McGowan Makes Mistake

Late last week, the McGowan government extended the Emergency Response provisions of the Residential Tenancies Act for a further six months.

Unfortunately, this decision has nothing to do with protecting tenants impacted by COVID-19 as proven by the fact less than two per cent of residential tenancies are affected.

To date, the conciliation service provided through the Department of Consumer Protection, set up to assist COVID-19 impacted tenancies, has had around 800 applications since the emergency laws came into effect six months ago. Currently, there are approximately 200,000 tenancies, so only 0.39 per cent of tenants have sought assistance. The lack of take-up for conciliation reveals there is little need for extending the emergency period.

To be clear, the extension applies to all residential tenancies, not just the two per cent that are COVID-19 impacted. The decision is both lazy and reckless.

Rental stock is already extremely tight, with Perth’s vacancy rate at 1.3 percent, well below a market-balanced 3.5 per cent. Rents are inevitably on the rise as a result. By the time the emergency provisions end, upward pressure on rents will be at critical levels as investors continue to wait until they can buy in a less regulated environment. The short supply problem is exacerbated by existing investors taking advantage of more favourable market conditions and selling their properties. As a result, new supply of tenantable property will remain very low for the foreseeable future.

Unless the government can miraculously build more community housing in six months, there will be enormous pressure on families who will not be able to afford rents after March 2021 when the provisions are lifted.

Ironically, the government is actively encouraging workers into WA who are already finding it extraordinarily difficult to find rental accommodation. The REIA’s June quarter Housing Affordability Report ranks WA as the most affordable place to rent in Australia with an average 16.1 per cent of a tenant’s income going to rent. This fact refutes tenancy advocates’ fear of wholesale rent stress in WA, the false rationale behind the extension.

It is entirely reasonable to continue emergency support measures for COVID-19 impacted tenants, a position supported by REIWA and industry. It is simply baffling that the extension has been applied to all tenancies. This decision reeks of political expediency because extending the laws could be done via regulation, sensible modifications would have needed to pass parliament.

This is irresponsible, indolent governing that must be called out for what it is; rent control by stealth. It sets a very dangerous precedent acting as a disincentive to investors to supply the rental market with much needed stock.