- 11 Aug 2024
- By API Magazine
Investors are exiting the market and moves by the New South Wales Government that limit landlords’ right to recover their property are only making matters worse “at a crucial time in our history”.
The New South Wales Government appears set on proceeding with removing a landlord’s right to recover possession of their property.
It’s clearly a politically populist ploy to appeal to tenants but to dismiss it as merely a stunt downplays its severity.
This will have an immediate and negative impact on a rental market already in crisis. To discourage investors from investing in residential property at this crucial time in our history is extremely reckless.
The data makes it very clear that investors are responding by exiting the market. They are looking at alternatives like shares, commercial property and other assets. You can’t blame them. Anti-landlord reforms make investing in residential property less attractive.
The pool of rental properties is shrinking and demand is growing. More upward pressure on rents is inevitable and tighter vacancy rates will ensue. This course of legislative action leads to a clear, unavoidable outcome: tenants will suffer.
Yet, it can be avoided. Government has the option to listen to the data. Recent data from June and July tells a highly concerning story, loud and clear.
Dwelling approvals in June were down almost 19 per cent in NSW. Also in June, the number of properties rented in the state decreased by 1,251. In July, this number decreased by a further 1,362, Rental Bonds Board figures show. Yet over the same two-month period, through immigration alone, more than 30,000 new people arrived in NSW in need of somewhere to live.
To summarise this unfolding catastrophe, new housing supply is going backwards, there are fewer properties to rent, and a lot more people to house.
Laid out in such simple, dangerous terms, it is difficult to fathom Government’s refusal to recognise what the data is saying.
How can Government not understand that the current approach is not working? That the crisis is getting exponentially worse, month-on-month?
A change in approach is urgently needed. This means encouraging investment back into residential property. Reforms that inhibit a person’s right to recover possession of their own property must be abandoned.
This is precisely what the New Zealand Government has recognised, albeit painfully. New Zealand removed the right of a landlord to recover possession of their property in 2021 yet is now reversing that decision, predicting that this reform will drive investment.
It’s a lesson the NSW Government would be wise to heed. And it’s not too late.
It’s important to remember that before someone can be a tenant, someone has to be a landlord.
So, and this may be an unpopular view, but instead of constantly demonising landlords, perhaps a little gratitude and support is warranted?
Article Q&A
What is causing the housing crisis in New South Wales?
Dwelling approvals in June were down almost 19 per cent in NSW. Also in June, the number of properties rented in the state decreased by 1,251. In July, this number decreased by a further 1,362, Rental Bonds Board figures show. Yet over the same two-month period, through immigration alone, more than 30,000 new people arrived in NSW in need of somewhere to live.
