identify the effects of the policy changes on relative rents in these boundary areas. First, we estimate that recipients on the side of boundaries with larger increases in the AS-maxima received on average about $14-19 per week more in accommodation support relative to recipients on the other side. Although we estimate that the relative raw rent increase in the second year after the policy change was about $9 per week on the boundary-sides that received larger increases, once we control for observable and fixed unobservable characteristics of clients, we find negligible differences in rent changes. We conclude that higher-rent new AS-recipients to the treatment areas largely explain the composition changes in these areas, but explain little of the increase in average support. Finally, regression kink analysis shows only weak evidence of stronger rent increases for AS-recipients directly affected by the policy changes.