How holiday home investors could be key to Queensland’s rental crisis
A solution to the worsening rental crisis is being pushed by Gold Coast real estate leaders - and it means not demonising short-term letting owners but incentivising them. Read the plan.
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They’ve been dubbed public enemy number one when it comes to the rental crisis - but attracting holiday home investors into the long-term market is being tipped as a solution.
A leading Gold Coast property expert has called on local and state governments to provide incentives for holiday home owners to enter the long-term rental market as the city grapples with a worsening housing crisis.
Gold Coast rental properties are among some of the most expensive in the country, with complaints of not nearly enough housing supply to meet rising demand and holiday letting compounding the long-term market.
Real Estate Institute of Queensland (REIQ) Gold Coast boss Andrew Henderson said as a tourist hotspot it was important to provide short-term accommodation - including AirBnB and Stayz - but ultimately it was up to government to deliver on housing supply and attract investors.
“If landlords continue to exit the market at the rate they have been, rents will only continue to increase. You’ve got to give landlords some legislation balance to make it attractive to get them back into owning an investment property,” Mr Henderson said.
“It probably comes down to what incentives can council do to put those vacant homes and short terms in a permanent rental situation.”
According to PopTrack data, the median rent in the Gold Coast last month was $780 a week, more expensive than the inner western suburbs of Sydney.
PopTrack Director of Economic Research Cameron Kusher said the Gold Coast rental scene had become extremely challenging with a lot of demand, but not enough rental stock.
“If you go back before the pandemic, on average, you were getting 15 to 20 inquiries per listing (but) for most of the last four or five years, it’s been above 35 inquiries per listing,” Mr Kusher said.
He said the biggest challenge was not enough investors in the market.
“It’s hard to quantify this, but I would suspect what’s happened as interest rates have gone up and the cost of servicing that mortgage debt has increased, there have been people that have taken their rental properties out of the long-term rental pool and put them into short term.”
With the ability to make higher returns from renting on a service such as Airbnb, it’s not surprising many were choosing to go down that route rather than stay in the long-term market, he said.
“Maybe it is a case of changing land tax thresholds because they haven’t changed in decades -or maybe removing the stamp duty on house insurance policies,” Mr Henderson said.
“Why charge so much stamp duty extra if I want to buy an investment property for someone to live in? All these things add to the problem we have today, they (the government) haven’t delivered on enough housing. Everything goes back to them - it’s not the person who got the holiday home.”
Investor and Coastal agent James Massey owns a lucrative short-term rental property in Palm Beach located just 20 steps from the sand, raking in an average of close to $250,000 a year.
However, Mr Massey said despite good returns from the Gold Coast holiday market, if there were added incentives to get back into the long-term rental market it would be a no brainer for investors.
“Instead of trying to penalize someone holiday letting and making it more difficult, give an incentive. It could be for tax reasons or, give an incentive for permanent rentals,” he said.
Mr Massey said a discount on annual rates, council rates or water rates could be some examples of incentives to get investors into the long-term market.
“It might be something where if you hold a property for seven or five years, the longer you hold the property the less the capital gains tax becomes - that’s an incentive.”
“(Investors) are doing it for retirement, doing it long term to create wealth for their retirement or future,” he said.
Asked whether providing incentives to investors was a housing relief option council were open to, Mayor Tom Tate said while responsibility for many of these issues predominantly sat with the State Government, Council still had a very important part to play.
“We are very aware of the housing issues facing our city, like many other areas of Australia, so we do need to be creative in our thinking to address these challenges,” Mr Tate said.
“The City has commenced planning for our next City Plan that will map out our strategy for the next five to ten years. This process will involve a broad range of steps including extensive community and stakeholder engagement.”
He went on to say feedback from industry and the community would be vital to ensure a mix of housing that the city will need and to successfully manage growth as the Gold Coast heads towards one million residents.
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Originally published as How holiday home investors could be key to Queensland’s rental crisis
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