While renters are struggling to afford the minimal rental properties available on the market, Residential Rental Providers (RRPs) are requiring severe rent increases to make their investment viable.
Why is there a lack of housing?
The 2021 selling boom tempted many property investors to sell their rental property. This led to multiple renters receiving notices to vacate due to their homes being sold. Additional factors that may have contributed to the decision to sell are rising maintenance costs, tougher rental laws including minimum standards and implementation of safety compliance checks, and limited reasons to serve notices to vacate. While we still saw many investors purchasing property during this time, first-home buyers were taking advantage of government incentives resulting in fewer properties available for rent.
Is a rent freeze the answer?
One solution currently making headlines is a national rent freeze, proposed by Greens MP Max Chandler-Mather.
Mr. Chandler-Mather is urging the Albanese Government to implement a nationwide rent freeze for two years to help combat the rental affordability issue and allow time for wages and incomes to catch up to rents.
In recent COVID times, we saw a rent freeze occur during lockdowns. This eventually led to significant rent increases across our portfolios once the freeze was lifted. As a result, some renters are receiving $20, $30, $40, or even $50 per week increases in order to catch up to market value resulting in many renters giving notice to vacate as they couldn’t afford or didn’t want to pay that much more. Now we’re seeing more renters on the market looking for another property.
Residential Rental Providers are also falling victim to inflation receiving higher interest rates, higher Council rates, higher maintenance costs due to material shortages, and increased labor costs, and to freeze the amount of rental income coming in, many can no longer afford their investment, therefore opting to sell and adding to the housing shortage while more renters look for another home.
What does this mean for renters?
Renters are amidst an unfortunate rental crisis. Some of our properties for lease with Neilson Partners see 40+ groups through their first open for inspection which leads renters to ask ‘what’s the point of applying for a rental property? We hear of renters living in hotels or cars because they are unable to secure a property. The lack of properties available combined with high rental prices is making it impossible for some to secure a home they can afford for the long term.
What is the solution?
After speaking with several property investors and colleagues about this issue, one thing is agreed upon and that is that the government needs to step in and provide more affordable housing. The good news is that as part of the Albanese Government’s $10 billion social housing fund, 30,000 social and affordable houses have been promised. This is on top of 15,000 houses statewide that have been forecasted over the next two years.
Property investing needs to be viable for Residential Rental Providers and there needs to be a holistic approach to the rental housing crisis, taking into consideration both renters and owners.
