Already in the grips of a rental crisis, investors are selling off their Victorian investment properties en masse, discouraged by the raft of taxes and regulatory burdens that are being thrust upon them.
According to a recent survey from the Property Investment Professionals of Australia (PIPA), 12.1 per cent of investors sold one or more of their rental properties in the past 12 months around the nation.
However, in Victoria, that number was 31.35 per cent – dwarfing the results in all other jurisdictions except for Queensland, which also drew the ire of investors over the government’s failed land tax changes.
WA-based investor David Gunter recently sold his investment property in Melbourne and is looking to further trim his residential portfolio, thanks to the headwinds he’s faced over the past few years.
Mr Gunter lost more than $50,000 in rent during the pandemic rental moratoriums and through the erosion of landlords’ rights under changes to tenancy legislation in Victoria.
And he’s had enough.
“I just got sick of it,” Mr Gunter said.
“The government is just meddling.
“I don’t think it’s up to governments to be telling us how to manage our properties.”
Mr Gunter, who works as a social worker, said the changes to lending standards by The Australian Prudential Regulation Authority (APRA), along with the constantly evolving Tenancy Act, made life incredibly difficult for Mum and Dad investors and he’s simply getting out.
Mr Gunter said he is also considering selling his Queensland investment property, after the state tried to impose a broad-based land tax on investors’ total property portfolio.
“It’s just been a constant theme for the last six years,” he said.
“It leaves a sour taste in your mouth, so now we are just going to shift our money elsewhere.”
According to the PIPA Property Investor Sentiment Survey, a staggering 38 per cent of investors have indicated they might sell a property in the next 12 months, with the top reason being governments increasing or threatening to increase taxes, duties, and levies (47 per cent).
Changing tenancy legislation that impacts their control and increases their compliance burden and holding costs was cited as a reason by 43 per cent of respondents.
While the impact of rapidly rising interest rates was also a factor, with 40.1 per cent naming it as the main pressure.
“Investors are really feeling like they’ve lost control of their real estate assets,” Ms McDougall said.
“So that’s actually motivating many more of them to sell than perhaps previously would have.”
Ms McDougall said the impact of investors selling is going to be felt, most of all, by tenants who are already struggling with the rental crisis.
“It actually started to happen probably about 10 years ago,” she said.
“We didn’t have the normal volume of investors buying into the market including in Victoria, because they couldn’t access the funding because of some APRA changes.
“So we’ve had a perfect storm over the last 10 years where you didn’t have the normal volume of investors coming into the market to replace those investors who were selling.”
She said over the past few years in particular, investors have sold in far greater numbers on average and that’s reduced supply of rental accommodation.
“Obviously excessive demand versus dwindling supply just drives rents higher and higher,” she said.
Ms McDougall said it’s time governments start acknowledging the role investors have in bringing supply to the market and looking after them.
“It does appear at the moment that policymakers are more open to discussing the needs and wants of investors more than they ever have before,” she said.
“As someone who represents the industry, we’ve certainly found over the years that, investors have been seen as the evildoers or the cash cows.
“At a policy level, it would be really nice to see some type of incentives that would encourage more investors to get into the market, but also encourage investors to stay for the long term, because then we would have a nice steady supply of rental accommodation, which would, flatten out those big spikes in rent that we’ve been seeing.”
Mr Gunter said governments needed to work with investors.
“I didn’t get into property investment to lose money and I’ve got thousands I need to recoup,” he said.
“They keep talking about the under-supply of dwellings, so governments should really be working with property investors.
“But we need some incentives to do so.”