29 April 2022

High rents, low supply: industry questions timing of rental reform, including minimum standards

| Lottie Twyford
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housing from above

As the latest Anglicare snapshot has shown, Canberra’s rental crisis is worsening with residential vacancy rates at 0.4 per cent. Photo: Michelle Kroll.

The picture for Canberra’s renters is not looking pretty, with the latest rental affordability snapshot showing things are getting worse, especially for those relying on Federal Government support.

At the same time, the ACT Government is proposing a swathe of reforms to strengthen residential tenancy laws, including minimum standards for rental properties.

But some fear this will not help alleviate the current ‘perfect storm’ wreaking havoc for both investors and renters.

According to the latest Anglicare report, there are only five affordable and appropriate properties on the market for a couple with two children where both adults are receiving the JobSeeker payment and one child is aged under five and one under 10.

It’s the same grim picture for a single parent receiving the parenting payment. Again, there are only five available properties.

For singles receiving JobSeeeker, Youth Allowance, or the Disability Support Pension, there are currently no properties available at all.

Affordable rent is generally deemed to be no more than 30 per cent of a person’s income.

READ ALSO Dire warnings as Canberra’s rental crunch worsens

ACT Shelter CEO Travis Gilbert said the Territory’s private rental market is a tough place to be for anyone receiving income support payments.

The residential vacancy rate in the ACT is currently extremely tight – at only 0.5 per cent. Mr Gilbert noted a vacancy rate of 3 per cent showed “a rental market balanced between landlords and tenants”.

The ACT Government is considering a range of reforms that would, among other things, prevent landlords from ending leases without cause, seek to regulate and prohibit rent bidding, and set minimum standards for rental properties.

Feedback into these rental reforms was released yesterday and there were “mixed views” on a variety of topics.

Shane Rattenbury MLA Photo: Michelle Kroll Region Media

Attorney-General Shane Rattenbury said any reform to rental laws would seek to balance the rights and responsibilities of tenants and landlords. Photo: Michelle Kroll.

Attorney-General Shane Rattenbury said everyone in Canberra deserved a “safe and secure place to live” and all reforms would seek to balance the rights and responsibilities of tenants and landlords.

“Tenants should have the right to turn rental properties from a house into a real home. Property owners should also have the ability to effectively and fairly manage their properties,” he said.

Real Estate Institute ACT President and Director of Property Management for The Property Collective Hannah Gill agreed with these sentiments.

But that doesn’t mean Ms Gill, and much of the industry, isn’t concerned about these reforms being implemented in a way that doesn’t have “unintended consequences”.

“We completely support the principles of the reform,” she said.

“You want people to have a home that is warm and safe and secure, but when you look at some of the framework for delivering that for older homes, that becomes problematic in terms of the costs involved.

“Those landlords aren’t going to spend significant amounts of money … they are going to opt-out and sell because the market’s hot.”

From there, Ms Gill said, those properties are more likely to be sold to owner-occupiers or developers, rather than go back to the rental market.

“It’s a challenge and we are seeing less stock on the market … which will push rents up.”

Ms Gill said, above all, increasing the supply of rentals to the market must happen.

The government’s feedback report also found minimum standards should be clearly defined and specific so compliance could be determined easily.

Woman smiling

Hannah Gill is the Real Estate Institute ACT President and Director of Property Management for The Property Collective. Photo: File.

Ms Gill said it’s hoped there will be some assistance for investors bringing their properties up to new standards but warned there would be some properties – particularly those which attract students and young professionals for group housing – which wouldn’t be able to meet them.

Furthermore, although the ACT Government has already committed to banning no-cause evictions, Ms Gill said it’s important this is replaced with something else useful.

“It’s already the longest notice in the country. A tenant is given six months’ notice … you could argue that is much fairer than the eight-week notice given because an owner wants to move in,” she said.

The government’s report on the consultation process showed the majority of respondents who argued against the removal of no-cause evictions were either landlords or real estate agents.

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Views on paying more than the advertised price for a rental property were more mixed.

“Several landlords and agents were strongly opposed to preventing tenants from offering more than the advertised price for a property, arguing that rent bidding is a legitimate means to achieving the market price for the property,” the report said.

But tenant advocates strongly urged all forms of rent bidding be banned, arguing it is unfair.

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It’s just yet another ACT govt scam to give their mates jobs to be ‘rent inspectors’ and employ them to go look at rental properties. The ACT govt wants to abolish private landlords (mums and dads who have properties to try to save for retirement) and instead the ACT govt wants to bring in their corporate friends to create multi storey large build to rent apartments. It’s all about the ACT govt giving money (taxpayer dollars) to their mates.

I had 3 rental properties in Canberra and sold them all in the last few years because of the landtax hikes and government overreach. Also I did not want to be involved with having to raise rents to the levels they needed to be to keep the investment viable. I have since invested in other markets that are providing a good return with far less concerns. PS and this is only so I can hopefully afford to retire one day as I got into super around halfway through my working life.

I can never understand why the ACT government has been very happy to turn our local property developers into very rich multi millionaires, but place a load of taxes and property restrictions on everyday landlords.

It’s no wonder so many Canberra landlords have sold off their houses and removed another rental property from the market over the last few years. Reportedly there’s been a 10% drop in the number of rental properties available to tenants.

Surely there’s been policy ways to cut into unscrupulous Canberra landlords with a scalpel, not hit them all with a sledgehammer.

This has to be incorrect. Andrew Barr and Labor have worked for over twenty years in office to make rents affordable in Canberra. What went wrong?

Yep…. look back over ACT Government ministerial press releases, housing strategies, taxation strategies, etc

You will see repeated claims from Mr Barr or others on how their latest housing intervention will increase housing or rental affordability in Canberra. It’s over a decade of empty promises.

When will someone from the ACT government admit some ownership for Canberra becoming: the worst place to rent in Australia; by some reports the least affordable housing market in the country; and containing suburbs with Australia’s highest mortgage stress levels.

We need to tackle Canberra’s housing issues with the same effort and innovative approaches we took to successfully tackle the 100% renewable energy equivalent goal.

limestonecowboy6:37 pm 29 Apr 22

The tenancy laws are already severely slanted towards the tenant in the ACT. A landlord entrusts a property worth hundreds of thousands of dollars , or more, to a tenant with a bond of a few thousand.
A malicious, negligent or even careless tenant can cause tens of thousands of dollars in damage in a very short time. There’s a small cohort of bad tenants and the same goes for landlords and over zealous agents. Most are reasonable and fair.

The ACT government with it’s rapacious Land Tax forces rents up as does imposing higher and higher standards of insulation etc. I agree tenants are entitled to a secure and well appointed residence.

Retrospectively introducing higher standards is unfair and imposes thousands of dollars of extra costs on landlords who are often just wage earners, sacrificing their own lifestyles to secure an income for retirement. I chose to invest rather than travel overseas and drive a flash car.

I have had two bad tenants in thirty years of renting my properties, one was under an agency, which did not adequately screen a tenant or oversee the tenancy. The other was simply a liar and anti-social miscreant who upset every neighbour in the street. He did a “midnight flit” owing a months rent a damaged house and an overgrown, weed infested garden.

My current tenants have been there 8 years and we have had no issues in that time. We have a mutually beneficial and respectful arrangement.

A result of the long tenancy is that rents have not increased in line with market pricing. The leasing provisions make it difficult to increase rents in line with the market. The continuity of the lease partly makes up for this loss of potential income. So again the system favours a long term tenant

Nonsense. legal protections for Australian tenants fall behind those in virtually every other OECD country.

Let’s compare Australian tenancy laws to those overseas. Indefinite leases are available to renters in the Netherlands, Denmark and Germany, and even if the tenant is on a fixed-term lease it is difficult to terminate the agreement without their permission.

In Ireland, tenants are moved on to a secure lease of four years after six months of renting.

In many European countries, such as France, Scotland, Netherlands, Ireland, Denmark and Germany, landlords cannot evict tenants at any stage without a certified reason.

ChrisinTurner2:02 pm 29 Apr 22

This is exactly when renters need protection. There has never been a justifiable reason for “no reason” evictions.

The ACT Labor / Greens government owns this crisis, and needs to be held accountable for years of terrible policy and inaction that ignores the expert analysis in favor of appeasing private developers. Even now they talk up corporate landlords and build to rent as a solution despite all evidence being to the contrary.

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