Why Australians are being warned to prepare for yet more rent increases
Why Australians are being warned to brace for yet more rent increases – as landlords announce their next move amid rising interest rates and tax increases
- A new tax could be passed on to tenants
- Governments are also considering rent caps
Australians could be hit with even more rent increases as landlords try to offset the cost of a new tax and the possible introduction of rent caps.
In response to a poll on social media this week, a group of landlords said they would now raise rents if caps on rent increases were introduced.
Rob Klaric, head of The Property Expert International, said landlords were feeling pressured as they were already bearing the brunt of rising interest rates.
“Landlords will have no choice but to raise their rents to offset the additional costs because they are being pressured on both sides of the fence right now,” Klaric said news.com.au.
“If you’re a renter, you’ll be pushed out of the big cities because it gets too expensive.” “They don’t make enough money to pay their rent,” he said.
A recent survey by 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-backed market rent caps for newly built apartment complexes would be a better solution.
“They’re building all these new units, but they might still be unaffordable for people.”
Mr Klaric said the problem would affect everyone because people like essential workers were being pushed out of big cities.
He claimed raising taxes on landlords is like “trying to fix the holes in a leaky bucket”.
Victoria has a public housing waiting list of more than 65,000, NSW has more than 50,000 and Queensland’s public housing waiting list is about 27,000.
New South Wales Premier Chris Minns recently ruled out a rent freeze, saying it would force landlords out of the market and reduce overall rental supply.
But Queensland Prime Minister Annastacia Palaszczuk made it clear last month that rent caps were a possibility when she said the government was “very seriously” considering how to implement the policy.
Victoria is also thinking about it and has already introduced an additional property tax.
Some 860,000 Victorian investment, holiday home or commercial property owners will be hit with $4.7 billion over the next four years under a Covid-19 debt levy announced in Tuesday’s budget.
Beginning in January, real estate investors will pay a flat fee each year of $500 for properties valued between $50,000 and $100,000, $975 for properties over $100,000, and an additional 0.1 percent for each $300,000 or more U.S. dollar.
This means that investors have to pay an average of $1,300 a year in additional taxes.
A tight supply of rental properties is driving prices up across the country, particularly in the capital cities (pictured: tenants queue to view a Bondi apartment).
Quentin Kilian, chief executive of the Real Estate Institute of Victoria, said the changes would force landlords to exit the sector, reducing rental supply and adding to cost pressures.
In his first public appearance since passing his ninth budget, Treasurer Tim Pallas ruled out a total rent freeze in a bid to curb a 25% rise in Melbourne rents over the past five years.
But he pointed out that the Andrews government would consider a rent cap or some other form of market intervention to ease the pain for one in three Victorians who are renters.
“There has to be a point where the community says this has gone beyond reason,” he said at a post-budget luncheon hosted by the Victorian Chamber of Commerce and Industry on Wednesday.
“I’m not suggesting that we won’t intervene in the workings of the real estate market … it’s a question of what interventions are best.”
Prime Minister Daniel Andrews blamed the lack of housing supply rather than property taxes for the rising rents.
“Anyone who applies for a lease and finds that it’s one of 25 or even 50 different applications can tell you the offer isn’t enough,” he said.
“That’s why we have to make better decisions and implement them faster.”
His government will present a housing and planning strategy statement in September to address the shortage of available housing.
Mr Andrews pointed out that property tax was deductible for some landlords under the federal tax system and denied that the household would penalize ordinary Victorians.