In part two of A perfect storm: Australia’s rental crisis we examine two potential solutions to the issue, including how a change in mindset could help bring landlords and tenants on the same page and how axing stamp duty could ease the pressure. You can catch up on the other parts of the story here.
Solution: Changing the ‘us versus them’ mentality
The ‘us versus them’ mentality that exists between renters and landlords has to change if Australia is to solve its rental crisis, experts say.
REIQ CEO Antonia Mercorella says there’s a misconception that landlords are wealthy and raking in the cash.
“There is this real ‘us and them’ mentality that’s started to emerge, and you can sense this real angst and anger towards investors, which is really unfortunate,” she says.
Ms Mercorella says most landlords are mum and dad investors with one rental, who are looking to fund their retirement.
“I don’t know that it’s well understood what’s involved in owning a rental property, the risks that come with it and the ongoing costs that come with it,” she says.
Real Estate Institute of Australia President and WA agent, Hayden Groves says the state is also going through rental reforms and a recent survey of landlords revealed if no-fault evictions are removed and tenants are allowed to make minor modifications to properties without landlord permission, then 61 per cent would consider selling.
Mr Groves says state governments often make the mistake of making policies based on social housing objectives, even though mum and dad investors own about 27 per cent of private rentals across the country.
“Their mindset is that the tenant is the consumer,” he says.
“And the landlord is surely independently wealthy, and doesn’t need protection because they’re more sophisticated.
“We must give them the incentive to supply Australians with the housing they need to rent because, if we don’t, there’s not one government in the country that can suddenly increase their housing stock availability.”
Solution: Axe stamp duty
One of the biggest changes the REIA feels could aid the rental/housing crisis is axing stamp duty.
While recognising that a significant portion of governments’ funding comes from stamp duty, President Hayden Groves says axing the tax would increase housing supply, including more rentals, aid labour mobility and encourage older Australians in large homes to downsize.
“It’s hard to model but we would expect to see up to a 50 per cent increase in supply of housing stock,” he says.
He says it would also increase the country’s labour fluidity.
“People will make buying decisions more readily and move around the country to find better work, education and lifestyle opportunities,” he says.
If one of the barriers to buying a home is removed then many people currently living in a rental will be able to buy, freeing that rental up for someone else.
Removing stamp duty would also encourage more senior Australians to downsize, which then means their property could be purchased by an investor or create a flow-on effect of families and couples moving into the ‘right’ size home for their needs.
To get a copy of the upcoming magazine featuring our special feature on the current rental crisis visit eliteagent.com/subscribe.