‘To call me a greedy landlord is far from the truth. I’d rather be a tenant‘
A survey of property investors has revealed many are struggling to keep up with soaring costs, with some sharing their own precarious financial positions. SEE WHAT THEY SAID.
A survey of property investors has revealed many are struggling to keep up with their soaring mortgage repayments, and were concerned about government suggestions of a possible cap to rent increases.
Conducted last week by the Property Investors Council of Australia (PICA), the survey heard from “dozens of investors” who voiced concerns about their financial situation in the face of rising expenses and about any possible rent caps.
LANDLORD STRUGGLES: Scroll down to hear what the investors said
The survey was conducted after Premier Annastacia Palaszczuk made comments last Monday about “very seriously” considering how a rental cap could be put in place.
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That comment caused a firestorm of backlash from the property sector and investors alike, with Deputy Premier Steven Miles hosing down the comments the following day.
Dr Miles said there needed to be a “conversation” on whether a limit should be placed on the size and frequency of rent increases, accepting that investors needed to “see a return on their investment”.
24 hours later, Ms Palaszczuk fronted The Today Show, saying one “option” was to
limit rent increases to “once a year, rather than twice a year”, reaffirming the state government would not implement a “rent freeze”.
But economists, including the Grattan Institute’s Brendan Coates, said interfering in the market by putting a cap on rents was bad policy and would make the “race for space even worse” by discouraging investment in rental housing and reducing supply.
PICA chair Ben Kingsley said the latest attack on investors was proving a bridge too
far for many and showed the Queensland Government failed to understand the
basics of supply and demand.
“Those tenancy groups, and now the State Government, who are lobbying for a rent cap, or freeze, are claiming some sort of market failure is the reason why, well, we want to know from them, how is reducing investor demand and rental housing supply going to improve the situation for Queenslanders?” Mr Kingsley said.
“New arrivals to Queensland try before they buy, meaning they rent, but if there are no rental properties — because no investors can trust the government to allow a free market to operate — these new arrivals won’t have anywhere to live, business won’t be able to employ staff, and the Queensland economy and its citizens will ultimately be the biggest losers.
“Another question that needs to be asked is: ‘What does the government believe is an ‘acceptable’ percentage of cost increases that a landlord should be able to pass on to tenants?’ Are they insinuating that costs can be uncapped but income must be capped?”
The average monthly rental price in Brisbane has increased by $290 over the past year, but repayments on a $500,000 mortgage have increased by more than $800 per month over the same period, according to PIPA.
Among the survey respondents was investor Marcus, who said that the land tax alone on his investment properties had increased by 25 per cent in 2021/22, and his latest land tax assessments had gone up by between 18 and 35 per cent.
“I’m very mindful of trying to keep the rent affordable for my tenants and I have only
just put up the rent to one property by 10 per cent,” he said.
“Some tenants are still paying the same rent from years ago.
“To call me a greedy landlord is far from the truth. I’d rather be a tenant at the
moment.”
Property Investment Professionals of Australia (PIPA) chair Nicola McDougall said it
appeared that the State Government had learned nothing from its failed land tax
regime less than six months ago.
The Palaszczuk government was forced to scrap its controversial land tax after her fellow state and territory leaders slammed the plan.
The tax would have applied to interstate investors who owned properties in Queensland, and would have required other states to share ownership records.
Ms McDougall said the kneejerk rent cap comments were likely in response to a damning
Queensland Council of Social Service report that revealed 300,000 people across the state were experiencing housing insecurity amid soaring rental prices and inadequate social housing supply.
The Blueprint to Tackle Queensland’s Housing Crisis report revealed the rate of homelessness surged 22 per cent since 2017 – nearly triple the national rate.
“PIPA research last year also showed 160,000 rental properties had been stripped from Queensland markets in just two years – with even more investors set to sell if
rental caps are introduced,” she said.
“Without any meaningful solutions by the state government to increase rental supply
in the Sunshine State – and therefore stabilise rents – the Premier will likely go down
in history as the leader who forced more Queenslanders into homelessness than
ever before.”
Many readers argued that if a rent cap was imposed, the State Government should also cap rates, water, electricity, incurances and other costs.
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WHAT THE INVESTORS SAID
Lauren
I have had a Brisbane property since Feb 2020 with lovely tenants who are pensioners. I have kept the rents low as they look after the property really well and I feel they deserve to be rewarded. This renewal period I have again provided them with a discount to market as a show of good faith for being great tenants. I have raised the rents and haven’t been greedy, knowing that they would have little choice but to sign the renewal given there was no comparable properties in the area remotely in their price range. It is not our fault as landlords that supply and demand economics are at play here
Marcus
The land tax alone went up 25 per cent on my investment properties in the 2021/22 financial year, and I just received the latest land tax assessments and they have gone up again between 18 per cent and 35 per cent. “I’m very mindful of trying to keep the rent affordable for my tenants and I have only just put up the rent to one property by 10 per cent. Some tenants are still paying the same rent from years ago. I haven’t even mentioned the increase in my mortgage repayments … which have doubled in the past year. To call me a greedy landlord is far from the truth. I’d rather be a tenant at the moment.
Andy
I have definitely felt the impact of the rate hikes over the last 12 months. My portfolio
was positively geared, and I thought I had cracked the property investing game, but
then the rate increases started, and my repayments have increased by around $2500 per month. I have just gone through rent reviews for my properties and the increases have been in the range of 15 to 20 per cent, which feels really high, but is significantly less than the increase in my mortgages, which is closer to 100 per cent across the board. If rent increases are capped then I’m not sure how investors are expected to make up the difference between what they are paying, versus what they are receiving. A little more detail on my portfolio and recent challenges. I rentvest and this year our rent was increased by $100 to $630 per week. It’s a big increase, but being a landlord myself I understand the factors driving the change.
The reality is that when mortgage payments increase dramatically landlords have to
pass on some of that cost to tenants, if that option is capped I don’t see how the
average investor will be able to succeed.
Carly
My husband and I rentvest. After purchasing a property in September last year, the
interest rates have climbed so much that repayments now use up our whole income
and now digging into our buffer. We are an average family, two kids, regular jobs but we saved and stretched with the aim to set ourselves up for the future and not rely on a pension. It doesn’t seem very fair the way things are going. We are nothing fancy. The changes in the last six months have meant we have to come up with an extra $450 per week in repayments – not to mention our own rent which is also rising.
James
I have just purchased my second investment property in Queensland and with rising
interest rates and now the suggestion to cap rental increases, this is going to absolutely ruin my chance to become financially free and in turn will make a lot more investors rely on Centrelink. My rents are already well below market value, and if they introduced this, it would ruin me.
David
We have an investment property in Brisbane. It’s an older house currently rented for $445 per week, but the lease is nearly due for renewal and the market review from our property manager suggests $490 per week is appropriate. We aren’t wanting to gouge our tenant, so are considering reducing that to around $475 per week and are just waiting on feedback from our property manager.
We hold the property in a family trust so between land tax and interest rates, we have a pretty sizeable negative cash flow on it. I am sure that the proposed increase
in rent won’t offset the increase in holding costs. I have an opinion that the market sets the appropriate rent and Queensland is in the midst of a rental crisis due to the current population growth, but also the uncertainty created by State and Federal Governments – not just in Queensland – with their property policies and disincentives for people like us to invest in recent years.
Originally published as ‘To call me a greedy landlord is far from the truth. I’d rather be a tenant‘
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