SELECT MORTGAGE FINANCE

The ‘rental crisis’ that we have all become accustomed to watching and reading about almost daily is hitting hard for not just tenants but also landlords like Charlotte.

But here are the hard truths about the situations both tenants and landlords find themselves in.

Hard Truth 1. Rents are too high because landlords are greedy – WRONG.

An increased interest rate from 2% (which they were paying back in May 2022) to around 5.5% now means they have almost tripled their interest cost.

Vacancy rates across the country have tightened, and we are now at a national record low of 1.1% vacancy.

Hard Truth 2. Landlords can increase rents to whatever they want, whenever they want – NOPE.

Except for the ACT, there is no restriction on how much a landlord can increase rent. HOWEVER, the landlord must demonstrate that the increase is based on market rent. You have to provide actual comparables, proving that the rent increase being asked is what a tenant would have to pay if they were looking for a rental property on the open market.

Hard Truth 3. The increased rent covers the landlord’s repayments costs. – NOT FOR MOST.

Landlords carry all of the risks that come with owning an investment property. The rent, even in this market, doesn’t always cover the expenses like insurance, body corporate fees, special levies, land tax, annual appliance checks, maintenance, repairs, etc.

Whilst rents are increasing rapidly due to the factors mentioned above, so are the costs associated that come with owning an investment property. And let’s not forget some of us have suffered through the past three years of high vacancy, reduced rent, and minimal or no increased rents.

Hard Truth 4. Capping rent increases will solve the ‘rent crisis’ – ABSOLUTELY NOT.

In Australia, 26% of rental housing is provided by ordinary Australians. Rent control, through capping rent increases, will unquestionably result in a massive exit of the already diminishing property investor pool.

Capping the possibility of growth with any investment is a massive constraint that will make it impossible for people like Charlotte to provide rental property for people.

Hard Truth 5. The final point – let’s get more investors in the market!

Investors are sold on growth strategies. Suppose the focus shifts to helping more people invest in property rather than restricting the very thing that provides homes to 26% of the current population compared to the 3% provided by state and territory housing. In that case, more everyday Aussies will do it.

Please do not hesitate to contact me on 4739 4500, 0403 166207 or beards@selectgrp.com. au if you what to discuss your situation, any financial matters or have any Home Finance questions that I can assist you with.