When will the Government take the blame for Rental Crisis
By Bailey Compton 10 Nov 2023
Up to 40% of build costs are going into government organisations.
One of the major contributors to the housing shortage in Australia is our government. The state, the Commonwealth and the local government, all sought to contribute to the housing crisis. It is unfair that professionals in the industry are constantly identified as a fault, when in fact, the government needs to put their hand up and accept the blame. First, let’s look at Fair Trading: Fair Trading and Consumer Affairs departments of Australia have seen fit to cast the landlord in the role of the villain.
• Landlords cannot increase rent more than once a year, even though the Reserve Bank can increase interest rates once a month;
• Owners must provide a minimum building standard;
• If a landlord wants to sell their property, the tenant can move out with 2 weeks notice;
• The person appointed to NCAT usually favours the tenant;
• The government funds the tenancy advisory service, which provides advice for tenants with no protection to landlords;
• You have no standing in NCAT to terminate tenancy.
They say we have a housing shortage! Well, why then is it so difficult to obtain an approval from the local council. We are advised that if we want to put a project home on our property, it will take us 18 months to obtain proper approval and have the house built. It mostly is for normal houses on normal properties so is itself not understandable.
The government over the last 25 years has absolutely destroyed the apartment marketplace. Apart from the introduction of private certifiers, removal of the building insurance scheme for unit holders has left people without protection. The price of units has dropped greatly across the capital cities, and they have not proven to be a great investment. If an apartment, which is the only form of providing multiple levels of accommodation, is not attractive, you will obviously end up with a dirt of a property industry. Failure to protect has led to a reluctance to invest.
All government has done is put their hand out to collect money in relation to new property. Recently, I spoke to a builder who indicated that 40% of his build costs are going into the palms of some government organization. So much for affordable housing!
Now we have a new Reserve Bank governor who feels that loaners should be punished again. Notice in the previous edition, homeowners will put up with it and just reduce spending elsewhere. Investors will leave the market. The Reserve Bank, in its own way, has now contributed to the affordable housing problem.
The government determines to introduce a change to the planning law which will allow for more short-term residential accommodation. Regional areas that rely on tourism now have a massive drop in available accommodation. For the right property, short-term renting will always be a good investment option. Considering the current residential tenancy law across the various states, this will become more and more attractive to investors. Again, every property that is taken out of the residential pool, creates higher demand and reduces supply, which will increase the price.
This is not a statement on our current government, because both sides of Parliament do not understand property. We will never understand, considering property represents approximately one-eighth of the Australian economy, why governments punish it!