Krissy tried to negotiate down a rent increase. She was taken aback by the response By Tawar Razaghi November 19, 2023 https://www.smh.com.au/property/new...en-aback-by-the-response-20231114-p5ejsn.html Key points Many NSW renters face steep rent increases. Rent increases are limited to once a year but the state government has ruled out a rent cap. Tenants can fight excessive rent increases at NCAT but few do so as the process is not quick. Single mother-of-four Kristina Gram got a rent increase, but when she tried to negotiate it down, her agent came back asking for even more money. The 45-year-old eastern suburbs firefighter was notified her rent would jump from $800 a week to $1100. Gram offered to pay $975 instead, but the agent came back asking for $1200 a week, 50 per cent more than she had been paying. There are no laws that forbid this level of increase. Kristina Gram, a single mother in Sydney, has been notified of a 50 per cent increase to her rent.Credit: Janie Barrett “It just seems really unfair, and it seems ludicrous they can go one step further and say let’s make it even worse,” Gram said. Gram has already cut back on expenses and her adult brother has moved in to share costs. She’s considering getting a second job or moving to a three-bedroom rental and sleeping in the garage. But with scant options in the private rental market and even fewer in her local council’s affordable housing scheme, she has called for a limit on excessive rent increases. “Even if they can limit it by 25 per cent [that would be helpful]. As a firey, we’ve just secured last year’s pay increase, which is only 4.5 per cent, which is not in line with inflation.” “It just seems really unfair, and it seems ludicrous they can go one step further and say let’s make it even worse,” the eastern suburbs firefighter said.Credit: Janie Barrett Many renters like Kristina face excessive rental increases. Experts have warned rising rents will increase the rate of homelessness. While there is a limit on the frequency of rental increases (once every 12 months) in NSW, there is no limit on how much a landlord can increase the rent. The Minns government has ruled out a rental cap. Tenants have the option to fight an excessive rental increase in the NSW Civil and Administrative Tribunal. NSW Tenants’ Union chief executive Leo Patterson Ross said very few do so as the process is not conducive to renters in need of a quick resolution. Several economists have warned rent caps would stymie the development of new rental properties, but Patterson Ross has urged a more nuanced debate. He said legislating against excessive rent increases, similar to the ACT where rents are capped at the rate of inflation for Canberra rentals, plus 10 per cent, could be one part of a broader strategy of ongoing construction to increase supply and address the chronic shortage of housing in NSW. Patterson Ross said waiting for supply to increase, a long-term solution, would not help renters like Kristina today. He urged better regulation around housing, similar to water and electricity, viewing it as an essential service, not an investment. NSW rental commissioner Trina Jones said: “There are already rules in place to prevent ‘excessive’ rent increases through the NSW Civil and Administrative Tribunal, considering factors like average prices, location or the type of property. In the case of a 50 per rent increase, that’s in excess of the market standard. I would strongly encourage renters to challenge this at the tribunal.” Jones encouraged tenants to check if a rent increase was excessive using the Tenants Union rent tracker tool. Per Capita’s Centre for Equitable Housing director Matt Lloyd-Cape said while a rent freeze would be a poor response, there was scope for rent stabilisation – limiting excessive rental increases. “The types of rent controls that can work are smoothing out these increases, like the ACT. Their rent price increases have kept up with the rest of the country in the long run, but the jumps can’t happen as quickly,” Lloyd-Cape said, adding this would prevent the displacement of key workers like Kristina. He said many countries have rent stabilisation, including Germany, Ireland and Canada. He called for better regulation of housing and more social housing, and said governments could offer tenants similar guard rails to provisions for landlords to smooth hefty land tax bills by paying in instalments. “What you can do is slow down the speed of change, so people aren’t whammed with a 50, 60, 70 per cent [rental] increases,” he said. UNSW business school professor of economics Richard Holden said while Kristina’s case was unconscionable, rent caps would reduce the number of rentals available. “She is in a horrible situation through no fault of her own. This is a very unfortunate consequence of what happens when you have too little supply and a lot of demand,” Holden said. “This will all take a lot of time, that’s not going to be an immediate fix, it’s not going to solve the supply issue in the short term.” REINSW chief executive Tim McKibbin had no short-term solutions for renters and questioned why landlords had to provide affordable housing in lieu of governments. “There is a lot of hardship out there … But what’s happening is private investors are pushed into the affordable housing area,” McKibbin said. “Social and affordable housing is the domain of government, not private investors.”
Only true in some states, 6 monthly rent increases are legal in other states, eg Western Australia, Victoria, Queensland, Northern Territory.
The Australian government are totally incompetent when it comes to managing housing. They just remain silent because they know they're involved with a business conflict which is votes and tax harvesting. But the votes issue, hahaha, is coming to bite them in the ass and deservedly so, young people whom housing mostly affects will tell the government at the next election ".....and fuck you too". But I already know the government's next tactic, on the eve of the next election, they will promise (but not keep) a sweetener in order to hoodwink the public.
Opinion The dirty little secret that keeps Australian housing wildly unaffordable Alan Kohler Contributor November 24, 2023 https://www.smh.com.au/national/the...sing-wildly-unaffordable-20231121-p5elo7.html Unaffordable housing has a political cause and a political solution, but its victims simply don’t have enough political clout to make it happen. They are mainly the people born after the mid-1980s, who either can’t enjoy the freedom and security that owning a place to live in can provide, or if they do manage it, have no money left for anything else and no time for their kids because they have to work full-time, often in two jobs. But there are not enough of them to move the political dial. It’s not just that renters are in the minority – some minorities have real power – but the nation’s attitude to housing is deeply ambivalent and well hidden. There has been, and still is, a public dialogue about the problem of housing affordability and plenty of sympathy expressed for the disenfranchised, but the majority who own a house are quietly happy with their high prices, and economists and businesspeople approve of the economic “wealth effect”. Also, the minority who don’t own a house talk about the property ladder and the need to get on it. The idea of housing as the main, if not the only, form of real wealth creation for ordinary people is deeply embedded in the national psyche. Superannuation is starting to rival it but is still a long way behind. Australian capital-city housing is too expensive compared to incomes for a healthy society, and that needs to change.Credit: Darrian Traynor That means doing something about it requires true political leadership – that is, doing something right that’s unpopular. Study after study on the subject has concluded that the high price of housing is leading to dangerous inequality and distorting the economy and society, yet political leaders have never tackled it effectively, for obvious reasons. The fact that one of the three least-populated countries on earth contains the world’s second-most expensive housing is a national calamity and a stunning failure of public policy. For decades, political leaders have paid lip service to housing affordability, while doing nothing that would bring prices down. In fact, most of the big political decisions have done the opposite. For example, the capital gains tax discount in 1999 was designed by business leaders to encourage investing in their businesses, but it only led to a surge in investment in housing. Since then, there have been official inquiries and taskforces into housing affordability in 2003, 2004, 2008, 2009, 2012, 2013, 2014, 2015, 2016, 2018 and 2022. Throughout all this time, house prices kept rising, except when APRA cracked down on bank lending to investors in 2017, and when the Reserve Bank increased interest rates in 2022. Policy has been nowhere, done nothing. When the ALP adopted its policy to modify negative gearing in 2016 and there was an opportunity for the political class to come together and actually achieve something, it was turned into another occasion for rivalry, and was later excluded from the terms of reference of yet another inquiry. Transport infrastructure decisions have usually favoured roads – usually toll roads, not fast rail – and all the work on the latter has focused on the pie in the sky of inter-capital city trains, rather than anything designed to increase the supply of housing. And perhaps most important of all, decisions about the level of immigration have been driven by the needs of business, with little thought to housing the new arrivals or to the impact on house prices. Most prime ministers – especially Labor ones – seeking election or re-election promise to build houses, the latest being Anthony Albanese with his plan for 1.2 million houses over five years. Albanese’s foray into housing began in October 2022 with a “National Housing Accord” agreed with the states that would result in 1 million new houses over five years. That was accurately described in the document as an “aspirational target,” which means that it was not a promise not supported by any actual policies. At that point, the most recent housing completions data from the ABS was for the June quarter, during which 43,649 dwellings were built. If that rate continued for five years, 872,980 dwellings would be built, so the aspiration of 1 million over five years would be an increase of 14.6 per cent. In fact, in the five years before the pandemic, 1,028,480 dwellings were built, so the government was really just aspiring to get the amount of house building back to what it was pre-COVID. Awkwardly, completions promptly fell to 38,710 in the quarter following the announcement of the aspirational target. Then at another national cabinet meeting in August 2023, the ante was upped by 20 per cent to 1.2 million houses over five years. The extra 200,000 houses (which means a total of 240,000 per year, or 657 new houses per day) are to be achieved with a bounty of $15,000 per house paid to state governments for releasing land, capped at $3 billion – so 200,000 bounties. In October 2022, when they came up with the original one million aspiration, the states all agreed, among other things, to “undertake expedited zoning, planning and land release to deliver the joint commitment on social and affordable housing in well-located areas, including looking for immediate opportunities to free up well-located state land, for example in and around train stations and TAFE campuses including for affordable housing”. So apparently $15,000 per house will entice states to do 20 per cent more than they had already promised, which was a pretty full and politically dangerous promise to begin with – freeing up land in “well-located” areas tends to annoy a lot of existing residents, otherwise known as NIMBYs. The Albanese policy seems to be based on the idea that state and local governments are so desperate for cash, they’ll do anything for $15,000 – even destroy their own re-election chances by annoying the NIMBYs who elected them, with apartment towers sprinkled through the leafy suburbs. In any case, state governments and local councils don’t build houses and apartments, developers do. Even if 1.2 million lots are released over five years, developers will only build on them if they can make a profit, which applies to all political promises about housing. As far as I can tell, the total number of houses “promised” during election campaigns by aspiring prime ministers between 1955 and 2022 is close to 9 million. According to the Australian Bureau of Statistics, the total number of dwellings actually built in Australia since 1955 is 6.7 million. Shortfall: 2.3 million. The bottom line is that Australian capital-city housing is too expensive compared to incomes for a healthy society, and that needs to change. Merely bringing the rate of increase in house prices back to the rate of growth in incomes isn’t enough – that ratio needs to come down, so it isn’t a stretch to buy a place to live. To achieve this will require active, and serious, government intervention. It won’t be enough simply to restore the amount of housing construction to what it was before the pandemic, as the federal government is now aspiring to do. We don’t need another inquiry or a royal commission; there’s a room full of inquiries, reports and submissions. They just need a taskforce drawn from Treasury and the housing department to go through the work that’s been done already and come up with a policy that has a clear aim and is likely to work. That would be a good start. This is an edited extract of Alan Kohler’s Quarterly Essay The Great Divide: Australia’s housing mess and how to fix it, published on Monday, November 27.
they have no idea how to manage economy they just know one simple rule more people - no recession immigration aka quantative peopling felt good for some time but at some point it needed tapering like quantative easing. Australia refuse to taper instead they went into completely mad overdrive with almost 3% population growth current state of affairs went into catastrophical state around a year ago and australia government is acutely paralized as they just can't force themselves to cut immigration those new immigrants must be coming from total shitholes. I can't imagine anyone skilled with family would come with rents pushing above $4000 per month and still hard to find It's gonna be very bad and worse for bottom third in the next 5 years
Krissy spoke out about her 50 per cent rent hike. Then she got evicted By Tawar Razaghi November 26, 2023 Key points https://www.smh.com.au/property/new...ike-then-she-got-evicted-20231122-p5eluq.html No grounds evictions are still legal in NSW. The bar is high to fight an excessive rental increase. Experts say no grounds evictions have a chilling effect on the tenant-landlord relationship. Renter Kristina Gram was evicted from her rental property after raising concerns about an excessive rental increase. Experts warn more renters are at risk of no grounds evictions in the escalating rental crisis unless the law is reformed with urgency. Eastern suburbs firefighter and single mum of four has been evicted just a day after she expressed concerns of an excessive rental hike.Credit: Janie Barrett Kristina was shocked to receive her eviction notice a day after this masthead published a story where she raised her concerns about the excessive rental increase. Tenants face a high bar to fight an eviction or an excessive rental increase in NSW. “It’s a low blow. I was absolutely gobsmacked to get the email,” said Gram, who will have to leave just days before Christmas. “My reasoning for talking about it was about raising awareness. It’s not just me. It’s a lot of parents, single parents with kids in the same situation. It puts people off from speaking up.” The 45-year-old firefighter, and single mother of four, said she would have welcomed an explanation at the very least. “An explanation would be nice. It makes it harder to swallow, without any explanation I can only assume it’s retribution.” The agent representing the landlord said while they had not read the initial story about Kristina raising her concerns, the landlord’s family is navigating personal health challenges affecting both members that have significantly influenced their decisions, and added the rent offer was below market price. Gram had been paying $800 a week and was notified her rent would jump to $1100. She counter-offered $975, but the agent came back asking for $1200 a week. Gram then agreed to $1100, and considered taking extra shifts or getting a second job. She is not alone as a renter is evicted every 18 minutes in NSW, according to a Fair Trading end of tenancy survey. While the Minns government has committed to reforming no grounds evictions, it is unclear when the law will be introduced into parliament. Gram said she was “gobsmacked” to receive the notice.Credit: Janie Barrett Tenants Union of NSW chief executive Leo Patterson Ross said no grounds evictions have a chilling effect on the relationship between tenants and their landlords. “They’re worried about the consequences,” Patterson Ross said. “It’s too easy to be evicted and too hard to find a new place, so people try to stay undercover, unnoticed, so they try to minimise the notice. That’s where no grounds affect that relationship.” Without requiring a landlord to provide a reason from a list of reasonable grounds for evictions, there is no easy and transparent way to protect tenants from unscrupulous landlords’ behaviour, he said. “At the moment a landlord moving back in or a landlord looking to avoid a repair serve the same no-grounds notice. The reform is about providing transparency around giving that notice,” Patterson Ross said. The only avenue of recourse from a retaliatory eviction is for a tenant to lodge a complaint through the NSW Civil and Administrative Tribunal which even then can exercise discretion to uphold the eviction notice. “It’s a discretion that you have to convince the tribunal to exercise which is very hard to achieve and is very narrow. It’s all on the tenant to prove it.” He said renters, especially those who are most vulnerable, often are not in the position to engage in hard-to-win legal disputes when they are looking for the next home to live in. “This is not what we put people through to access energy, water and healthcare. We put these systems in place to protect those who are vulnerable to pressure, so they don’t have to carry this load to get the basics of a decent life.” NSW Rental Commissioner Trina Jones said she supported improving rental laws and would make recommendations on proposed changes to the state government after further consultation. “I strongly oppose unfair evictions and for this reason, my priority is on getting this element of the package right,” Jones said. “Renters tell me about the stress they are under, and we are working hard to ensure there are protections in place.” Patterson Ross stressed the need to ban no grounds evictions from fixed and rolling leases to prevent landlords from exploiting loopholes in the reforms like in Queensland. Real Estate Institute of NSW chief executive Tim McKibbin said he believed there were enough protections in place in the current legislation. He said there were many reasons why landlords want to recover possession of their property, such as divorces and health reasons, and it was inappropriate if they had to provide evidence to support that. He said he was concerned that reforming no grounds evictions would result in landlords investing their money elsewhere. “That first and foremost these people have chosen to buy a residential property and what investors always want is the maximum return on their investment,” McKibbin said.
https://www.abc.net.au/news/2023-11...rs-compete-with-generation-landlord/103151724 The emergence of Generation Landlord By now, many of us are familiar with the term "Generation Rent," which refers to the generation of younger Australians who will never own a property and be locked into renting for life – with the wealth implications that will follow. But researchers say the corollary of that phenomenon is "Generation Landlord." They say the emergence of Generation Landlord has been partly fuelled by the growing financialisation of housing, reflected in the large increase in investors owning multiple properties in recent decades. They say it's also been supported by an ideological shift in politics during the past 30 years, which has seen landlordism promoted as a welfare strategy for the market-thinking, self-responsible, investment-ready individual. They say debt-financed landlords have been reframed in Australia as "mum and dad investors" who are valorised politically as enterprising, self-reliant, and providing essential housing for others, but who, upon closer inspection, are predominantly middle-aged and older, wealthier and higher-income. They say this valorisation of landlords has created tension in Australia, given the winners-and-losers element. "By privileging the investor class to boost their welfare into retirement, others are denied the opportunity to secure their own housing, and therefore retirement security, at all," they say. And they say the tension between Generation Rent and Generation Landlord is compounded by the shift in employment arrangements in Australia that has undermined the ability of younger workers to earn and save a 20 per cent deposit. They say the break-up, in the 1980s and 90s, of the arbitration system that underpinned the relatively high wage rates of Australia's post-war settlement was a crucial milestone on the path we took to get here. "More recently, the rise of the 'gig economy' has signified a shift to more flexible work arrangements in which employment is undertaken on a time-limited, contract or temporary basis," they wrote in March. "This re-emergence of flexible or non-standard work practices has crystallised the concept of the precariat, which is characterised by economic insecurity. A recent paper by the Melbourne Institute noted that non-standard employment now accounts for more than half of all employment." They say the modern unpredictability of household finances for younger Australians is now a "key constraint" on their ability to plan and control their spending. And when combined with reforms to Australia's tax system, through the 1990s and beyond, that have increasingly privileged current home owners over aspiring home owners, it means it's become harder for younger Australians to be able to buy a home by simply working hard, they say. Undermining the model of post-war citizenship So, when thinking about the working and saving habits of younger people, we need to keep these things in mind. Researchers say the traditional pathway to home ownership simply doesn't exist for a huge number of young Australians these days. They say the modern reality of precarious and polarised labour markets is "inextricably linked" to these changed housing dynamics, and it's challenging the idea of what is it to be Australian. "The existence of a 'typical' life course, in which people become educated, attain employment, leave home, form a new household with a long-term partner, and buy and pay off a house during their working lives to underpin a decent standard of living in retirement, is becoming increasingly uncommon," they say. "With the intertwined nature of employment and housing, such shifts potentially signal a major break in key 'pillars' of the post-war model of citizenship. "In particular, they indicate a crumbling of previous support frameworks as people move into retirement," they say. Which begs the question: where does Australia's self-image of egalitarianism sit in all of this?
Analysis Australian real estate has at least one thing in common with a Ponzi scheme, and that makes it vulnerable to a crash Rents highlight Australia's economic Achilles heel, but it's not what you might think By business reporter Michael Janda Posted Tue 16 Jan 2024 https://www.abc.net.au/news/2024-01...t-australian-economic-achilles-heel/103321034 The average initial gross rental yield on Australian residential real estate sold in December was 3.7 per cent.(ABC News: John Gunn) There's no doubt many renters are in a world of pain right now. CoreLogic data shows asking rents jumped 8.3 per cent last year, after a 9.5 per cent jump the year before, and 9.6 per cent the year before that. According to a survey by financial comparison website Finder, nearly two-thirds of renters say housing costs are causing financial stress. But, as painful as the increase in rents has been, it's still only just ahead of the increase in home values over those same three years from 2020-2023. Go back further and there's no contest. For all but three of the past 11 years housing prices have grown faster than rents. Usually much faster. In fact, 2023 was the first time in the past decade where rent rises outpaced capital gains on housing without home values falling. The reason the recent, unusually large, surge in rents has gathered such attention is that there are a lot more losers than winners. Even though most Australian landlords own just one investment property, there are still plenty with two or more. Ipso facto, there are many more renters than landlords. The rise in home values is very different. At the moment, there are many more home owners than those trying to buy a home — although this is inexorably changing as home ownership rates dive among all but the oldest age groups. Home ownership rates have been falling for most age groups, but the younger the group generally the steeper the decline.(Supplied: AIHW) A bit over two-thirds of Australians see their wealth increase because of rising home values — at least on paper. What's the problem? Aside from the obvious one, that home ownership is becoming increasingly out of reach for the third of Australians who aren't already there, there's another huge problem with prices surging far above rents. It's indicative of a massive misallocation of capital … a waste of money. When professionals make an investment, they look at the return (or yield) and compare it to the risk they're taking. The average gross rental yield on residential property nationally was 3.7 per cent in December, according to CoreLogic. That means the average Australian property investor who purchased a place in December 2023 is initially making a return of 3.7 per cent per annum — and that's before any expenses, like interest costs, management fees and repairs. In Sydney, it was just 3 per cent. According to the most recent RBA/APRA data for November, the average variable interest rate on new property investment loans was 6.5 per cent. In what financial universe is it a good investment to borrow a massive sum of money to receive a return that's half what you'll pay in interest? 'Strayan property, apparently. She'll be right, mate. No worries. Of course, through negative gearing, you can write off the losses against other income to reduce your tax bill. But you'll still be making losses. And if rents kept growing at 8.3 per cent per annum for the next five years, then by the end of 2028 your rental yield would have risen from 3.7 to 5.5 per cent — although you literally could have got a higher yield over that period from a bank term deposit. (Also, if that was to happen, your mortgage interest rate would probably be 10 per cent-plus as the RBA battled to get inflation down, of which rents are a major component). So, in the end, basically what you're betting on as an Australian landlord is capital gains, which will be taxed at half the rate of any income you actually work for. Australia's property Ponzi Any investment that's primarily reliant on capital gain rather than future income generation for its return shares at least one thing in common with a Ponzi scheme. Both rely on the next investors to pay out the profits of the earlier ones. In the case of real estate that means a new generation of buyers willing — and able — to stump up more cash to pay a higher price than the previous ones. That worked a treat while interest rates were falling, boosting borrowing capacity for any given income level. It's much more challenging as rates rise. Although, with property prices having recovered their 2022 falls nationally, and hitting fresh record highs in Brisbane, Adelaide and Perth, it seems like Australians are up for the challenge. At the moment, about 35 per cent of home loans, by value, are going to property investors. But they also help drive property prices more broadly. Those who want to buy a home to live in have to outbid not only other owner-occupiers but also investors to secure one. So the Australian obsession with investing in low-yielding residential property, encouraged by a tax system that subsidises this behaviour, pushes even those who simply want a place of their own to live in to sink more cash into housing. As a result, Australians have $10.3 trillion of their wealth tied up in housing, more than three times the value of stocks on the ASX and even dwarfing the $3.5 trillion of superannuation savings. According to CoreLogic, housing represents 56.7 per cent of household wealth. That's a lot of money that could be invested in new businesses and technology to spur economic growth, or used to buy stakes in foreign firms (or even a bigger share of Australia's own mining and energy sector) to boost the national current account balance. Instead, we tie up the majority of our wealth in the value we put on land we've already occupied, and now buy and sell from each other to the tune of more than $400 billion each year. It's great for the banks that lend the money, the real estate agents and state governments who take their cut from the transactions, those who already own a lot of land and can earn more from simply sitting on it than they would by developing it. But at what cost to Australia? The biggest cliché of popular personal finance books is to avoid putting all your eggs in one basket. But, as a nation, that's exactly what we've done with housing and, even without a major property crash in recent history, we're already a lot poorer for it.
There's another issue my parents in law are facing in Melbourne.. They're in their 80s and 90s, own their property out right and get a government pension. They would like to move closer to an urban center where they can walk to shops and be close to hospitals, but if they sell their home to rent in town, they will lose their government pension. Instead of simply taxing the sale of the property, the system disincentivise selling the property by removing a benefit owed to them for their years working.