The current rental housing crisis will continue to worsen.
Back in July last year, I wrote an article hoping to prompt our Federal and State Governments to take a collaborative approach to solving, or at least seriously addressing, the current rental crisis with the assistance of councils, developers, the private sector, and mum and dad investors.
This crisis is on the brink of pushing rental prices to increasingly unsustainable levels, making housing progressively out of reach for a considerable segment of the population. The situation is exacerbated by an acute shortage of rental properties, driven by factors such as immigration, which is expected to rise significantly over the next two years and further strain our housing supply.
Rising land tax charges have also led to a decrease in the number of available rental properties due to many investors recently exiting the market, occurring alongside increasing demand, and resulting in heightened rental prices across all price ranges.
The situation urgently calls for comprehensive solutions to prevent what many believe could be an explosion in rental costs, which would place them well beyond the means of most Australians.
To date, responses have been merely temporary fixes to a problem needing in-depth and permanent solutions. Particularly in Victoria, the government has opted for punitive measures against those who could help solve the problem—namely, investors and developers who have the capacity to increase the supply of housing.
What we know:
- Investors in 2023 left the Victorian market in large numbers due to overwhelming increases in land tax.
- Our population growth is estimated to expand by 500,000 this year.
- Compliance issues have been further compounded by additional costs and charges for rental providers.
- Interest rates have risen.
- There is a distinct disincentive to own or buy an investment property in Victoria.
What we would like to see:
- Adopt an incentivised approach – cease penalising small-scale investors and encourage Mum and Dad to own rental property.
- Encourage the development of build-to-rent properties.
- Rebalance laws to ensure fairness between renters and property providers.
- Eliminate stamp duty for investors committed to the rental market, under specific conditions.
- Reduce land tax for dedicated rental properties.
- Revise planning regulations to facilitate more dual occupancy conversions and higher-density residential use in selected areas.
- Guarantee the absolute retention of negative gearing by investors.
- Oppose the introduction of any additional capital gains tax, as has been suggested by a political party. In fact, reduce capital gains tax on dedicated rental investment properties.
These proposed solutions aim to increase the supply of affordable housing by cutting through bureaucratic hurdles and creating a more attractive investment landscape for those willing to contribute to the rental market. Retaining incentives such as negative gearing and adjusting GST liabilities for rented properties are essential steps in making rental investments more appealing.
The crisis at hand requires a unified approach, transcending political differences to focus on practical, actionable solutions. Establishing a nationally chaired committee with a clear deadline for action is crucial for devising a strategic response to this national emergency.
As we navigate these challenging times, the importance of collaboration and swift action cannot be overstated. By working together—free from political bias—we can begin to address the urgent need for more affordable rental housing and ensure that the Australian dream of having a “roof over one’s head” remains attainable for all.
As a nation known for its prosperity, ensuring that everyone has access to affordable housing is fundamental. However, addressing the issue requires more than just identifying the problem; it demands immediate and collaborative action across both the government and private sectors. Together, we can work towards a future where affordable housing is not just an ideal but a reality for every Australian, thereby ensuring a stable and inclusive future for all.
This situation can only be resolved be increasing the supply of rental accommodation. More supply equals more affordable rental properties. Governments alone cannot create enough supply it needs to be a joint initiative between the government and the private sector.
And finally, I remind politicians of a famous quote by Winston Churchill “I contend that for a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle.”
