This article is from the Australian Property Journal archive
TENANCY law reforms in NSW and Victoria have had little impact on whether or not landlords choose to invest in private rental housing, in fact the reforms have accommodated, even facilitated, the long-term growth of the sector.
According to a new report by AHURI, changes to tenancy laws in Australia’s most populous two cities hasn’t made significant waves in landlords’ rental investment decisions, when looking at reform interventions and surveying investors.
When looking at NSW’s Residential Tenancies Act 2010, no evidence was found of any impact on the number of properties entering the private rental sector, with fewer exiting than expected.
While 2015 Victorian Fairer Safer Housing review, only a slight decline properties entering the rental market was found after the review commenced, but there was no effect on the number of properties leaving the sector.
In line with this, most investors surveyed said tenancy law was an important consideration when they invested, but was rarely a major factor when selling.
“Overall, we found that Australian residential tenancies law reform has accommodated, even facilitated, the long-term growth of the private rental sector, rather than causing disinvestment,” said Chris Martin, research lead author and senior research fellow in the City Futures Research Centre at UNSW Sydney.
With only 14% of investor responding that tenancy laws were “very important” when deciding to sell, compared to 50% who said they sold their properties because it was a good time to realise capital gains.
47% also responded that they sold because they wanted money for another investment, with 36% citing insufficient rental income.
“The sector is dominated by small-holding landlords who frequently transfer properties into and out of private rental according to their individual circumstances and the wider housing market conditions,” added Martin.
“The reality is the Australian private rental sector is built for both investing and disinvesting, and that’s what landlords do.”
The research also revealed that within five years of entering the private rental market, a good portion leave.
With 32% of properties in the rental market in 2000 no longer in the sector five years later and 44% no longer there after a decade.
While in Melbourne, after five years 49.3% of properties have left the sector and 58% after 10 years.
Moreover, of the properties entering the private rental sector after 2015, 54.7% in Sydney had exited after five years and 54.7% in Melbourne.
“As properties churn through the rental sector, renters get churned out of their housing. This is a basic problem for people trying to make a home in rental housing,” said Martin.
“Around Australia, states’ and territories’ renting laws accommodate the dynamic nature of private rental investment. Landlords can access the sector easily because there are no licensing or training requirements. And they can exit easily because tenancies can be readily terminated.”
Martin noted that despite many variations in rental laws between jurisdictions, there is practically zero nation co-ordinations of law reform processes, leaving room for divergences and for issues to go unchecked.
“Based on the findings of our report, we argue it is time for jurisdictions across Australia to pursue a new national agenda for residential tenancies law reform. Some high-priority actions should include making tenancies more legally secure, clarifying landlords’ obligations regarding defective premises, and investigating contemporary rent regulation regimes to moderate increases in market rents,” concluded Martin.
