Spooked landlords fuelling nation’s rental crisis

Greens Leader Adam Bandt. Picture: Gary Ramage/NCA NewsWire

More than 80 per cent of residential rental property is provided by ‘mum and dad landlords’, most of whom are tradies and only own a single property.

A key reason why there is a desperate shortage of rental accommodation and rents are going through the roof is that politicians and governments have convinced families with rental property to get out or to switch to the short term Airbnb accommodation.

Every time the media plugs the Greens’ party policy advocating bans on negative gearing and/or a freeze on rent, another tradie has the jitters and takes the substantial capital profits available and sells their rental property into the private ownership market.

Often they use the proceeds to buy or construct a bigger residential house and enjoy tax-free capital gains without the hassle. And many larger builders tell me that tradies who no longer have rental houses with negative gearing are cutting back their work rate, boosting the shortage of skills and the cost of new dwellings.

Two years ago, the Australian Landlords Association warned state and federal housing ministers that there would be a severe rental crisis if they maintained their campaign favouring tenants against landlords.

No one listened.

Part of the problem may be that too few politicians are landlords, and tenant pressure groups far more active applying pressure than landlords.

Now federal and state government are trying to establish a pool of money to build low-income ghettos, hoping to convince foolish superannuation funds to back the projects.

Instead, governments should be addressing the cause of the problem and begin reversing previous policies that discriminate against landlords.

Sadly, they show no signs of reversing those past mistakes, and the Greens are pressuring them into making further errors.

The Landlords Association President Andrew Kent says renter preferences are also part of the current crisis, with property managers reporting a noticeable reduction in the number of occupants per rental, contributing to an increased demand in the number of rental properties.

The federal government’s decision to increase migration to record levels adds fuel to an already overheated market.

Every time the media plugs the Greens’ party policy, another tradie has the jitters. Photo: William West/AFP

Some of the measures governments have introduced that have boosted rents by creating rental shortages are:

– The Queensland Treasurer’s failed attempt to increase land-tax revenue by including the value of property held outside of Queensland resulted in landlords exiting Queensland.

– Big rises in land tax

– The extensions to the Covid-19 protection legislation were well received by tenants, but has caused a lot of pain for landlords who have been required to find other ways to pay their own bills.

In some cases, families were unable to return to their own homes because they could not evict their non rent-paying tenants.

Retirees have been left without income and the uncertainty has festered in the landlord community.

The Victorian and Queensland governments have passed legislation which gives tenants extensive rights, some of which are fair, but a great many makes life very tough for landlords if they are saddled with a bad tenant.

Many tenants are now struggling to make ends meet given the small wage rises and the ballooning cost of living.

Some are deciding not pay their rent in the belief that the legislation will protect them and provide free accommodation for an extended period.

Landlords with borrowing must find other sources of income, and the word spreads among the landlord community.

There are about two million landlords, and so far only a relatively small percentage have sold their property and paid the capital gains tax on their substantial profit.

But a lot more are starting to think about it and if the Greens succeed in freezing rent or stopping negative giving there will be an avalanche.