Australia is facing an unprecedented rental crisis. So, how do we solve it?
It will require both short- and long-term strategies and cooperation between property owners, the government, and the property management industry.
Investors returning from international posts
Initially, many international residents returned to their home countries at the beginning of the pandemic, leaving rental properties vacant.
However, the situation worsened as Australian rental property owners returned from their international posts and needed their homes.
While some owners left permanently, the crisis is slowly resolving itself as property owners return to their overseas positions and their properties become available for rent once more.
However, it’s essential to keep track of the duration such properties are available for.
The rise of short-term rentals
Airbnb and short-term vacation rentals have become increasingly popular.
However, this has contributed to the rental crisis, as many rental property owners have opted to offer their properties as short-term rentals instead of residential rentals.
This decision was driven by the desire for higher returns, as rental laws favoured tenants, making it difficult for property owners to collect rent.
To address this issue, we need to encourage property owners to return to the residential rental market.
One solution could be to impose financial consequences that offset the benefits of short-term rentals, such as higher interest rates, taxes, and council and water rates to account for the impact on local communities.
Australia requires more private investors to meet the demand for housing.
The government cannot solely provide enough private housing, nor can it afford the high cost of maintaining it.
To encourage investors to invest in residential properties, the government should offer incentives, such as reducing or eliminating stamp duty, offering interest rates comparable to owner-occupied properties, or even slightly lower rates to attract new investors.
Local governments should also contribute by reducing rates.
To further incentivise investors, the government should provide an upfront incentive for repairs or upgrades to ensure the property is safe and attractive for residents.
Additionally, taxes on returns should be reduced for the first five years.
In recent years, changes to tenancy laws in various states have left landlords frustrated.
The laws were introduced without a lot of consideration on the impact they would have on private property investing.
As a result, property owners took advantage of rising house prices and short-term gains.
To address this issue, the property management industry should advocate for the owners and follow the example of the US, where they promote laws that assist property investors and fight against laws that negatively impact them.
The Australian property management industry should unite and demonstrate their knowledge, professionalism, and support for property owners.
Think outside the box
To address long-term rental crises and shortages, it’s important to think creatively and explore alternative solutions.
Rather than solely relying on new building developments, we should consider other options.
For instance, transform empty parcels of land into suburbs, convert dilapidated rural properties into attractive rental homes, and repurpose warehouses into trendy communities.
By relaxing residential tenancy laws and embracing innovative ideas, a variety of buildings could be converted into rental properties quickly and efficiently.
Addressing the current rental crisis and preventing future shortages requires short and long-term strategies.
In the short term, incentivising Airbnb hosts to return their properties to the residential market through penalties and extra charges could make a significant impact.
Currently, more than 100,000 Australian properties are listed on Airbnb and similar platforms.
If only 25 per cent of these properties were made available for long-term rentals, it could help alleviate the crisis.
To solve the rental crisis in the long term, the property management industry must unite and
advocate for private property investors.
Encouraging tax and mortgage incentives and proposing new laws while removing recently introduced tenancy laws could attract investors back to the residential property market.
By doing so, there would be an increase in property sales and property management opportunities, leading to a positive impact on the rental market.