Don’t blame landlords for the rental crisis

Greedy landlords gouge tenants out of their hard-earned dollars!

OK, it’s a bit extreme, but that’s the kind of newspaper headline we might expect to see about the rental crisis. While vilifying landlords for making an income is a juicy story, the reality of the situation isn’t so black and white. And unfortunately, it will be renters who lose out either way.

Firstly, the Government has created the biggest problem in the rental market by enticing people to become investors and then washing their hands of any issues. 

Offering negative gearing means that people are in a position to buy and then rent out their property. However, there is no control over pricing, and simple supply and demand can leave renters in a world of pain. 

Maybe it’s time that the government took a bit of responsibility and a leaf out of Europe’s book. In countries like the Netherlands for example, the government owns co-op properties that they rent out. Prospective tenants must declare how much they earn and their requirements when applying so they compete in their own affordability bracket. 

Is it perfect? No, there are waiting lists, but no rent bidding and renters tend to stay for many, many years. Yes, in New South Wales they changed the law so real estate agents can no longer invite offers. But anyone can offer more than the advertised rent. So has anything really changed?

While plenty of dodgy tactics exist, let’s not group all landlords as money-grabbing multimillionaires looking to fleece tenants. The vast majority of investors in Australia only own one rental property and will likely be parents creating a nest egg to retire on. 

Homeowners are being hit with one rate rise after another – 10 in a row recently! An investor increasing the rent on their investment property is the natural way to balance out their growing expenditure. When the cost of goods goes up, the cost gets passed onto the consumer; it’s the same the world over. 

The problem is made worse with election candidates running campaigns on promises of limits to rent increases and preventing the ban of pets in rental properties. Both are pointing the finger of blame at every single landlord! Even the Queensland government passed a law limiting rental increases to once per year (yet interest rates continue to increase monthly). 

At the same time, the Government is making it easier for first-home buyers to enter the market, currently giving them the choice between upfront stamp duty or an ongoing land tax, if the property costs up to $1.5m.  After July of this year, when the Labour government takes over in NSW, and the land tax option will be scrapped, there will be other concessions put in place.  

It’s creating an imbalance that will result in investors throwing in the towel and selling. I am currently seeing many properties on the market with tenants still in situ with many months left on their 12 month lease, and with not many investor buyers out there, who’s coming to snap up those properties? Owner-occupier first home buyers who take another rental property off the market. Fewer rentals with increasing demand stand to push the price of rent up. 

The irony is that for decades the government has pushed the great Australian dream to own your own property, and promote the negative gearing scheme to help you buy an investment property with which you could prop up your retirement. Now, landlords are vilified for passing on the rising costs they face, so that dream is slowly becoming a nightmare.  

I’d love for the Government to cut the confusion and think about reasonable, long-term solutions to help everyday Aussies navigate the property market, whether that be owning or renting. It shouldn’t be a case of the haves versus the have nots. 

In the short term, whether you’re an owner, investor or tenant, talking to a trusted professional is the best way to get a handle on a very tricky property market.