Home News The solution to Australia’s rental crisis is more regulation and fewer landlords | Matt Lloyd-Cape

The solution to Australia’s rental crisis is more regulation and fewer landlords | Matt Lloyd-Cape

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ictoria saw an average rent increase of 20% this year, but in some cases up to 150%. These slightly frightening stats are recent meetings About the state of the Australian rental market.

Rent growth like this should be more of a concern to policy makers than the recent surge in house prices.

We’re seeing a new wave of residential rental regulations across the state, but it’s debatable whether our rental policies do a good job of protecting renters from such price increases. Victorian house rent laws covered the basics such as functioning toilets and mold-free rooms. It shows how the regulation lags behind.

But every move to improve the rights of 3 million renting households provokes outrage from real estate investors.

When changes to Victoria’s rental law came into force last year, Victorian Real Estate Association Chief Executive Gil King said: [landlords] could afford this… landlords without realtors [may be] Fortunately ignorant about these changes. “

Truly blissful ignorance.

No other industry has investor expectations 8% of annual assets growth, Yield 13%, receive a 50% discount on capital gains on sale and offset losses against taxes through negative gearing. Business regulations don’t even need to be kept up to date, and all this special treatment is registration and proof of skill in providing essential services to her one-third of Australians. Applies to landlords who don’t need it.

It’s interesting that you’re treating the rental market this way. I would never dream of regulating something like childcare, as if the needs of employers were as important as the safety of our children. But when it comes to regulating the homes of millions of children, the hopes of landlords outweigh safety and security concerns.

Perhaps, as investors often argue, there would be no rental market if the government regulated the presence of landlords, thus offering this special treatment. This claim was recently verified by a team led by his Dr. Chris Martin at UNSW. their research We tracked individual properties and mapped their entry into and exit from the rental market during the period when new rental laws were introduced.

Despite 44% of landlords reporting that regulation is very important to their investment decisions, they found that the introduction of rental protection had no negative impact on the number of properties entering or leaving the market.

Besides debunking that particular myth, the study also highlighted another key issue in the current rental market.

In Sydney and Melbourne, most rental properties will be out of the market within five years. Sold to the owner or occupied by the landlord himself. This large churn rate helps explain why the average rental period is so short and why tenants are desperate to buy homes. If you are not sure how long you can stay in the property, you cannot treat it as a home. .

About 50% of rental contracts are currently for 6 to 12 month terms, and the percentage of people who prefer renting over other types of rental terms is expected to drop to about 10% by 2022. That’s it. new research It is by Professor Emma Baker of the University of Adelaide.

In 2017, ANU survey The most common reason for wanting to buy a home is “peace of mind, stability, belonging” (68%), with the third most important reason being “control, no one can kick you out, nails in the walls.” I can hit it.” (41%).

Simply put, we have created a housing market that is too expensive for many to buy, and a rental market that is too poorly regulated to give people homes.

But there are some reasons for hope.

The construction leasing sector is growing rapidly with Industry Superannuation Property Trust, ANZ, HESTA, Australian Super and other investors seeking investment in this nearly $10 billion sector. If properly regulated, pension funds could build long-term rental properties, focus on slow recovery of investment costs through rental yields rather than capital gains, and provide a mix of market, social and affordable housing. Developing tenant buildings could help improve the leasing sector.

Large landlords have their own set of issues, but at least the long-term rental yield goals are in line with what many renters want. That means they know they can stay in the same place for a much longer period of time and want to see the rent increase in the black. White by contract.

It will be very interesting to see how well the Albanian government manages this institution’s desire to invest in rental properties through housing agreements.

Time will tell, but perhaps the answer to the rental crisis is not more landlords, but fewer.

Matt Lloyd-Cape is Director of Housing Affordability for Per Capita.

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