Real estate industry bodies REINSW, PIPA slam government polices over rental crisis

Mar 2023Karen Millers

Two real estate bodies have slammed government policies and bans which they say have exacerbated the rental crisis.

One says “kneejerk” policies have contributed to the growing crisis while the other say that the State Government’s ban on “rent bidding” – which stops agents suggesting tenants offer above the asking rent – had been counter-productive.

The Real Estate Institute of NSW (REINSW) says tenants were now more aware than ever that they can offer above the asking rent and believe they must in order to stand a chance.

REINSW board member and senior property manager Michelle McLean said the increase in rent bidding was happening at the lower end of the market.

“We are seeing tenants competing for properties at the cheaper end of the rental market becoming increasingly desperate in their attempts to secure a home in an environment of such tight vacancy,” she said.

“They are pulling out all the stops and, in many cases, leaving themselves ever more vulnerable.

“The situation will remain perilous until the Government gets serious about providing more housing for people in the lower socio-economic demographic.”

REINSW CEO Tim McKibbin said the ban failed to understand the problem.

“Banning agents from asking above the advertised rent has had no impact, as rent bidding was always driven by desperate tenants,” he said.

Mr McKibbin said the party elected on Saturday needed to work with the industry on real and tangible measures to address the housing crisis.”

It comes as the Property Investment Professionals of Australia (PIPA) argues that years of “kneejerk” policies created the rental crisis.

PIPA chair Nicola McDougall said policies had reduced the volume of investors, which had fallen to the lowest level since 2020, and ultimately the supply of rental properties.

“Since late 2014, we have seen investor-targeted APRA lending restrictions come and go; negative gearing and Capital Gains Tax laws continually on the chopping block; emergency tenancy laws enacted during the pandemic; and mooted rental caps now being the latest attack on investors,” Ms McDougall said.

“Given property investment should be a long-term strategy, no wonder hundreds of thousands of investors are offloading their properties in reaction to the head-spinning array of financial and legislative imposts that are forever levelled at them.”

CoreLogic Asia-Pacific executive research director Tim Lawless said the short to medium term rental supply outlook was “looking pretty glum”.

“From a new dwellings’ perspective, approvals are at their lowest level in more than a decade,” he said.

“Across the medium to high density sector, dwelling approvals have mostly been below the decade average since 2018,” he said.

Financial and housing market expert Pete Wargent said stable regulatory framework encouraged investment in all sectors.

“Knee-jerk reactions or price caps never work in economics traditionally,” he said.

“A good starting point needs to be removing the current lending assessment buffer … if people want to borrow, then let them borrow.”

Originally Published: Fiona Killman | | 22 March 2023

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