REIACT slams minimum standards for rental properties

In a media release penned by REIACT chief executive Michelle Tynan, she said that the institute had researched the effects of similar legislation being introduced in both Victoria and New Zealand, which she said showed “their concerns are well justified”.

The Victorian government mandated the introduction of minimum standards early last year. According to Ms Tynan, Victoria is “now beginning to see the actual effect” of the reforms on the private rental market.

She said: “While the Victoria government maintains that the rental reforms ‘strike a fair balance between helping tenants to have safe, secure and affordable housing, and benefiting rental providers with clear obligations and stronger accountability for tenants’, property experts in Victoria are now seeing that rental providers are simply leaving the market due to the complex reporting requirements and it is now ‘too hard’ to sustain their investment properties.”

According to the CEO, “this has been further compounded by the crippling backlogs now facing VCAT, with delays of up to 22 weeks for a hearing related to tenancy disputes”.

She said it’s a similar story in New Zealand, where minimum standards were brought in back in 2017. Since then, there has been a reduction in available rental properties in some jurisdictions of up to 50 per cent, which Ms Tynan said had seen landlords sell up, “due to the onerous compliance requirements and sentiment that they have had their rights as owners slowly eroded with the implementation of each new legislation mandate”.

According to the CEO, since the Attorney-General’s announcement as to its intention to push forward with the bill, commentary has abounded that the ACT’s landlords “now need to move with the times” and that if “landlords cannot afford to remediate their properties to a minimum standard then they shouldn’t be in the market”.

From her perspective, “the ideology of this sentiment is admirable; however, the reality is very different”.

“The biggest losers, as now seen in other jurisdictions, is tenants,” she said.

With Western Australia also looking to move ahead with similar legislation, she has leant on the recent state-based survey that rang an alarm that more than six in 10 investors would exit the state’s rental market if major changes to the residential tenancy laws were adopted.

On the release of the results, the Real Estate Institute of Western Australia (REIWA) had warned that if the new laws came into fruition, it would “only plunge the region deeper into a rental crisis”.

For Ms Tynan, “if this survey is indicative of investors nationally, for the ACT, this would see over 26,000 investors leave the market”.

Pointing out that the ACT is already dealing with a vacancy rate of less than 1 per cent, she flagged that “figures released to the Real Estate Institute from the ACT government showed that in October 2021, there were 49,233 properties liable for land tax in the ACT”.

“In May 2022 there were only 43,873 rental bonds lodged with ACT Revenue. This represents a decrease of 5360 properties from the ACT private rental market in that six-month period,” she said.

The CEO cited recently published comments from the Chief Minister in the Canberra Times — which suggested that “he was eager to ensure the ACT maintained a vacancy rate of about 3 per cent”.

Ms Tynan shared: “The ACT already has the unenviable crown of the most expensive city in which to rent in Australia. To risk further upward pressure on rents and reduction of rental stock availability, will, inevitably only see not only our most vulnerable Canberrans, but also many renters already experiencing rental stress, forced into homelessness.”

Noting that the REI has lobbied on the bill “for fair and achievable outcomes”, she said they had warned the ACT government of many of these unintended consequences — “and the very people that they are supposedly protecting”.

“To mandate this magnitude of change to legislation, based on just over 700 respondents to a survey, which has a base of over 43000 investors and 55000 renters is irresponsible and careless by the Attorney General,” she argued.

In conclusion, the CEO acknowledged that there is no simple answer to the current national crisis in our rental market but suggested that “for the ACT government to continue with these changes, is simply going to push many renters into homelessness”.

“For many people renting in the ACT they have no other choice, for rental providers – they do have a choice and that is to sell,” she said.

She ended: “Perhaps the Attorney General has information that we don’t, as to how the ACT is going escape these ‘unintended consequences’ that no other jurisdiction has.”