The number of people who are eligible to receive rent assistance from the government is expected to hit 1.5 million by 2031, new research shows.

In 2011, 952,0000 households were eligible for Commonwealth Rent Assistance – a payment provided to those who rent and qualify for government support. In 15 years, this is likely to hit 1.5 million, a report from the Australian Housing and Urban Research Institute found.

About half of this increase is due to population growth and more single- and lone-parent households, but the remainder is due to a growing proportion of tenants facing increased costs in the private rental market.

There will be an estimated 1.5 million people eligible for government rent support by 2031, a new report shows. Photo: Rob Homer

This will see the cost of subsidies jump from $2.8 billion to $4.5 billion in real terms – or a 3.1 per cent increase a year. Because of this surge in cost, academics have recommended the government consider incentives for landlords to encourage them to rent their investment properties to low-income tenants.

This could be a “secure lease scheme” where the government would pay a rent premium to landlords who provide long-term leases to low-income families, with the report estimating it could be a cheaper option for 650,000 households who live in private rentals but are eligible for public housing.

Modelling detailed in the report shows that if the government built new public housing from 2010 to 2014 for all who were eligible, the cost would have been $238 billion – and a further $13.1 billion in “recurrent costs”.

A secure lease scheme would cost $10.1 billion in private landlord incentives, and $7.4 billion in Commonwealth Rent Assistance.

“In essence, the capital costs of providing the housing would be carried by the private landlords, as is the normal case in the private rental market,” the report said.

But Tenants Union of NSW senior policy officer Ned Cutcher said landlords are already paid a premium – through negative gearing and the capital gains tax concession.

“As for improving security of tenure for renters, the best way to do that is to make renting fair,” Mr Cutcher said.

“In NSW and Victoria, there are strong coalitions of community, union and faith based organisations who are calling on our governments to do just that.”

The report found home owners were the recipient of $5.8 billion of assistance in 2011, lead author of the report, RMIT University’s Melek Cigdem-Bayram, said.

“We found that the total of tax subsidies to home owners has a larger cost to government budgets than either housing assistance, or the asset test concession,” Ms Cigdem-Bayram said.

The combined subsidies are expected to jump from $15.3 billion in 2011, to $18.8 billon in 2031.

“The future cost of these tax subsidies would have been even greater but for the falling rates of home ownership that we expect will continue in middle age groups,” she said.

Rents in Australia’s two hottest real estate markets, Sydney and Melbourne, has climbed for apartments and houses over the past year.

In Sydney, rents for houses were up 4.8 per cent in the 12 months to June, while apartment rents jumped 3.8 per cent, Domain Group data shows.

Melbourne’s renters faced even steeper hikes, with house rents up 5 per cent and apartments up 5.3 per cent in the same time period.

Don’t Rent Me founder and tenants’ advocate Anthony Ziebell said there should be a review of what constituted a low-income earner before any incentive scheme was considered.

“Those suffering rental stress and who are generally unable to get themselves out of the rental cycle trap, [are not always who] our government [considers] a low-income earner,” Mr Ziebell said.

He recommended investors should instead only be eligible for existing benefits, such as negative gearing, if they rented to low-income households.