Greens’ leader Adam Bandt’s impassioned address at the National Press Club earlier this year, demanding the government immediately impose a national rent freeze, continues to feature in the rental crisis discussion. The recently announced National Rental Inquiry initiated by the Greens will be dominated by their supporters’ calls for a rent freeze.
Victoria Premier, Dan Andrews chimed in during the week suggesting he’d consider ‘rent caps or freezes’ too. Investors have responded by suggesting that such a move, on top of recent massive land tax hikes and higher interest rates, would be the ‘tipping point’, forcing them to sell their properties.
all your policies are designed to whack investors
Last time I looked, it is the private investor market that supplies 89 percent of all rental homes in the nation. The government provides 11 percent. If seems obvious that if you disincentive private investors (with things like rent freezes), investors will stop providing enough houses for renters. This leads to shorter supply (investors will sell) which pushes rents even higher. Yet, somehow, the Greens and the Victorian Premier have missed this fundamental economic point.
Investors selling is exactly what is unfolding across the nation right now. The CEO of First National Real Estate told me this week that their Bendigo, Victoria office that normally sells about 10 properties per month, sold 38 listings from their rental portfolio in June. In WA, there are 16,000 fewer residential tenancy bonds now than a year ago.
Other policies such as calling for changes to negative gearing and capital gains tax discounts (another Greens policy) would demolish the current rental housing system, causing a rental crisis far worse than currently experienced. The Greens say they want solutions to address the rental crisis ‘right now’. Well, you don’t and simply can’t solve it by turning on the very people that supply the houses; you can’t magic more housing supply out of thin air if all your policies are designed to whack investors.
The Greens have also called on more government built housing, something desperately needed. Yet they refused to back the $10b Housing Australia Future Fund which aims to deliver 30,000 more affordable homes, blocking it in the Senate.
To get more supply in the market immediately, you could start with stamp duty reform. Imagine offering a stamp duty rebate for investors that offered property at a below-market rent that guaranteed a certain reasonable return with fixed moderate annual rent increases. Investors would buy and re-supply the market.
Treasurer Jim Chalmers is on the record as a supporter of reforming stamp duty; that unfair tax that stifles economic growth and impacts affordability. Everyone from the Henry Tax Review through to the National Housing Finance and Investment Corporation (NHFIC) agree with what real estate agents have always known; that stamp duty is a significant barrier to property ownership and rental affordability and is a transaction-killing tax that should be reformed.
There is no avoiding that the only way to address rental affordability is by increasing supply and unhelpful policies that seek to diminish supply rather than incentivise it is counter-intuitive madness.
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