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Collaboration best way to remedy rising rents

By John Thistleton 15 November 2018 3
Canberra Rental Affordability

Canberra’s property managers respond to suggestions to tighten ACT rental laws.

Canberra’s ever-tightening rental spiral will worsen unless the property industry, ACT Government and housing sectors collaborate to resolve housing affordability.

Professional property managers say rental pressures are part of a wider problem that stems from housing affordability, and a remedy will only come when all stakeholders work together.

They were responding to commentary on RiotACT calling for more legislative reforms aimed at helping renters.

The Make Renting Fair CBR Alliance wants the ACT Government’s rental reforms outlined in the Residential Tenancies Amendment Bill 2018, to go further, to include minimum standards in accommodation and heating and cooling.

But property managers warn more legislative changes will drive investors from the market which is already under pressure from land tax.

Dexar Chief Experience Officer John Minns said the lack of collaboration from key players was helping erode affordability.

“If we have the government sitting in one place and the industry sitting in one place, lobby groups, minority groups sitting in other areas, and no one is actually working together, we don’t tend to get great outcomes,” Mr Minns said.

“I think it would be highly valuable for all the key stakeholders to get together, to say what is really important here, how do we achieve outcomes everyone wants rather than sitting there throwing stones at each other,” he said.

Belle Property Kingston Co-principal Richard Davies echoed a widespread industry warning, saying: “Investors will leave the market, and there will be less property which will only make it harder to find rental accommodation,” he says.

Mr Davies says left alone, market forces will give everyone a fairer outcome.

Peter Blackshaw Queanbeyan and Jerrabomberra Principal Alex Ah Key, rejects a previous suggestion tenants are being evicted in order for property managers to collect fees for new leases.

“I read that with my jaw on my desk,” says Ms Ah Key, who has been in the property management industry since 1998.

“We are in the business of client service, we would not be providing a good one if we were pushing out brilliant tenants in order to make a buck for ourselves,” Ms Ah Key says. “In fact sustaining a tenancy for as long as possible is what we are all about.”

Minimum standards would be worth discussing but needed to be defined. Rentals managed professionally were well maintained and had heating, cooling and good working appliances, Ms Ah Key said.

“You would be hard pressed to find an owner whose property is professionally managed but doesn’t meet those standards. Yes, stories are out there about owners who refuse to do private maintenance and things like that. As an agent we would not advocate for that, it is irresponsible. If they don’t do maintenance then we may cut the business loose,” Ms Ah Key says.

Property owners already under pressure from rising rates and land tax were also impacted by increased costs of tradespeople and maintenance, and some were making nothing from their investment.

Mr Minns says the tenants’ lobby calls to overhaul eviction laws are unnecessary, because plenty of legislation is already in place.

Property owners must give six months, or 26 weeks no-clause notice to evict.

“To argue that is unfair eviction is incorrect,” Mr Minns says.

“It is rarely used, if there is a legitimate reason, generally speaking that would be enacted elsewhere. People are still covered by their lease, very few leases are longer than 12 months. It would be unusual for someone at the beginning of a lease to say we are going to give you six months notice of eviction.”

Mr Minns says the scarcity of rental properties stems from housing affordability, influenced by several factors.

These include having a single source of land in the ACT, which some would argue had pushed up the price of land to the point of a market in which people cannot afford to build a medium-priced home on a medium-priced block of land. Few affordable options for first home buyers are available in existing homes.

Consequently, people who should be first-home buyers are renters instead.

The property industry has long been troubled that the ACT Government remains completely unconcerned about the impact of tax policies like lease variation, Mr Minns says.

“We are now unable to get intelligent infill in areas that are approved for dual occupancy or tri-occupancy development where people are looking for accommodation. We have an unrealistically high lease variation tax where most of those developments are simply not viable before they start.”

This was reducing housing supply and putting pressure on the cost of infrastructure, because while selling land on new estates may bring in more revenue, more new roads and new schools were needed.

Mr Minns said a more balanced approach would be redeveloping older suburbs, where some houses had passed their use-by date.

McGrath Estate Agents Belconnen/Gungahlin Relationship Manager Jessica Lawless says minimum standards for rental accommodation would be an excellent idea, within reason.

“Ensuring properties were safe and habitable prior to being allowed to be leased, from a property managers perspective would increase the chances of the tenancy going smoothly. Legislating this would assist us to ensure owners took the recommendations we often make prior to leasing their investment,” Ms Lawless says.

As an example, having working smoke alarms is essential but has opened the flood gates for start-up companies to exploit landlords. In the ACT, it is not mandatory to have your smoke alarm checked annually, however there are companies who have put the fear into agencies and landlords twisting legislation with the aim to push clients to sign for an annual check-up or recommend this service to their landlords. This can cost the owner in excess of $1100 over a 10 years period and is unessential.

Ms Lawless says government incentives to help owners make their homes more energy efficient would improve minimum standards.

“The majority of landlords we manage property for are willing to make improvements to their properties where needed and often take ours and their tenants recommendations on board,” she says.


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Collaboration best way to remedy rising rents
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John Thistleton 3:17 pm 16 Nov 18

As a postscript to this story, Tamara Davis of home by holly agency says, ” From a property management
 point of view and someone who represents owners and their investment properties I think it’s a catch 22 for everyone involved.
 
“At our agency we try and educate both owners and tenants and work as a team to ensure a smooth tenancy so nothing is off the table and that is what we teach our valued owners.
 
“I think overcomplicating the legislation is going to make things harder for everyone. ACAT is already overloaded with cases and half the time it is because people (agents and private landlords) don’t sit face to face with the parties and talk it out and mediate a resolution where everyone walks away content with the outcome. “ 
 
On the topic of allowing pets in rental properties, Tamara says she educates all home by holly owners to ‘consider’ pets when their property is available for rent but there are some logistics to look at for both sides.
 
Does the property suit the pet the tenant ‘wants’?  Three large dogs in a two bedroom courtyard townhouse when factoring in wear and tear and potential damage on a property is something to look at?
Is the pet an inside/ outside or both pet?
Is the property an owners ‘home’ which they are only renting out whilst working abroad. A lot of owners have no choice but to rent their family homes whilst working abroad. I have seen families with children with health concerns that if a pet was to live in their family home whilst aboard, carpets etc would have to be ripped up upon return for their own children to reside in their home.”
 

Peter Bee 9:15 pm 15 Nov 18

First step: Stopping the guy in Turner who rents three apartments and is AirBnB-ing them all

Jim9 1:41 pm 15 Nov 18

“Investors will leave the market, and there will be less property which will only make it harder to find rental accommodation,”

Regardless of the broader debate in this space (it is complex with no simple answer) I always laugh when I read this old chestnut, surely the most repeated red herring out there.

For if investors leave the market, that should reduce demand for properties from investors – thus opening up greater opportunities for people currently renting to get into the market and purchase a property. Hence any loss of rental stock is a decent chance of being offset by more people that are currently renting being able to get into the property market and purchase. Its certainly not the black and white case the vested interests suggest when they repeat this old ‘talking point’.

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