Rental freezes to cause more pain, according to peak body

Jun 2023Karen Millers

The Victorian rental crisis has been highlighted across most media forums in recent times and only seems to be getting worse, according to several peak industry bodies.

The latest to reiterate the issue is the Property Investment Professionals of Australia (PIPA) and the Property Investors Council of Australia (PICA), who blame state taxes and policies.

PIPA says Victoria is Australia’s worst state for renters, with the highest stamp duty in the country, a new land tax set to slug mum and dad investors, the threat of rent controls, and more than 100 tenancy reforms in two years.

PIPA’S analysis of new ATO data also shows the net average annual number of people with rental property incomes has fallen 55 per cent in five years nationally.

Analysis of the ATO’s Individual Taxation Statistics for 2020-21 found the average increase in net individual investors every year in the five years to 2015/2016 was about 66,000 nationally, but in the five years to 2020/21 this figure had fallen to about 29,600 – including a negative result in 2019/20 when investor numbers fell by 333.

PICA chair Ben Kingsley said it was clear the number of net individual investors was not keeping up with net rental demand, and constant attacks and financial imposts on investors over the past five years in particular has pushed the country into a rental crisis, with Victoria the worst of the lot.

“Never in my lifetime would I have thought that a government of the day could be that dumb to consider rental freezes, yet the Victorian Labor Government is sounding a very clear message to mum and dad property investors – telling them your money is not required in Victoria, even though it has one of the lowest rental vacancy rates in the country.

“Whilst most renters will think this is a welcome short-term relief measure, the chronic shortage of rental properties in this state will remain for years and decades to come, ultimately causing severe economic harm to a state that is already challenged by record levels of debt.

“This will lead to higher rents for longer, as investors choose to invest their money in other states and territories where the suppliers of the majority of rental properties in this country are treated with more respect than they are in Victoria.”

PIPA chair Nicola McDougall said investors had been selling up for years, which had resulted in a critical undersupply of rental properties nationwide, because for many it was not worth the financial risks nor the constant requirements to fund state government coffers via higher taxes.

“PIPA has been warning for nearly a decade about the negative impacts of market intervention on rental markets, starting with the APRA lending restrictions that came into effect in 2015, and now a variety of rent caps or controls”

“The ATO stats don’t lie: investors have already deserted markets around the nation – and especially in Victoria and Queensland – because they no longer have control of their assets. “The negative annual result for investor numbers during the first year of the pandemic was the first time this had occurred since the GFC more than a decade before but is set to happen again sooner rather than later as investors sell up in droves.”

Originally Published: Dean Webster | Times News Group | 30 June 2023

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