Current solutions disconnected IMAGE Freepik
Current solutions missing the point IMAGE Freepik
  • Mike Mortlock said the error being made is a failure to engage with landlords.
  • He said that the crisis is a result of the swift exit from the market by landlords.
  • His many recommended changes included regulating more lending to investors.

The current solutions being proposed to fix the rental crisis are a long way off and “disconnected from reality” according to an expert.

Managing Director at MCG Quantity Surveyors, Mike Mortlock said a one per cent vacancy rate, monthly rent increases of two per cent, and long lines at rental open homes will not disappear anytime soon if the government keeps taking the same approach to rental properties in Australia.

Mr Mortlock said that the number one error being made is a failure to engage with landlords who are the ones that actually provide the rental stock.

Mr Mortlock said, “Private investors account for around 84 per cent of all Australia’s rental accommodation.

“The fact that landlord advocacy groups have been left out of most discussions and round tables beggars belief,” he said.

Increase supply

According to Mr Mortlock, the rental crisis is about a lack of supply, not increased demand, and that the solutions suggested so far are “all wrong.”

He said that the crisis is a result of the swift exit from the market by landlords based on the latest ABS finance data that shows new loan commitments for investor housing have fallen 23.2 per cent compared to a year ago.

Provide grants, and…

Mr Mortlock said there are a number of steps that need to be taken to help the current rental crisis, starting with providing construction grants.

Build more housing:

“Building more housing adds to the rental pool,” Mr Mortlock said.

He said that Australia is substantially underbuilding rental stock, given that nearly one million new households were created between the 2016 and 2021 Census, which equates to approximately 198,000 households each year.

The total number of new homes built each year – including owner-occupier residences, holiday homes, and second dwellings – was approximately the same figure of 198,000.

Incentivise investors:

Mr Mortlock said the government should also look at increasing depreciation benefits: “Tax depreciation benefits motivate landlords to invest in property by offsetting the costs of ownership.”

He said the reinstatement and improvement of depreciation benefits is a low-impact way to help more people buy and operate an investment property.

Cut out red tape:

According to Mr Mortlock, there’s also a need to reduce regulation.

Mortlock believes that recent changes made to protect tenants are welcome, but there have been onerous changes that impact an owner’s financial well-being, which will only disincentivise future investors.

Mr Mortlock also said that a program of incentivising people to continue engaging with the regions would be a win-win: “It makes regional living more appealing for tenants seeking cheaper, more easily available rentals, while also stimulating these non-capital city economies.

Finally, Mr Mortlock would like to see a change in financial regulation that would encourage more lending to investors would be hugely beneficial in increasing rental supply.

“The Australian Prudential Regulation Authority (APRA) has consistently sought to make investors the scapegoats for poor practices in the financial sector,” he said.

Mortlock believes that investors face far more scrutiny when applying for loans and are asked to pay interest rates well above those applied to owner-occupiers – despite being historically at less risk of default.

Mike Mortlock
Managing Director at MCG Quantity Surveyors, Mike Mortlock


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