Rental stress is set to worsen, at least in the short-term. This disturbing prediction is not hard to see as insightful data and a basic understanding of investor behaviour and economics come together.
The Pathways to Regional Housing Recovery from COVID-19 Report recently release by the Australian Housing and Urban Research Institute recognises the critical role that private rental properties play in housing around 40,000 Tasmanians households, particularly in the absence of sufficient social housing.
The report warns that “changes in private landlords’ long-term risk mitigation strategies would be to the detriment of lower income renters who have no other realistic alternatives”. It cannot get much clearer than that; adding to the inherent risk of rental ownership will hurt tenants, especially those who cannot afford to buy at today’s dizzying prices.
It is highly concerning that this obvious correlation is not being acknowledged by some given the superficial, ineffective, and poorly timed rental policies they took to the election. Policies such as those spruiked by likely Independent, Kristie Johnston, and the Greens prey on the worry and strain that thousands of Tasmanian renters are feeling but should be quickly dropped given the collateral damage that would undoubtedly follow if they were to see the light of legislation.
The AHURI report also captures the disturbing finding that nine per cent of landlords are intending to sell. A small figure with the power to cause big pain. Sadly, this figure does not surprise me – it matches our Association’s own research and is evident in the stories I hear and see daily from both owners and tenants.
The selling up trend is already underway and snowballing. Simple math tells us that the sale of nine per cent of rental stock puts around 3600 rental homes up for grabs. Lending statistics from the Australian Bureau of Statistic and recent data released by the Real Estate Institute of Tasmania show that around 18 per cent of the rental properties will change to owner-occupier. Therefore, around 3000 rental homes are at risk of being removed from private rental supply. That is huge, that will hurt. That is thousands of Tasmanians, mostly low-income people, competing even harder for an even smaller pool of private rental properties and likely paying even more.
Despite the data, warnings, and personal accounts of people selling and homes being sold from underneath tenants, we still have the Greens and Kristie Johnston pushing to remove owners’ fair rights. Removing landlords’ rights to set the price for their product, forcing the additional risk of animals on owners, and removing the ability to end a lease when it has run its course are just a few of landlords’ fair rights that they have on their chopping blocks.
Like many major decisions, purchasing and holding a rental property requires a risk assessment. In addition to the significant new risk these policies pose, owners also must factor into their decision-making the precedent that was set through Tasmanian’s faulty no eviction moratorium and the risk of repeat, the increase cost of land tax, the challenges of new exclusions in landlord insurance, and the ever-present risk of property damage and rent arrears. To limit the exodus, these threats must cease, and we need to collectively redirect our focus to the cause not the symptom.
Some declare that rental owners selling up is a good thing, thinking it will lower prices, but this will not be the case. The supply-demand scale is too unbalanced for that to occur. As rental properties trickle to the market prices will hold, and likely to continue to rise as predicted by many. Congratulations, if you can afford to buy, commiserations, if you are one of thousands who need or want to continue renting. The math simply does not add up as good news for tenants, given Tasmania’s population has increased by 5300 people in the past year and around 15 per cent of homes sold are going to interstate owners.
In the interests of full disclose, owners do not want their fair rights taken away. But they especially do not want to see their rights stripped for policies that are doomed to fail. Policies that erode landlords’ fair rights is a lose-lose situation for owners and tenants. Rental owners lose through permanent removal of fair rights, tenants lose by having to take their place in longer inspection queues, having to cross their fingers even tighter in hope they will be selected for property, and ultimately by having to pay even more for the roof over their head.