26 July 2019

Landlords will need to lift their game

| Ian Bushnell
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Affordable housing

Housing can be a money pit and a draining experience for many renters. File photo.

Tenant help lines overwhelmed, declining home ownership and rental stock incapable of dealing with Canberra’s temperature extremes – that’s what the ACT’s renting landscape looks like this winter.

Throw in high rents and rising utility bills consuming large portions of tenants’ incomes, and you have a situation that the market is not going to resolve.

While renters are much more aware of their rights and attempting to exercise them, they remain at the mercy of landlords and rental agreements weighted towards owners.

For ACT Tenants Union executive officer Deb Pippen, who has seen it all in more than 20 years in the role, the changes to the Tenancy Residential Act that come into force next year are only minor and do not deal with the pressing issues of minimum home standards, no-cause evictions and remedies against landlords who are reluctant to making repairs or order work, despite clear directions in leases.

Better Renting’s recent report revealed that more than 43 per cent of Canberra’s rentals have an energy efficiency rating of zero, with some tenants resorting to bubble wrapping windows to insulate properties that may have heating but little means of retaining warmth.

New ACT Climate Change councillor Professor Mark Howden says much more needs to be done generally in the housing space for properties to be up to scratch as the extremes of climate change become more pronounced.

For the rental market, where climate control measures such as insulation, efficient heating and cooling, and shading with curtains and awnings are way behind owner-occupiers, there are serious equity issues. The energy divide is becoming even more pronounced with owner-occupiers taking up solar panels and batteries to avoid rising power bills.

The Australia Bureau of Statistics’ latest report Housing Occupancy and Costs, 2017-18 shows home ownership is falling steadily. At the turn of the century before the price boom, the ACT had a home-ownership rate of 75 per cent but that is now 63 per cent.

With home prices holding firm or rising in the ACT, incomes flat, banks making borrowers jump through more hoops and investors continuing to reap the benefits of favourable tax settings, it is hard to see that decline turning around.

Canberrans are using bubble wrap on windows as a new form of insulation. Photo: George Tsotsos.

Canberrans are using bubble wrap on windows as a form of insulation. Photo: George Tsotsos.

The federal election offered hope that the housing market in Australia could be recalibrated so that the market distortions of negative gearing and capital gains tax discounts could be adjusted, but a ferocious campaign from the property industry and a Coalition wedded to the constituency it created put paid to that.

Taxpayers will continue to foot the bill for the multi-billion dollar subsidies investors enjoy, but they also have to pick up the tab for the government intervention that will be necessary if the nation is to avoid widespread homelessness or at the least drastically curtailed living standards due to the high cost of housing.

Public and social housing will need to be provided en masse, not just to the jobless but to the many in work, even in the affluent ACT, who are unable to afford the private rental market, no matter how many apartments go up.

For the increasing numbers of people locked out of the owner-occupier market, the private rental market will be a battleground of broken dreams unless changes are made that can provide more security, minimum standards and a measure of equity.

Real estate agents and landlords will argue as ever that too many impositions will drive investors from the market and result in fewer rental properties available.

But many landlords, who have benefited from those favourable tax settings unique to Australia, need to understand that ownership also confers responsibilities and obligations as well as rights.

Some of the relatively new investor class, possibly highly leveraged with multi-home portfolios, might find it hard to stay across the needs of their properties.

But as Ms Pippen says, they are operating businesses and their properties don’t just ‘magically sit there and you just reap the benefit, there are costs’.

Yes, there is recourse to the ACT Civil and Administrative Tribunal but that can be a daunting prospect for an already insecure tenant, not to mention forking out the fee to take on a landlord.

Landlords will have to lift their game, one way or another, and government at all levels, along with the property industry, will have to come to grips with a housing environment marked by falling levels of ownership and growing numbers of renters demanding a better deal.

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Love the bitter tirades of the obviously upset renters. If you don’t like it just buy your own place and stop grizzling. You don’t own the property even though it appears you think you do. It’s called knuckling down and saving

And tenants will have to lift the amount they pay.
No such thing as a free lunch.

rationalobserver10:00 am 12 Feb 21

There are not many alternatives to real estate when it comes to having something to live in.
There are many alternatives to real estate when it comes to protecting and growing a small savings nest egg.
The harsh reality is that tenants need to pay at least as much as every other investment option for there to even be a rental property available to rent.

Wonderfully written, Ian. Both succinct and pointed. Yours is a ‘must’ read for for investors, government and tenants alike.

Love the comment, ‘good you can sell the rental and I’ll rent it anyway ‘ haha ours sold for 7 figures and it was a ex Govie knock down. rented for $500 pw. The new buildings rented for $900 pw each. So much for affordable housing.

Blen_Carmichael3:26 pm 29 Jul 19

“The federal election offered hope that the housing market in Australia could be recalibrated so that the market distortions of negative gearing and capital gains tax discounts could be adjusted, but a ferocious campaign from the property industry and a Coalition wedded to the constituency it created put paid to that. Taxpayers will continue to foot the bill for the multi-billion dollar subsidies investors enjoy…”

Since when did negative gearing amount to “subsidies”?

So, not ‘strictly’ a subsidy. However, the investor cuts taxes and the tenant cannot. It’s very like a subsidy.

Nice four beddie house across the street from me sold six weeks ago. Got to know the tenants fairly well before the rental cost drove them out. I read the stats on the house on the Agents website: Rates $3,460.00 pa, Land Tax $3,890.00 pa so there’s $612.00 pm the landlord has to charge before considering maintenance etc and the rental value. Who would want to own “investment” property in the ACT?

The costs don’t deter anyone.
‘Your money is only safe in housing.’ Ha!

And everything being suggested here will just drive the price of the rental market up further. As you say, it is a business. People go into business to make money.

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