How to fix the housing problem.

WELCOME TO BRISBANE AFFORDABLE RENTALS, YOU ARE INVITED. IN THIS BLOG, WE WILL DISCUSS RENTAL PROBLEMS THAT WE MAY INCOUNTER WHEN RENTING, AND THE PROBLEMS OF RUNNING AFFORDABLE RENTALS. WE WILL ALSO DISCUSS, WHAT THE GOVERNMENT CAN DO TO HELP THE RENTERS PAY THEIR RENT, AND THE OWNWES RUN A BETTER AFFORDABLE RENTAL SERVICE TO THE COMMUNITY. 

Anyhow, the farmers' problem in this article is similar to the rental problem that we have today, because the social security system can help both, if the assets test is modified. So, we are writing several articles, where we will talk about the rental problems and the Social Security System. 

This blog can be found at this link, http://affordablerentals.blogspot.com/))

And here are other links to our internet articles

http://menfranco-re.blogspot.com/, http://manneedsgod.blogspot.com,  http://menfranco.blogspot.com, 

http://ifyoubelieveingod.blogspot.com/, http://genzanoit.blogspot.com/, 

https://sites.google.com/site/prayersofreconciliation/,https://sites.google.com/site/menfrancoreconciliation/

This article can also be found at this link,   How to Fix the Housing Disaster, My Views. 

Today the Australian rental market has a big problem, because there are not enough rental houses or units on the market. So, if we want to fix it, we must look at the reasons why this has happened, because in the past these things did not happen as much as today, and if something happened, they self corrected themselves soon enough. But today they are not, so, we must learn how to fix it. 

Welcome to article, How to Fix the Housing Disaster, My Views. 

Dear readers, we are writing about social issues that effect our way of life, and this is blog, No.9. 

How to fix the housing problem. 

Dear readers, before I can say anything about Australia rental problem, we must look at what the politicians are doing to fix it, because what is happening has been caused by the politicians themselves, as I will explain in my articles. Anyhow, we need to look at what is happening in the rental market. So, let us paste some reports that I found in the net, the 8^th of June 2023, in this shortened quote hereunder.   

(And I quote)

Sydney's inner-city market has seen the biggest surge in rents with Treasury expecting a record 400,000 migrants to move to Australia by the end of this financial year, followed by 315,000 in 2023-24.

The city was home to nine of Australia's top 10 suburbs for rental increases, with Melbourne having one entry. 

Sydney was a city of extremes with rents soaring near the city but falling in scenic areas by the water, including on the Central Coast an hour's drive north. 

Rental increases of more than 20 per cent were recorded in parts of Brisbane, with double-digit increases also occurring in Perth and Adelaide.

(End of first quote)

Looks like that everywhere in Australia the house rent is going up. So, let us see what the politicians are doing, to solve the problem, if they can solve it.

Anyhow, the present government, believes that they can solve it buy building more affordable housing themselves, with our taxpayer money. See what I found on the net, and quote again.

The federal government has confirmed it will divvy up its $2 billion social housing booster payment to Australia's states and territories on a per capita basis.

• NSW will receive the lion's share of $510 million, Victoria will get $496m, Queensland $398m and Western Australia $209m.
• South Australians will see $135m of the money, while Tasmania, the Northern Territory and the ACT will take minimum slices of $50m each.
• The funds will be allocated over the next fortnight.
• Thousands of new homes will be created for public housing tenants with both new developments and upgrades of existing properties that are currently uninhabitable on the drawing board.
• All of the money is to be committed by states and territories within two years ending June 30, 2025.
• Prime Minister Anthony Albanese announced the Social Housing Accelerator at the Victorian Labor conference on Saturday.
• He did not specify exactly how many homes would be created, saying that would depend on how governments chose to spend the money.

"State and territory governments have agreed that it will be in perpetuity, so we're not going to have public housing built and then flogged off," he told reporters.

(End of the quote) Now let us say something how we see this situation.)

--------------------

How I see Australia rental situation. 

From what is happening is very clear that there are not enough rental properties available in Australia. Here we must point out that the Australian economy is set to run with the capitalist system, and in normal times is self-regulate itself, so, there is no need to do anything, but this time something went wrong, so let us explain today situation. 

One of the reasons for this rental shortage is that for the past ten years or longer, the rents have not gone up as much as other things, so, the few small investors that were investing in rental properties, have stopped investing, because they cannot make enough money to run the properties. The people in charge must understand that they have created this problem themselves, because of the several charges levied on property owners, and this includes rental properties, some of these charges are completely unjust, but they say that they must do that because they need the money, so, this problem has been created from the authorities in charge, and now they are looking for a way out. But what they are trying to do may not be the right way to solve the problem for good, like building some affordable rentals themselves.

But I believe that this rental problem cannot be solved for good, unless they fix what has caused it first. Anyhow, the government wants to build affordable housing, that they are going to pay with the taxpayer money. This may help, but it will not solve the problem, they must understand, that if the private investors are not able to run rental properties and make money, then the government body that is going to run affordable rentals, can only run them at a loss, I hope I have explained my views clearly.

-------------------

But what are the main causes. 

As we have said, there are not enough affordable rental properties for rent, because there is not enough money in rentals, if there was enough money, there would be investors. So, it is not what people believe that if you have a rental property, you are rich. In fact, I believe that if you have rental properties, you and your family have lost your freedom, and you feel that you are the slave of the tenants. This is only the first problem, because the biggest problem is how much money does this property make, and how it affects everybody in the family, which usually will be negative. So, let us explain how it affect property owners in a negative way.

If you are a pensioner, you may lose part of your government pension, and in some case the entire pension, because of the assets test. The assets test is the biggest problem for a lot of people, the greatest problem for the pensioners’ is that the assets test is set at least three time too high. So, for every dollar you can earn from the rental property, you very likely will lose fortnightly three dollars of government pension, this is one of the reasons why, there are no more small investors, wanting to invest in rental properties. I hope that I have explained myself clearly.

Now, the assets test affects other people as well in a negative way, like jobseeker and sick people, and other groups as well. So, it would be helpful if the government removes the assets test, or adjusts it in a more realistic way, that will reflect the same values for everybody. But let us go back to talk about rentals.

-----------------------------

How can we fix the rental shortage.

To fix the rental shortage, not only the government should build affordable rental properties, and run them the best way they can, even if they lose money. But above all they should abolish the assets test or set it up in a way that the property owners can earn the same money they can lose. You see, the property owners that we call landlords run a service to the community, and if you run a service you are supposed to earn some money. If you do not earn money, then this service becomes impossible to run. I hope you see what we mean.    

So, it seems to me that we need more money for rentals, and it would help if they gave more rent assistance to the tenants that are on low income, instead of blaming the landlords, that sometimes are worse of financially than the tenants.   

Anyhow, if what I have suggested can be done, then the rental market can slowly return to normal. If they do not, then the rental problem will be a lot harder to solve.

Well, this is what we have learned so far, and every day that I write something about rental, I will learn a bit more. So, the advice now is to abolish the ASSETS TEST ON AFFORDABLE RENTAL, and things will improve.

To see more click on this link, How to Fix the Housing Disaster, My Views. 

See you next time, with whatever we can learn about rentals. 

 ---------------------------

Housing disaster in Australia.

 WELCOME TO BRISBANE AFFORDABLE RENTALS, YOU ARE INVITED. IN THIS BLOG, WE WILL DISCUSS RENTAL PROBLEMS THAT WE MAY INCOUNTER WHEN RENTING, AND THE PROBLEMS OF RUNNING AFFORDABLE RENTALS. WE WILL ALSO DISCUSS, WHAT THE GOVERNMENT CAN DO TO HELP THE RENTERS PAY THEIR RENT, AND THE OWNWES RUN A BETTER AFFORDABLE RENTAL SERVICE TO THE COMMUNITY. 

Anyhow, the farmers' problem in this article is similar to the rental problem that we have today, because the social security system can help both, if the assets test is modified. So, we are writing several articles, where we will talk about the rental problems and the Social Security System. 

This blog can be found at this link, http://affordablerentals.blogspot.com/))

And here are other links to our internet articles

http://menfranco-re.blogspot.com/, http://manneedsgod.blogspot.com,  http://menfranco.blogspot.com, 

http://ifyoubelieveingod.blogspot.com/, http://genzanoit.blogspot.com/, 

https://sites.google.com/site/prayersofreconciliation/,https://sites.google.com/site/menfrancoreconciliation/

This article can also be found at this link, Housing Disaster in Australia and What Can Be Done.

I have been waiting for the federal budget, hoping that there was something positive, that could solve the rental problem, but the federal budget 2023, has not done enough to solve the housing market, they knew about the problem and they promised that they would build affordable rentals themselves. They believe that they can solve the rental problem that way, but I think that it is not enough, and I am writing about what else needs to be done in this article. 

Welcome to, Housing Disaster in Australia and What Can Be Done.

Dear readers, we are writing about social issues that effect our way of life, and this is blog, No. 8.

To solve the rental problem, we must ask ourselves why this housing disaster is happening.

Today to buy or rent a residential property in Australia is not easy. Yes, we had these same problems in the past, but it was not as bad as now.

So, we must look for the reasons why this is happening. I believe that, for this to happen there must be negative forces that keeps the housing supply not growing fast enough to keep pace with what is needed. So, what is the cause and what can be done, we may ask?

To ease the rental market, the federal government, and the local governments must start building lots of affordable rentals, and rent them at no profit, or at a loss, this will help to keep the price of rental down. But this by itself will not be sufficient to solve the rental problem. So, what else needs to be done urgently to make it better? I believe that they need help from the private investors, but today most investors are not interested in having affordable rental properties, because there are lots of problems running them and not enough money, compared to other available investments.

Therefore, the governments involved should make and pass laws that will help to private investors to build and own properties, at a moderate profit. You see, nobody wants to be involved, if there is nothing for them, especially if they can lose their hard-earned money, if they are not careful. Having said that, now, let us talk about how the the rental problem can be solved.

 

 Let us talk about the rental problem.

I believe that, TO SOLVE THE RENTAL PROBLEM, THE ASSETS TEST ON RENTAL PROPERTIES MUST BE REMOVED.

As we have said above, today to buy or rent a residential property in Australia is not easy, because there are negative forces, that keep the housing market down, so, hereunder I want to say what I believe needs to be done as soon as possible, to stop this rental disaster becoming worse. One of the negative forces is the ASSETS TEST. And it needs to be removed. 

Anyhow, it seems to me that we need to build lots of new houses and rental properties. The problem today is that everything is going up in price, and there seems to be a shortage of builder and building tradesman. There are a few building firms that are going broke, so, this problem is going to take time to solve, but it can be solved, if we look at the reasons why this happen, and the politicians change the laws that need to be changed.  

Anyhow, as we have said the federal government, and the local governments must start building lots of affordable rentals, and rent them at no profit, or at a loss, this will help to keep the price of rental down. They can afford to do that, because the money they spend is taxpayer money. 

But this will not be sufficient. I believe that they need help from the private investors, but most investors are not interested in having affordable rental properties, because there are lots of problems running them and not enough money, compared to other available investments.

Today there are still a few old timers that have affordable rental properties for rent, but they are slowly giving it away, because of what they cost to run and because they are being discriminated. They are being discriminated on two fronts. One most people hate landlords, because the people that rent think that they are paying their rent to a rich person, when in most cases the owners are financially struggling to keep the rental business going. Then there all these charges from local authority to pay, one of these is the land tax that gives you nothing, but because you own this land you must pay them. This is like paying the stamp duty every year, like when you buy a property. All these charges plus maintenance, there will not be much profit left to run the property. The other problem is that, if you have a property for rent, everybody thinks that you are a rich person, when in fact this is far from the truth, as we will explain hereunder.

 

Let us talk about rental properties. 

Now let us talk about those people that have a house for rent or a couple of units. If they are pensioners they might lose their entire government pension, because of the assets test, when their properties can only earn a few hundred dollars after all expenses are paid. Which most likely is under 2% of the property value, according to today market. THIS IS THE REASON WHY, THE ASSETS TEST ON AFFORDABLE RENTAL PROPERTIES MUST BE REMOVED. If that is not removed nobody will want to save money to buy a rental property for financial security when they become old, and those that have a rental property will want to sell them, because they cannot afford to keep them, since they are losing money.

Now, you must understand that to solve this rental problem, we need the private people to invest on affordable rental properties, so, there need to be a small incentive, or at least some security that they are not going to lose their money, Australia needs those investors, because the governments will never be able to build and run affordable rental properties for everyone, and if they do, they will lose money. 

ANYHOW, IT CAN BE A LOT CHEAPER IF THE ASSETS TEST ON AFFORDABLE RENTAL PROPERTIES IS REMOVED.

Anyhow, if the assets test on affordable rental is removed, then investors may still try to own a property for rent, instead of keeping their money it in the bank earning interest, or some investment that earns money, and you do not have to do anything.

Today views on rental properties.

You see, today people think that those people that have no house, are the people that have been hit the hardest from this changing economy; but I believe that, it is the small residential investor has been hit the hardest from the changes. Because the small investor is being put in a disadvantaged position, not only they are in a disadvantaged position, but they also can be abused from the tenants. But what hurts most is that the government treats them as if they are rich people, when some of them are financially worse off than the tenants they are housing.

Because the tenants that are on a low income, can receive rent assistance from the government. But the landlords cannot receive any help from the government, because of the assets test threshold, even when their properties income is very low and they may be starving, so, we may say that they are being discriminated. 

Anyhow, because I want this article to carry the message that THE ASSETS TEST ON OFFORDABLE RENTAL PROPERTIES MUST BE REMOVED. I am not going to explain how the landlords of affordable rental properties are worse off than their tenants. But later I will write another blog later, to explain that. 

Now, in this article we have said that to overcome the housing shortage in Australia, the governments must build lots of affordable rentals, and rent them at no profit or at a loss.

We have also said that the governments need help from the private investors, but the rich private investors cannot be interested in affordable rentals, because there are lots of problems and not enough money, so, it is up to the mums and dads the small investors. But they are put in a disadvantaged position from the assets test. So, THE ASSETS TEST MUST BE REMOVED, or perhaps reset at a lower rate that reflects what those rental properties can earn. Instead of their imaginary and impossible 7.5 % when those properties may only earn about 2% or less net.

I believe that the rental market can be fixed, if the people in charge make laws that do not discriminate the small investors. Starting by REMOVING THE ASSETS TEST on affordable rentals, or modifying it to the right level, where the owners do not lose money, if they are on a government pension, they are jobseekers, or disabled. I hope I have explained it clear enough. You see nobody wants to be involved if they can lose money. 

I believe that I have said enough in this article, so, see you in our next rental article about, 

How to Fix the Housing Disaster, My Views.

To see more click on this link, Housing Disaster in Australia and What Can Be Done. 

-------------------------------------

The Rental Problems Can Be Solved.

WELCOME TO BRISBANE AFFORDABLE RENTALS, YOU ARE INVITED. IN THIS BLOG, WE WILL DISCUSS RENTAL PROBLEMS THAT WE MAY INCOUNTER WHEN RENTING, AND THE PROBLEMS OF RUNNING AFFORDABLE RENTALS. WE WILL ALSO DISCUSS, WHAT THE GOVERNMENT CAN DO TO HELP THE RENTERS PAY THEIR RENT, AND THE OWNWES RUN A BETTER AFFORDABLE RENTAL SERVICE TO THE COMMUNITY. 

Anyhow, the farmers' problem in this article is similar to the rental problem that we have today, because the social security system can help both, if the assets test is modified. So, we are writing several articles, where we will talk about the rental problems and the Social Security System. 

This blog can be found at this link, http://affordablerentals.blogspot.com/))

And here are other links to our internet articles

http://menfranco-re.blogspot.com/, http://manneedsgod.blogspot.com,  http://menfranco.blogspot.com, 

http://ifyoubelieveingod.blogspot.com/, http://genzanoit.blogspot.com/, 

https://sites.google.com/site/prayersofreconciliation/,https://sites.google.com/site/menfrancoreconciliation/

This article can also be found at this link, Australia Rental Problems Can Be Solved.

Block of unit in Brisbane, some unit are up for rent. 

There are a lot of units around Brisbane for rent, and we need more to satisfy the rental market. But the problem is that they cost a lot to build and buy, and is the problem to run them. So, most small investors keep away from buying them, because they are risky and hard to run.

Welcome to our article, Australia Rental Problems Can Be Solved.   

Dear readers, we are writing about social issues that effect our way of life, and this is blog, No. 7.

Today the people that are renting, complain that they cannot afford to pay the rent, and the landlords complain that it is hard to keep the rental properties going, because there is not enough money in this business, and some of them have given up renting, because there are too many problems and not enough money.  So, this is becoming a real problem. What people do not realize that the Australian rental shortage problem can be solved, if the politicians do what needs to be done, after we pinpoint the reasons, why this is happening. Because in the past, if there was any rental shortage, it was not as bad as it is now. But I believe that the people in charge do not know what to do, or, they do not want to know what to do, because what needs to be done may favour the small investor, which is the middle class that nobody wants to know about, since they can look after themselves, if they are in a plain field, so, nobody cares about them, even though they are the people that make the economy work in a balanced way.

Anyhow, let us talk about the rental problem. These days, we can hear every day in the news, that there are a lot of people in Australia that cannot afford to pay their rent or buy a house or unit to live in. People believe that in the past it was easier to buy or rent, and I believe it myself that it was easier. So, in this article, we are going to discuss what could be the reasons, and if there are ways to improve the situation. To do that we need to compare what is different today, and if there are laws or by laws that make the rental properties more expensive to run, and therefore, it is harder for the property owners to rent their properties at a lower affordable price.  

Now what I am writing here is plain common sense, that anyone should be able to work out. So, I wonder why the smart politician have not picked it up, what they are doing wrong, because I can see a few things myself that could make the rental situation better. In fact, I believe that to restore the rental affordability issue, it is a lot easier than most people think, it all depends, if the politicians do what they must do the right way, and they must not try to impress people just to gain a few votes, like what they are doing now, they want to tell the owner, that they cannot increase the rent of their properties, when for about ten years or more, the rent have not gone up like everything else, but the charges to run their property has. So, today the owners are forced to pass the entire charge increase, that they are asked to pay from the authorities in charge, and some of them ask the owners to pay, just because they need the money. We will say something about this hereunder.   

 

The rental affordability issues. 

 Having said that, now let us start discussing this affordability issues. We believe that in the past properties were more affordable, so, we must look at what has changed to understand the reasons. This is not easy to do since the Australian economy is suppoused to be a capitalist economy and free to run its own way. So, most prices are automatically set, from the supply and demand market, when there are not enough properties on the market the price will go up. When the prices go up, more properties will be built and come on the market, so, the market will go down, and it is self-balancing, and sometimes it is good, at other times it is not.

Anyhow, for me that I have followed the rental market for a while, I believe that in the past it was easier to rent or buy, but the greedy politicians have changed the laws, so, there are a lot more expenses today than in the past , in some cases 50% of the rent covers the bylaws charges levied on that property, therefore some property owners cannot make enough money from their rental investment, for this reason people that were going to invest in properties, they do not see enough money coming in and they do not invest in properties. People need an incentive to invest their money on rental properties, or at least know that they are not going to lose their money if they buy rental properties. 

 Anyhow, it is a well-known fact that people with a lot of money, knowing that the residential rental market is risky, they keep away from it, so, it is up to the small investor, with limited money and struggling that invest in rental accommodations, but even these people are kept back from the never ending expenses, that the authorities levy on their property, not only that, but today while I am writing this blog, some politicians in Canberra are talking about limiting the rent increase that the properties’ owners can charge. Okay, it sounds good, and it might work for a very short time. But if they pass this law, then the few rental property owners left, may have to sell their rental properties and there will be less properties for rent.

I believe that the government needs to think what they are doing, because if they want cheaper rent, then their levies on properties must come down a lot, it is outrageous that in some case, a rented house, may only earn one per cent of its value in a year, when everybody else make a lot more. Anyhow, there is very little money to be made in rental properties, but there are a lot of problems to run them. So, the few investors that are left wonder, if they will continue to stay on the market or sell out, if they can find a buyer. But it is very hard to find anyone because rental properties do not earn enough money to run them at a profit.

 

Some discussions on rental issues. 

Anyhow, I have called this article, Australia rental problems can be solved, so, in a way a have promised that I can suggest a solution, so, I must come up with a theory, how the rental issues can be solved.

I believe that there are at least two choices, one, all the governments involved in rentals must chose, whether to build lots of affordable rentals themselves, and run them at no profit or at a loss, and this can cost several billions and may keep the government budget in the red for a long time. And let us not forget that this is out tax money. 

The other way is that the government authorities charge less levies on rental properties and do other things that keeps the small investors interested in rental properties. So, let me tell you a couple of things that come to my mind.

Here I am talking about the small investors only, because I do not care if the rich people lose money. Anyhow, one of the charges that hurts most small investors in Queensland is the land tax. The land tax is a levy from the Queensland Government, these days, they charge $1.7 per thousand of the land value. So, a property that is on a block of land of ONE MILLION, will be charged, about SEVENTEEN THOUSAND DOLLAS, per year, then there are other charges from other local authorities. Now, you can see why rental properties are not worth keeping. The government may argue that they need the money, but that is not helping the rental market, and it is driving the few small investors away.

I believe that the government authorities do not care for the small investors, or anybody that owns a property, and they are treated in a way that makes me think they are discriminated, when they deserve better, to prove that I am pasting an article I fount on the internet. (And I quote).

Public Trustee leaves pensioner without money for food and takes 40 per cent of his income.

There's growing concern about the treatment of some of the country's most vulnerable people by a government body that manages their finances. In Western Australia, the public trustee charges higher fees to people with assets, even if they have little cash to spare. (End of quote).

 ------------------------- 

I hope you can see what I mean, this pensioner, would have been better off, if he had no assets. This behaviour of this government body above, it makes me think that most government bodies are like that. So, the small investor, would be better off, if during his life, he would have spent his money to enjoy himself, instead of saving to buy a property investment, that in the end make life harder instead of better.

 

 

 How we can solve these rental issues. 

Now let me go back to the rental problem. Apart what we have said above, the other thing that comes to my mind is that years ago, the assets test for pensioners sickness benefit and other, was 1.5 dollars per thousand, but today it is three dollars per thousand, so, a pensioner is deemed to earn $7.5 per cent, on their rental property value, when in fact, he may earn only one per cent. You see why I think that the small investor is in a disadvantaged position and is being discriminated. And nobody cares.  

My view here is this. If the authorities want to save Australia from a huge debit by building lots of affordable rental accommodations themselves, they can choose to abolish the assets test, not only on the house you are living in, but also on the first rental house or unit that is rented, or on the market for rent. This will keep some of the small investors in the rental market, and the problem is half solved. Anyhow, this is my view how the rental problem can be solved.

What I am suggesting here, is a possible way how to solve the rental problem for good, and will save the governments billions of dollars, because they may need to build fewer rental properties themselves.

You may say that what I have suggested will cost the government money. I know it will, but it will be a lot less than if they build all the affordable rental themselves. 

There is more that can be said, but I will say it next time I write something about rentals. See you soon in Housing Disaster in Australia and What Can Be Done.

To see more click on this link, Australia Rental Problems Can Be Solved.   

----------------------------------------  

Australia Rental affordability issues.

WELCOME TO BRISBANE AFFORDABLE RENTALS, YOU ARE INVITED. IN THIS BLOG, WE WILL DISCUSS RENTAL PROBLEMS THAT WE MAY INCOUNTER WHEN RENTING, AND THE PROBLEMS OF RUNNING AFFORDABLE RENTALS. WE WILL ALSO DISCUSS, WHAT THE GOVERNMENT CAN DO TO HELP THE RENTERS PAY THEIR RENT, AND THE OWNWES RUN A BETTER AFFORDABLE RENTAL SERVICE TO THE COMMUNITY. 

Anyhow, the farmers' problem in this article is similar to the rental problem that we have today, because the social security system can help both, if the assets test is modified. So, we are writing several articles, where we will talk about the rental problems and the Social Security System. 

This blog can be found at this link, http://affordablerentals.blogspot.com/))

And here are other links to our internet articles

http://menfranco-re.blogspot.com/, http://manneedsgod.blogspot.com,  http://menfranco.blogspot.com, 

http://ifyoubelieveingod.blogspot.com/, http://genzanoit.blogspot.com/, 

https://sites.google.com/site/prayersofreconciliation/,https://sites.google.com/site/menfrancoreconciliation/

This article can also be found at this link, Australia Rental Affordability Issues. 

We believe that there are many types of properties for rent, of course some cost a lot to rent, like this one in the photo, but there are also affordable properties for rent, people should look into what they can afford, and try to be happy with what they can afford. 

Welcome to our article, Australia Rental Affordability Issues. 

Dear readers, we are writing about social issues that effect our way of life, and this is blog, No. 6.

Before we write this article, we want to point out that there are not enough properties for rent, because the assets test puts the small rental owners in a disadvantaged position. 

Anyhow, in this article of Australia rental affordability issues, let us start with what we find on the news and internet, to show you what we mean. So, hereunder is a shortened report.

 The latest property data from research firm CoreLogic reveals Brisbane has recorded a 3.8 per cent rise in housing rents in the three months to the end of September — the highest rise of any Australian capital city.

As Brisbane continues to face record low vacancy rates, rents have risen by 13.5 per cent state-wide in the past 12 months.

CoreLogic research director Tim Lawless said that equates to about a $68 a week increase for a typical rental dwelling, or $3,536 annually. (End of report).

Well, I hope you see what we mean. So, in this article, we want to discuss rental affordability, because they say that in Australia most people cannot find rental accommodation, and if they do, they cannot afford to pay for it. But what are the reasons for these days’ rental issues. It looks like that there are less property available for rent, but what could be the reason for this shortage, and what can be done to fix it.

Well, if the present government wants to fix it, they need to build more rental accommodation themselves, then rent them on low rent, perhaps at no profit at all or at a loss. But even if the government does that, will they be able to build enough rental property and solve the problem for good, I do not think they can do that, because that takes a lot of taxpayer money, and a lot of time to build enough rental properties, so, let us look at the reason why this is happening, and if anything has changed that has caused this shortage.

It looks like that in the past, when the rental property market was run from the private landlords, and there was some money to be made, these things did not happen very often, because a lot of small investors would invest on rental properties. But today there is very little profit in owning rental properties because they cost too much to run, and there are many taxes, starting from the local government, the state government, and from the federal government.

Because it is hard to make a profit, people that have money keep away from investing on rental properties. So, in this article let us try to find the reason this has happened and continue to happen. We want also to find the reasons why in the past it was better.

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Let us talk about the rental past. 

Rental properties in the past were more affordable, because there were more small investors in the market, they were people that had some money and instead of keeping it in the bank, they bought a rental property hoping that, when they retied, they could keep their affordable rental property rented, and they would be better off financially, in their old age, at least this is what they wanted, but today it does not work like that anymore, because of the assets test that is set far too high. 

Most of these people do not have enough money themselves, to become a self-funded retiree. So, they would rely on the government pension, for a modest living standard, but a lot of things have change, so, whoever is on a government pension, would be better off if they had no rental property.

Then, there are a lot of problems and a lot of overhead expenses to run the property. So, the small investors have stopped buying rental properties, since they give them enough trouble and very little returns. So, what went wrong one may ask? Well, let us try to answer that question.

We all know that most economies including Australia are set to run on capitalism, this type of setting requires that you need to make more money from the money you have, this works out well, when everything works the way, it is supposed to work, and you know what you are doing. But sometimes it does not work that well. This happens when unforeseen expenses pop up, and at the same time the rental market goes down, so, there is no money to be made, the worst part is when you know that you cannot make enough money, to run your properties at a profit. I believe that this is what has happened in Australia.

Now, let us see why this has happened, who are the people that are interested in the rental market, and if there is a way to fix this rental shortage. I dare to suggest that the government may have to change some laws, that permits the landlords to run the properties at a small profit, because that is the only way to have enough properties in the market. Here I am not talking about the rich people that run large luxurious holdings and can make money, from their new units on high rent, because most people cannot afford that rent. So, we are looking for affordable rentals, that the workers or the pensioners can afford.

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Let me state my views.

I believe that there are two ways to fix the rental problem, one way is that the federal and state governments, build enough affordable rental themselves, and rent them at no profit or at a loss, and this will take a lot of taxpayer money. The other way is to copy what we did in the past, because in the past there were more affordable rentals, since it was easier for small investors to have a property for rent, without losing money. Anyhow, what I am saying here is that we may have to go back and see what has changed, and if it is necessary, change it back the way it was before, since there were more affordable properties in the past.

Now we know that the private sector, can find ways how to supply all the rental properties required, but that must be done at a profit, so, the large companies are not interested to build affordable rentals, because there is not enough profit in them, then it is the small investors that can make the difference, and because there can be a lot of small investors that can be interested, if the laws permits them to have a rental property at a small profit, or as long as they do not lose other government entitlements, like the pension, then they could be interested to own a property for rent.

Now let me explain how it is possible to lose money. Small investor X lives in his own house and has a unit for rent, soon he is going to retire and hopes to receive the government pension, if he did not have the unit for rent, he would be intituled to receive the full pension, because the other assets he has, will take him past the limit he can have, before the pension is cut. But the unit is a real problem, because the net money he can make, is a lot less than the pension he loses, and that is the real problem, so, he believes that it was better if he did not have the unit. Then the last problem are the smoke alarms. Here the government makes laws that the landlords must employ a registered company to install the smoke alarms, but it does not say how much they are allowed to charge, so, they charge a lot, this can only make the rents dear. 

This is what the government should take into consideration. So, I dare to suggest that, if the government makes laws that the small investors can make at least from their rental properties, as much money as the government pension cut, then the small investors may be willing to invest in residential units, and the problem is half solved.

Anyhow, this is one of the reasons I can see, why this rental shortage is happening. I can write other examples that can explain better the rental situation. But I hope people understand what I am saying here. The only thing I can add here is this; it looks like that the assets test is the reason why there are not enough rental propeties anymore. 

This article is becoming too long. See you in our next article, Australia Rental Problems Can Be Solved. 

To see more click on this link, Australia Rental Affordability Issues. 

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