- Australians with rental property incomes halved over the past five years.
- Rent freezes are reportedly being considered to address the rental crisis.
- Industry bodies argue that more restrictions will worsen rather than address the crisis.
The Property Investment Professionals of Australia (PIPA) and the Property Investors Council of Australia (PICA) have crowned Victoria as the “worst state for renters”.
They argue the state’s impending land tax, high stamp duty, and repeated tenancy reforms have created a hostile environment for tenants in Victoria.
Industry bodies’ rebuke
Citing ATO figures, the property investment industry bodies state that the net average annual number of people with rental property incomes has nosedived by 55% in five years in Australia. They say that while the national average annual growth in net individual investors in the five years to 2015/2016 was around 66,000, the number halved to approximately 29,600 in the five years to 2020/2021.
PICA chair, Ben Kingsley, states that the investors in the real estate space are struggling to keep up with rental demand, and the succession of restrictions placed on investors over the last five years has created the rental crisis, with Victoria being impacted the worst.
“Whilst most renters will think this is a welcome short-term relief measure, the chronic shortage of rental properties in this state will remain for years and decades to come, ultimately causing severe economic harm to a state that is already challenged by record levels of debt.
“This will lead to higher rents for longer, as investors choose to invest their money in other states and territories where the suppliers of the majority of rental properties in this country are treated with more respect than they are in Victoria.”
The PICA chair’s scathing comments come after The Guardian reported that Victoria government treasurer Tim Pallas expressed in a letter to the Greens that they were considering rent caps and additional taxes on owners of Airbnbs and vacant properties.
“We’ve had 12 interest rate increases and this proposed move by the Victorian Labor Government will be the straw that breaks the backs of many property investors,” says Kingsley.
“Not being able to recover some of these costs will mean some mum and dad investors will be forced to sell, and with other budding property investors snubbing Victoria because it’s too hard and too costly to hold properties, the story is going to be pretty dire for the state and for all renters living there.
“It’s clear we have a housing supply issue that’s only going to get more challenging with more immigration planned which will result in many overseas migrants choosing to settle in other states and territories because there will literally be nowhere available to rent in Victoria.”
PIPA chair, Nicola McDougall, states that investors have been exiting the market for years due to increasing taxes and financial risks, resulting in the shortfall of rental accommodation nationwide.
“PIPA has been warning for nearly a decade about the negative impacts of market intervention on rental markets, starting with the APRA lending restrictions that came into effect in 2015, and now a variety of rent caps or controls,” McDougall says.
“The ATO stats don’t lie, investors have already deserted markets around the nation – and especially in Victoria and Queensland – because they no longer have control of their assets.
“The negative annual result for investor numbers during the first year of the pandemic was the first time this had occurred since the GFC more than a decade before but is set to happen again sooner rather than later as investors sell up in droves.”
Why the need for more regulation?
The Property Tribune reached out to the office of the Victoria Greens for comment.
“We are in a rental crisis with Melbourne rents rising faster than any other capital city, and many Victorians are one rent rise away from eviction or homelessness,” said Victorian Greens renters’ rights spokesperson, Gabrielle de Vietri, MP.
CoreLogic data appears to support de Vietri’s argument, finding that Melbourne experienced a 3.9% rise in rents last quarter, the highest rental growth of all major cities.
“Unlimited rent increases should be illegal. A two-year rent freeze followed by a permanent cap on rent increases would provide immediate relief for those doing it tough and give wages a chance to catch up with the cost of rent,” de Vietri says.
“We also need to regulate the short-stay industry so we can unlock homes for long-term rental.
“Housing is a human right yet for too long governments have treated it like a lucrative income stream. The urgency of this crisis demands action now.”
