More than ever during COVID-19, the role and responsibility of landlords in ensuring all Australians have a safe, affordable and secure place to call home has been under the microscope.
Movies and television love to portray landlords as cruel tyrants who will put grandmothers out on the street in the dead of winter without giving it a second thought, but the truth is that without their existence and generosity many more in our community would have faced homelessness during this crisis.
The myth of the evil landlord is completely dispelled by the fact that around 80 per cent of Australians who own a second property and rent it out are "mum and dad" investors.
ATO data tells us that just under 80 per cent of the total individual taxpayers that are claiming a tax deduction for property earn less than $80,000 a year. Most "landlords" only own one investment property. They are far from being ruthless property tycoons.
Property investors are not wealthy and uncaring, but people looking to put their money into something they hope will contribute to their future financial security.
It is these everyday investors that stepped up and took a financial hit during COVID-19 to support tenants. Often despite the fact that just like many others in the ACT, these landlords may have experienced their own job loss or reduction in income.
As the impact of COVID-19 started to be felt, we conducted a review of the rental market in the ACT. Of a sample of 12,000 rental properties, 580 tenants required assistance. Our local landlords provided at least a 25 per cent reduction in rent in 87 per cent of these cases, and agreed to rent deferral for another 11.5 per cent.
The stereotype of property investors is outdated and perceptions need to change.
Whilst the ACT government's land tax scheme was provided to eligible property owners who reduced rent, in nearly all cases landlords would have been out of pocket. For a family home where weekly rent is $650 a week, a 25 per cent reduction would equal $162.50 a week, while the government rebate was $100.
When the ACT already has an incredibly low rental vacancy rate of 0.8 per cent (SQM residential vacancy rates, September 2020), this would create a housing emergency.
According to the ACT government's June 2020 Housing Affordability Report, the proportion of family income needed to meet rent payments in the ACT is 19.2 per cent (based on median weekly rent of $545 and median weekly income of $2815), compared to 27.5 per cent in NSW. A reduction in rental stock would be liable to put upward pressure on these figures.
If the territory had just 5 per cent of current landlords sell their investment property, it would remove approximately 2500 properties from the market - and of course some of these would be from the already undersupplied affordable housing bracket.
Based on the experience of our members, if this pool of homes were to go on the market, a significant proportion would not be purchased by other investors and so added back into the rental pool, but by live-in owners.
Recently, one agent sold six properties for an investor getting out of the ACT market as a result of continued increasing taxes, proposed EER rating changes and COVID-19 uncertainty. Half were snapped up by first home buyers. Not only were these homes no longer part of the rental market, but having these purchasers buy a home did not reduce the number of renters in the ACT as they still lived at home.
The stereotype of property investors is outdated and perceptions need to change. They are our family, the nurses that take care of us, public servants, teachers, defence personnel, police officers, paramedics and our neighbours. It is time to treat property investors as the friends they are.
- Michelle Tynan is chief executive of the Real Estate Institute of Australia (ACT).