Real estate investors under attack, and the “greedy” tag hurts many

Attacks on landlords and policies that push them out of real estate investment could come back to bite everyone, including tenants.

It’s tall poppy chopping season, and the target is Australia’s 2.25 million residential real estate investors.

Again we are seeing calls from Greens politicians to introduce rent freezes, demands to punish real estate investors with changes to negative gearing and capital gains tax, and some truly wacky attacks on landlords.

Housing is front and centre in the battle between the haves and have-nots in Australia right now; but those who seem intent on forcing property investors out of the market completely should be careful what they wish for.

We are seeing extreme opinions and actions on both sides, masking the truth that many investors are far from the “greedy landlord”. They are simply trying to make their lives more financially secure.

For some first-home buyers, a rental property is all they can afford because they will have tenants helping to pay their expensive mortgage. That makes them landlords too.

The latest Australian Taxation Office statistics show more than 71 per cent of real estate investors own just one rental property – far from being hoarders – and the average property investor’s annual income is below the national average wage – far from being rich.

Few landlords hold more than one or two investment properties. Picture: iStock

About 86,000 of the nation’s 2.25 million property investors, or fewer than 4 per cent, hold four or more rental properties.

But forcing investors out of the housing market through tougher tax rules or onerous government policies will risk making the current rental crisis even worse.

There’s a shortage of rental properties in Australia, not a surplus, and house prices won’t suddenly plunge if more landlords leave. Hundreds of thousands of migrants are arriving each year and the building industry is producing nowhere near enough homes.

Rising house prices are good for a majority of the population, but sadly not for first-home buyers wanting to get a foot in the door.

Meanwhile, stories about landlords chasing big dollars are grabbing public attention.

Some are true, of course. Strong demand and tight supply mean tenants are being hit with huge rent increases, in some cases with another big rise locked into their rental agreements six months later.

But I’ve heard arguments that things like ambulance cover should be paid for by landlords, and of course the Greens want two-year rent freezes and new taxes on property investors and developers.

On the flip side, I’m also hearing of property investors selling up because the burden of a 60 per cent rise in repayments over the past two years is too much, or changing government rules have forced them to consider parking their money elsewhere.

People invest in property to give themselves a better future, just like others buy shares or pump large lump sums of money into their super.

Why punish them for wanting to avoid relying on government handouts later in life?

Without them, the rent crisis is likely to get worse, with fewer rental homes available.

Driving property investors out of the market may please some critics, but also may lead to a disastrous situation for tenants.

Originally published as Real estate investors under attack, and the “greedy” tag hurts many