On 28 March 2023, the Queensland state government announced their intentions to balance the rights and interests between Queenslanders who rent and investment property owners, to sustain healthy rental supply by limiting rent increases to every 12 months.
A plan that Queensland Premier, Annastacia Palaszczuk and the Minister for Communities and Housing, Leeanne Enoch claim will provide a “fair go for all”, hasn’t been received as such by many industry experts. In fact, several leading economists in Australia agree that this solution is not a sustainable one, and will instead have the adverse effect on rental supply, discouraging further action.
Amongst the many calling out the government on this out-of-touch proposal is our Director of Ray White Maroochydore, Dan Sowden.
“This decision is extremely short sighted and won’t have any significant impact on affordability. The government has already tried to intervene in the rental industry, and we’ve clearly witnessed the consequences of these actions: leading to increased rent, affecting affordability and homelessness. The proposed rental cap in conjunction with the rental reforms is simply another layer of government oversight,” says Dan Sowden.
Alarmingly, Brisbane is now the second-least affordable capital city to rent in, showing an increase of 17 per cent in the 12 months to June 2022 found in a recent report by the Rental Affordability Index.
In addition to this, an increase in rental costs has shown strong statistical correlation with increasing homelessness. We’ve seen a 22 per cent jump since 2017 in homelessness in Queensland state, which is significantly greater than the eight per cent reported across Australia, confirmed by data from Queensland Council of Social Services (QCOSS) .
Outraged by Palaszczuk’s announcement, Dan is calling out the government’s actions as “grandstanding for votes”.
“For those who fall under periodic agreements, currently rental increases are limited to every six months with a two month notice to tenants before rental costs go up. Many investors don’t ask for rent increases even when they are achievable because they value a quality tenant over higher rent.
This rental cap will only do two things: one, investors will stop purchasing residential rental properties, and two, investors will go for larger rental increases each year, because they won’t be able to review leases at six month periods.
The government is clearly grandstanding for votes without thinking about the long term consequences of these so-called reforms,” says Dan.With previous residential rental laws already impacting the percentage of owner occupied vs rental properties, Ray White Maroochydore is concerned about the flow-on effect of these laws reducing rental supply even further.
“The government has already implemented three stages of the residential rental reforms. In principle, these changes make sense to the rights of the tenants, however the flow-on effect has resulted in investors selling off their rental properties before the reforms came in, simply because they don’t want the complexity. These investment properties once hitting the market are in around 80% of cases bought by owners, therefore reducing rental supply, further fueling demand, and raising rent,” says Dan.
The Minister for Communities and Housing believes that the Queensland government is putting its best foot forward to reduce homelessness through their investment of $166.3 million in specialist homelessness services in 2022 – 2023.
Not interested in a “band aid solution” however, Ray White Maroochydore believes that the government should instead be devising long term solutions that are both effective and sustainable.
“Our housing and rental crisis isn’t going to fix itself if we keep implementing schemes that actually reduce supply. Instead, the government should be looking at incentivising private investors of Australia who currently provide 90% of all rental properties to continue to do so, and not propose caps or restrictions to their investment decisions.
Ideally a policy that will fuel supply in the form of building new properties specific for residential rentals, and allows for higher density developments in certain areas is the best way to tackle demand,” says Dan.
Links:
https://www.domain.com.au/news/opinion-rental-caps-could-worsen-the-housing-crisis-2-1202946/
https://www.yourinvestmentpropertymag.com.au/news/queensland-rent-cap-will-worsen-rental-crisis
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