It should come as no surprise that rents are rising. When risk increases, the reward needs to increase too. And the risks associated with being a landlord are now unfathomably high given the government can, whenever it sees fit, force a rental owner to continue to house tenants who are not paying their rent, while simultaneously removing an owner’s fair rights to do anything about it.
To make matters worse, despite months of pleading, Minister Elise Archer is refusing to amend Tasmania’s unconditional moratorium legislation which has knowingly been taken advantage of by some tenants over the past year. Labor leader, Rebecca White, has told our Association that they would support changes to legislation that would make Tasmania's moratorium conditional on the requirement of the tenant demonstrating that are in financial hardship due to COVID-19. We welcome this support and remain hopeful that the government will action this change as it is well overdue, with over $830,000 in taxpayer money already being used to pay rent on behalf of tenants, with no requirement for the tenant to show that they have been financially hurt by the pandemic.
When reading that a tenant’s rent has increased by $100 a week it is natural to feel shock and concern. But without important context, the full story is not known. Fundamental questions like ‘when was their last rent increase?’ and ‘how does their new rate compare to other similar properties in the area?’ should be addressed. We cannot read the front cover of a book and assume we know the twists and turns of the plot.
Large increases typically occur when rent has remained unchanged for years, usually in recognition of a great tenant. Over time, the gap between what the tenant pays and the actual market rate for the property naturally widens. And when that gap needs to close, it can be a shock. The Tasmanian Residential Rental Property Owners Association is recommending that owners document with their tenant not only the rent that the tenant is required to pay, but also the current market rate for the property to help create awareness of the difference between the two.
Not only are rents increasing organically as a major supply and demand imbalance drives up market prices, but rental owners are also needing to factor in sky high land tax bills as new valuations are rolled out across the state. (P.S. The worse on Land Tax is yet to come; Hobart and Launceston have not been revalued yet). Many rental owners are still owed rent and others have expensive damage and mess to resolve. Landlord insurance is also harder to come by and often has new exclusions. All of this factors in to the risk/reward ratio.
It is an understatement that rental owners did not respond well to having their fair rights removed through the evictions and rental increase moratorium. It is our view that removing owners’ rights is detrimental to tenants not too much further down the road. The calls by the Tenants Union of Tasmania for rent controls will simply mean that more rental owners leave the market, and perhaps throw their hands in to the air, declaring to not strive for financial independence and instead hope a pension is still around when they need it.
Rent increases are only one of the undesirable and avoidable legacy effects that the rental moratorium is leaving behind. We have houses empty, owners too scared that they again be trapped with a non-paying tenant able to wear, tear and damage. We have owners being more thorough and cautious than ever about who they allow to occupy their property so those without picture perfect incomes and histories will struggle even more.
Our Association has been declaring the moratorium short-sighted for months. And, as expected, the moratorium that was rushed through in a panic to protect tenants from homelessness is backfiring and adding to rental stress. Let us not go making a bad situation even worse by stripping a product owners fundamental right to set their price for their product.