Four ‘radical’ ideas to solve our rental crisis

The main reason for the current rental crisis is a set of well-meaning but appalling political decisions made at all three levels of government and embraced by the major political parties.

The current Federal government has come up with an idea that the problem can be solved by shoving billions into the share market, hoping to make big money so that over time more rental accommodation will be financed.

But currently, if the rules are set properly, there is no shortage of money to build more rental accommodation. What’s required is recognising what created the problem and modifying the policies that drove us into a crisis.

Sadly, creating a money pit appeals to politicians and local councils because it does not expose their mistakes.

But because it doesn’t address the causes of the problem it is unlikely to achieve its objectives

Over the last decade many groups including Australia’s biggest apartment developer Harry Triguboff and the Australian Landlords Association chief Andrew Kent have correctly forecast the impact of a likely rental shortage caused by disastrous political decisions.

Harry Triguboff too has ideas on how to solve housing issues.

Rather than simply criticise the past, today I will to try to put forward suggestions that will start to reverse some of the mistakes and take advantage of a current unique situation: we have the capital available to solve the problems if the mistakes are corrected.

A rent freeze will frighten that capital way. We also need a better alignment of migration and locations where there is accommodation.

Simple steps

The rental crisis embraces both cottages/small apartments and large apartment developments. The problems in each sector are different but overlap.

A first step would be to encourage existing landlords to stop leaving the market.

Here are four suggestions. Later I will canvass more radical ideas.

• Cap or reduce property taxes and government charges (at all three levels of government)

• Rollback legislation hostile to landlords until appropriate consultation with the industry (real estate agents and landlords) that protects both tenants and landlords.

• Guarantee no changes to negative gearing or capital gains for the parliamentary term.

• Have a tiered structure of rental agreements (instead of one size fits all). For example, most renters move within two years, so this market should have customised contracts. Some 15 per cent of landlords rent because they relocated, they should be able to move back in when they get back with appropriate notice.

Fundamentally, all landlords want the rent paid on time and the property returned in good condition.

Radical ideas

The problems in the apartment complex sector overlap but require another set of actions. The good news in this area is that overseas institutions want to invest in building complexes and have already started in Victoria.

The locals will follow, but the sector requires these actions:

• Retrench the myriad of bodies, committees etc that make gaining approvals too complex. States must institute a simple, streamlined approval system that works quickly and everyone knows the rules.

NSW has the most vicious bureaucrats operating at all government levels, and they have been the most successful in stopping developments to ease the rental crisis.

Victorian Premier Andrews is starting to understand the damage caused by the bureaucracies and is taking the first steps to streamline the approval process.

• Do not compromise with safety but make sure that bureaucrats do not think up rules to boost the cost. In NSW, this is an art form.

• Work on ways to improve and lower the cost of the building process.

• Standards for rental accommodation should not be higher than standards for owner-occupier — which is the Victorian situation.

Essential workers

The hardest area to solve is the provision of lower cost apartments for essential service workers such as police, nurses, teachers etc.

Then there is a separate issue for those with severe income and social problems. We have to start thinking innovatively about these two areas. Let me put a few suggestions on the table to foster the process

What about the government being responsible for rent being paid and property being returned in good condition, similar to the defence department?

This allows institutions to invest in build-to-rent with guaranteed income and low risk.

Perhaps we need compulsory rental insurance (similar to TAC, but properly funded) in place of bonds. The insurance would cover landlords and tenants premiums. It would be adjusted based on their track record of insurance process claims and repairs.

Once the above issues are tackled, there will be no shortage of money for rental accommodation.

It will take time to end the crisis, but it will end.