Why Australians are being warned to prepare for even more rent hikes
Why Australians are being warned to prepare for even more rent increases – as landlords reveal their next move amid rising interest rates and tax hikes
- New taxes can be passed on to tenants
- Governments are also considering rent caps
Australians could be hit by further rent increases as landlords try to offset the cost of a new tax and the potential introduction of rent caps.
In response to a social media survey this week, a group of landlords said they would raise rents now if caps on rent increases were put in place.
Rob Klaric, head of The Property Expert International, said landlords are feeling pressured as they are already bearing the brunt of rising interest rates.
“Landlords will have no choice but to raise their rents to recoup the extra costs because they are currently being thrown on both sides of the fence,” Klaric said. news.com.au.
‘If you’re a renter, you’re driven out of the big cities because it’s getting too expensive. They don’t earn enough to pay their rent,” he said.
A recent poll on a real estate group on Facebook found that landlords would raise rents in response to new taxes and potential rent caps
Mr Klaric said government subsidized rent ceilings on new residential complexes being built would be a better solution.
“They’re building all those new units, but they might still be prohibitively expensive for people.”
Mr Klaric said the problem would affect everyone as people like essential workers were priced out of the big cities.
He claimed tax increases for landlords were like “trying to plug the holes in a leaky bucket.”
Victoria has a social housing waiting list of over 65,000, NSW has over 50,000 and Queensland’s social housing waiting list is approximately 27,000.
NSW Premier Chris Minns recently ruled out rent freezes, saying they push landlords out of the market and drop the overall rental supply.
But Queensland Premier Annastacia Palaszczuk gave a strong indication last month that rent caps were a possibility when she said the government is “looking very seriously” at how to implement the policy.
Victoria is also considering them and has already introduced an additional land tax.
Some 860,000 Victorian investment, vacation home or commercial property owners will receive $4.7 billion over the next four years under a Covid-19 debt waiver announced in Tuesday’s budget.
Beginning in January, real estate investors pay a flat fee of $500 each year for land holdings valued between $50,000 and $100,000, $975 if more than $100,000, and an additional 0.1 percent for every dollar over $300,000.
It means investors pay an average of $1,300 a year in additional taxes.
A shortage of rental properties is driving prices up across the country, especially in the capitals (Photo: Tenants line up to view a Bondi apartment)
Quentin Kilian, CEO of the Real Estate Institute of Victoria, said the changes would force landlords to leave the industry, reducing rental supply and putting pressure on costs.
In his first public appearance since handing over his ninth budget, treasurer Tim Pallas ruled out an outright rent freeze to contain a 25 per cent rise in Melbourne rents over the past five years.
But he said the Andrews government would look at a rent cap or some other form of market intervention to ease the pain for one in three Victorians who are tenants.
“There has to be a point where the community says this is unreasonable,” he told a post-budget Victorian Chamber of Commerce and Industry luncheon on Wednesday.
‘I’m not suggesting that we don’t intervene in the functioning of the housing market… the question is which interventions are most appropriate.’
Prime Minister Daniel Andrews blamed a lack of housing supply rather than land tax for driving up rents.
“Anyone who puts in a rental application and finds it’s one of 25 different applications, or even 50… they can tell you there isn’t enough supply,” he said.
“That’s why we need to make better and faster decisions.”
His government will release a housing and planning strategy in September to address the shortage of available housing.
Mr Andrews noted that land tax is deductible for some landlords under the federal tax system and denied that the budget would penalize ordinary Victorians.