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