A recent survey capturing the experiences of landlords during the past six months and their views going forward has been conducted through the Tasmanian Residential Rental Property Owners Association. Over the past fortnight 100 landlords completed the survey. Each landlord could participate only once, regardless of the number of rental properties they owned.
It is recognised that this is only a small sample of rental property owners. That said, our Association finds the numbers shown in this sample deeply concerning and highly recommends policymakers always remember that landlords are people and households too and that for every action there is a reaction. As we are a young, self-funded association we expect our capability around research and data to improve as news of our existence spreads and our capabilities and capacity increases.
As of 24 October 2020, 100 rental property owners had completed the survey. Some of the key findings from the survey are as follows:
48 per cent of landlords or their households have been directly financially impacted on by COVID-19, such as through job losses, being stood down, reduced hours, reduced income. This impact does not include not receiving rental income. Landlords are people too. People who own rental properties who have lost their jobs, had their shifts slashed, seen the takings in their shop halve. In addition to the challenges all of us have faced around health, employment and life in general, landlords have had the additional - extremely unfair - burden of the Government removing their right to be paid for the service they provide in accordance with the lease agreement.
When asked about the impact the Government's residential tenancy interventions over the past six months has had on them and their level of concern about the viability of being a landlord going forward, 11 per cent stated they are extremely concerned and will highly likely stop being a landlord, 33 per cent reporting feeling very concerned and are seriously considering not being a landlord, and a further 40 per cent are taking a watch and see approach, being somewhat concerned that being a landlord will no longer be worthwhile. Even if we see only five per cent of landlords sell or otherwise remove their property from the rental market, the impact on the private rental sector will be significant. Let's say we have 16,000 private rental properties in Tasmania and over the course of the next six months or so we lose five per cent of those, some sold to owner-occupiers (many of which coming from interstate), that's a massive 800 properties at high risk of no longer being available to rent to shelter Tasmanian families. House prices are stable and strong, prices have not plummeted to enable first home buyers able to make their pick of the bargains.
Sadly, 12 per cent of landlords left one or more of their properties empty for an extended period during the past six months as the 'no eviction' risk was considered too great and it was wiser for a perfectly good home to be left empty rather than risk damage, non-payment of rent, and no access to your own property. This is, at the very minimum, 12 perfectly warm, safe and secure homes that were left empty for an extended period in the past six months due to the Government's unbalanced and short-sighted interventions. This is a sad statistic. Many landlords have chosen (and will again choose) to leave a property empty rather than accept the considerable risk of renting it out but not being allowed to take what is usually fair and reasonable action if rent is not paid. The prospect of having a property tenanted, not being paid rent but still having the wear and tear, maintenance requirements, and all-time high risk of damage and pets entering without approval is, clearly, of little appeal.
A significant 26 per cent of landlords stated that they will be evicting tenants as soon as they legally can, with 18 per cent also taking action to recoup money for lost rent and damages. This figure speaks for itself. Expect movement in early December when demand for rental properties will likely be high and competition fierce. Some of these evictions may not come to fruition if the landlord has been forced to accept a repayment plan made by the Residential Tenancy Commissioner, but for those whose debt is too high to be realistically paid back through a repayment plan and for those who have had the audacity to abuse the protection, order your moving van now and "see you in court".
A massive 40 per cent of landlords stated they have been owed rent during the past six months. Most disturbing is that 22 per cent landlords are owed rent from tenants who they are confident are abusing the protection as the landlord is confident that the tenant's income situation has not changed or had improved. Wow. In this survey the number of tenants who could not pay their rent for genuine reasons is less than the number of tenants who are highly suspected of abusing the protection. Abuse of government policies and programs happens all the time - just look at Centrelink who has a dedicated department just for this. What is new is that the Tasmanian Government - admittedly under heavy pressure - implemented legislation that could very easily and legally be abused. They knew this risk existed and they did it anyway. And 22 of the 100 people who took the landlords survey (and the many othes who did not) have paid the huge, distressing price for this.
One quarter of landlords have stated that their property has been damaged beyond reasonable wear and tear during the past six months, with 10 per cent stating that significant damage has occurred. Remember the news items about dog adoption centres being empty? Well many of those have ended up in rental properties without the required approval. K9s aside, landlords are uncovering major damage of all sorts. When the Government stopped inspections and did not replace it with the ability for inspections to still occur by video or date stamped photos, many tenants took advantage of this free pass. And now owners have the costly mess to clean up.
In terms of accessing State Government programs which pay the rent on tenants behalf, a mere 4 per cent of landlords access the programs and (at that point in time) it has covered all of the rent they were owed. A further 18 per cent of landlords have accessed the programs but they are still owed rent. A concerning 16 per cent of landlords are owed rent but are/were unaware of the programs and had therefore not accessed them (at that point in time). The Government is boasting about the generosity of the programs it has implemented to pay rent on a tenant's behalf. The Government is very quiet on the fact though that a large portion of the payments they are handing out - taxpayer money! - is paying rent on behalf on tenants who have abused the protections. The reality is that, in this sample, we found that only 4 per cent of landlords have had the rent they are owed paid in full through these programs. A further 18 per cent have accessed the programs but are still owed rent. And more work needs to be done to communicate the programs as 16 per cent of landlords in our survey are owed rent but did not even know about the programs. How about sending out promo material about the programs with the land tax bills? You know, the massive bills they sent to rental owners whose ability they took away to be paid for their service?
Our Association has publicly stated that there cannot be such extreme intervention in a buyer-seller contract without there being consequences, and many of these will be disadvantageous to tenants. When asked what actions they will seriously consider going forward in the future, 45 per cent of landlords said that that will avoid leasing to people who do not have income security, such as people in the tourism and hospitality sectors, casual workers and visa holders who are ineligible for income support. This is sad and our Association feels for people who will feel this pain. Landlords are reminded to manage their risks, and landlords would be foolish to not consider income security when it comes to selecting tenants.
When asked to select all the actions they would seriously consider, 27 per cent stated that they will be leaving their property empty when another wave/pandemic is on the foreseeable horizon, 28 per cent will use the property for holiday and/or short stay, 24 per cent will be raising rent to make up for losses and increasing costs (due to damage and massive land tax bills) and 25 per cent stated that will not be making any improvements to their properties. This is the crux of the consequences of the Government's misjudgment. Rental properties will reduce and rent prices will go up. Then naturally the 'I need a house" requests for social housing will follow right behind, and that's already a really popular list with a big wait ahead.The Government has made it incredibility unappealing to be a landlord when they destroyed the frameworks that were in place to mitigate known risks like non-payment of rent.
As you see, the Government's interventions in residential tenancies, particularly their removal of the requirement for rent to be paid, has and will have a tremendous detrimental effect on landlords, tenants and the Government.
Landlords are first to be hit, but it is a trifecta of loss. Despite the rhetoric, the burden has not been shared, but the loss certainly will be. Tenants lose as less private rental properties on the market, off-the-chart risk to factor in and higher expenses means higher rents and busier rental open homes. Landlords will also avoid renting to those with low income stability, such as hospitality and tourism workers and visa holders. The Government will pay for its poor judgement as the demand on income support and social housing will increase dramatically as private rentals disappear.
It does not need to be this way. The Government should take on the responsibility for paying rent when a tenant genuinely cannot in extreme events like COVID-19. This approach would bring housing and income stability, boost market confidence, help repair the tenant-landlord relationship and make the huge debts that tenants will carry much more manageable as it would be the Government being paid back, not your local plumber, aged care worker, or hairdresser.