I think it’s a fantastic idea in theory. But I’m not actually sure if it’s legal. Local Councils have to operate following laws set down by the State Government, and while I don’t know the details of it, I’m sure there are rules about how rates can be set. Unlike proposed increased rates for unoccupied homes, this feels like something that the state government may not allow under its framework.
On the one hand, I'm sold. On the other hand, I'd actually like my rent to go down a bit. This proposal freezes the rents in-place. With no relief or reason to reduce rent, ever.
I know I'm not in his LGA, so this doesn't affect me.
That's the thing - as soon as the interest rates go down to the point where it becomes profitable to rent out a property again, it will open up competition as more landlords are drawn to the market and the additional rentals compete for tenants.
But fixing rents just makes landlords like me want to exit the market completely, which is what I am working towards now. Next year when my tenants' leases are up they will unfortunately have to find somewhere else to live because I just cannot afford to keep subsidising their rent any longer - well over half my salary is going to the bank on top of 100% of the rent they pay me, which is not sustainable for me. I have to sell them on my own terms before I default on my loan repayments and the bank sells the rentals for me.
Most landlords I speak to are in the same boat. The more talk about rent freezes the more of them want to exit the market before they get trapped. And it has already started happening which is why rents continue to go up - the same number of tenants are competing for a smaller and smaller number of rentals, and it's only going to get worse. I think I need to sell now before the next bright spark comes along and says hey let's make it illegal for landlords to sell their rentals...
I think if you're a tenant and you think a rent freeze is a good idea, you're just shooting yourself in the foot. The real issue is the rise in interest rates, because some of that is what's getting passed on to you in the rent increases. Lower the interest rates again and rents will drop. The problem is it's so slow - it has taken this long for the rate increases to get passed on to tenants, so if they lower the rates again it will take just as long for rents to drop. I don't envy anyone renting at the moment, but blaming and penalising landlords when the banks are giving them no choice is misguided at best and will only make the problem worse.
If you haven't read the stuff coming out of the Reserve Bank it's pretty sobering. They are aiming for a certain number of unemployed, homeless people because that's how they plan to keep inflation low. So even the idea of a rent freeze is doing the opposite of what the Reserve Bank is trying to do, which is to get enough people to lose their jobs and homes so that they can't spend as much money, thus lowering inflation. I find it amazing that they are doing that and yet people blame landlords, the ones who actually go to the effort of making a rental available and subsidise some of the rent out of their own income. Talk about aiming at the wrong target.
But fixing rents just makes landlords like me want to exit the market completely
Exit the market completely...and do what? Not rent the home out at all? Well, for starters, that would mean you're leaving way more money on the table than you would be if you kept renting it out at a reasonable rate. But even besides that, the policy advertised here is in addition to Sriranganathan's pre-existing policy of increased rates on unoccupied homes.
And sell it? Well, the new owner is going to be one of: a first-time home-owner, a moving home-owner, or a different investor. In the first case, that's someone who is no longer renting, so the difference between the number of homes available and the number of renters remains the same. In the last case, that new investor is going to be renting it out, something the old owner was apparently unwilling to do. So it's completely neutral. If it's a moving home-owner, their old home is being bought by someone else, which takes us back to the top of this paragraph.
the same number of tenants are competing for a smaller and smaller number of rentals
This part is just completely wrong. It displays a severe lack of critical thinking on the part of the many people who are saying things like it. It's like they think that landlords are actually providing the service of providing housing. When really, the service provided by landlords is merely maintenance of existing housing.
Lower the interest rates again and rents will drop
Will they? I've never seen it happen. At best, lower interest rates might lower the rate at which they continue to rise. But as you already know (since you did watch the video before commenting on it...right?), many landlords are increasing rent at much higher than the rate that interest rates have risen, so that argument really doesn't hold much water.
For sure, the tack taken by the RBA is gross, and they need a new model that considers the effect on the actual people, rather than merely robotically applying economic theory from the 1980s. But there are a lot of problems with the economy which are being exposed at the moment, and trying to play these "but whatabout..." games when people are focusing on one area only serves to undermine progress.
You're completely delusional. Understandable, because you're invested in the delusion. The pun is free of charge. No need to pay rent on it.
The RBA's cash rate had been abnormally low, near zero, for a long time. It was abberant. I'm sure there's a reason it had been like that, and I'm sure that reasoning involved lots of America. But you people need to understand it was not, and is not, normal. It's not going back down. (At least not until the Americans drag it down again.)
The residential investor class in Australia is largely made up of amateurs being sold on hype and ideas of free money. "Stack your mortgages up on top of each other and get tennants to pay it off for you, plus profits!" The whole sector is full of jokers. And they kept on rolling in, inflating the price of housing with the banks' eagerness to finance speculation with ever cheaper money.
"But some people just won't be able to afford to buy. We're providing housing. If the big meanie banks make our loans cheaper we'll lower your rents. Pinky promise. :("
Use some logic, please, I beg of you, to at least present as a more sympathetic victim if nothing else. Why was the price of housing and rentals not going down when money was gradually getting cheaper? We've had your scenario play out already, and housing got more expensive.
Secondly, that's the banks role, not yours (to provide housing to those that can't afford the immediate outlay, in a round about way): to bring forward future expenditure. You know, to loan money. It's meant to be good for the economy.
Your role, as a landlord, is that of a parasite. Sorry, there's no glorious role here for your lot within the larger economy. From Adam Smith in the 18th century, to Henry George in the 19th, to who the fuck knows who in the 20th, to the unemployed, couchsurfer Brian in the 21st: landlords have not been seen as productive to the economy. Bearable, and injurious when too large. Never welcome. In Australia, their collective cries of "woe is me" is just... sad. A touch of pathetic, but mainly a deep sadness. A country that thought it could make nothing, and just perpetually rent out and/or flog stolen commodities.
Australia, you have a big problem. It's been decades in the making. I wish the federal government would be more visionary and lead in nation building. Its citizens don't have a fucking clue.
Why is this numbtee always wearing beany and scarfs in Brisbane?
