Change tenancy laws to ease housing crisis
Trevor Rawnsley, CEO of the Australian Resident Accommodation Manager's Association (ARAMA) is calling on councils across Australia to ban short-term letting in detached housing.
In his column in the March edition of Resort News Trevor Rawnsley, CEO of ARAMA writes…
Australia is facing one of the worst housing environments in decades. Soaring property prices and skyrocketing rents have combined with a shortfall of necessary homes to create a national homelessness disaster.
Queensland’s social housing waitlist is growing steadily, with more than 56,000 people registered and hoping for a home. In some areas, the waitlist stretches into years.
New housing construction across the nation has not kept pace with population growth, creating a significant deficit, particularly in urban areas. Some estimates suggest that despite a recent uptick, Australia still needs another 300,000 properties to cope with a population now exceeding 27.5 million.
By contrast, there were 251,000 short-term rental properties registered across Australia in September 2022. A significant proportion of these are standalone houses in suburban areas that can sit empty for periods of time.
In another staggering statistic, 1,043,776 Australian dwellings were listed as empty on census night in 2021. Some of these million-plus houses were vacant because they were being sold and awaiting new owners, but many are used as holiday homes and are often left unoccupied.
Because of the short supply of housing, rents have gone through the roof, vacancy rates are at all-time lows, and competition for properties is fierce.
However, the regulatory climate has been shifting against Australian landlords and agents for some time. Even with rents at a premium, Australia’s rental market is teetering on the brink, with an astonishing number of property investors abandoning the long-term residential sector and pushing an already overwrought system closer to collapse.
As financial expert Noel Whittaker wrote recently, “in many states, bashing landlords wins votes”.
Many Australian landlords now face rent freezes and regulatory changes that require owners to accept a broader range of “reasonable requests”. These can include pets or additional occupants. Each change pushes costs higher, which in turn pushes rents higher.
In Victoria, recent rental law changes have strengthened renter rights, including banning no-fault evictions. It can be a long legal process to evict tenants, even if they stop paying rent. ARAMA successfully argued against the introduction of those laws in Queensland.
However, an increase in red tape and regulation still makes it difficult for landlords with long-term residential properties in the Sunshine State, and there has been a record exodus of investors from the rental market.
Some people believe that investors selling rental homes would alleviate the housing crisis because those homes go to families. However, many residential houses are instead being purchased by investors for the short-term Airbnb market, something ARAMA strongly opposes because it worsens the rental situation.
This article was first published in the March edition of Resort News. OUT NOW. Read it HERE
Suburban long-term residential family houses are increasingly being used as holiday lets and party houses because governments have permitted this under what is often described as a ‘sharing economy’. There is nothing sharing about it. Removing houses from the long-term rental market during a housing crisis is extremely selfish and short-sighted.
Overseas-owned online travel agency platforms such as Airbnb and Stayz continue to turn traditional suburban family homes into largely vacant short-term cash cows. These detached houses were originally designed for families to live in, either as long-term residential tenants or owner-occupiers.
While OTAs are user friendly and consumer friendly, which is positive for holidaymakers, this is bad news for renters and owner-occupiers.
ARAMA has no objection to OTAs when they are used for traditional holiday letting. Some ARAMA members even use these platforms to market their holiday apartments. However, it is a vastly different story when these portals consume family homes in suburban areas.
There needs to be an Australia-wide ban on using houses in residential areas for short-term letting. On its own, it will not solve the housing crisis, but it would make a significant difference to supply and place downward pressure on rents.
Most local government authorities classify detached multi-bedroom dwellings as Class 1 dwellings. The more these Class 1 properties are converted to short-term holiday letting, the greater the reduction in available housing stock for Australian families seeking long-term accommodation.
State governments have set tenancy laws that are widely viewed as unbalanced and unfair, influencing owner-investor decisions in ways that reduce long-term rental supply.
In several states, recent tenancy law changes have strengthened renter protections around matters such as pets, certain minor alterations and lease terminations. For landlords, ending a tenancy or refusing requests may now require specific grounds and compliance with updated legislative requirements. In some jurisdictions, the end of a fixed-term lease is no longer, on its own, sufficient reason to terminate a tenancy.
If governments force landlords to pay more through increased taxes and red tape, rents will inevitably rise. I can’t think of any state in Australia where the rent has actually decreased as a result of unfair and unbalanced rental tenancy laws. In fact, the opposite applies. Short-term rental platforms have encouraged owners wanting to avoid these hassles to leave houses vacant for much of the year and charge high daily tariffs when they are used.
In many Gold Coast streets, family homes are occupied only a couple of nights a week, often by just two people in four-bedroom houses. These are homes designed for families, meaning more households are forced into long queues for an increasingly limited supply of homes.
This pattern is being repeated across Australia.
In December, Brisbane City Council announced a crackdown on short-stay accommodation in residential areas, with similar moves occurring in Noosa. However, many councils have chosen to address the issue through higher rates on short-term use rather than prohibiting the practice entirely.
Increasing taxation through council rates, such as the “view tax” on the Gold Coast or bed taxes in other regions, is not the solution. Higher costs are routinely built into nightly tariffs, driving up total booking values and, by extension, the commissions earned on each transaction. As a result, these measures are unlikely to be opposed by OTA platforms.
Suburban family houses should remain exactly that, not short-stay holiday pads.
Unless short-stay letting is banned for suburban houses (Class 1 dwellings) investors will continue to snap them up for short-term use rather than long-term residential rental. Governments must reduce red tape for landlords and unwind aspects of tenancy laws. ARAMA continues to engage in discussions on these issues.
There is a misconception among some public servants that all landlords are multi-millionaires. In reality, the average landlord owns just 1.2 investment properties, and most are mum-and-dad investors trying to get ahead.
Governments should also encourage investment in strata developments and adopt more flexible laws that allow strata apartments to be used for both short-stay and long-stay accommodation. This approach is particularly important in the lead-up to the 2032 Olympics and in responding to the housing crisis.
Incentives should exist for investors to move between short-stay and long-stay strata apartments depending on population needs. The 2018 Commonwealth Games on the Gold Coast provide a strong example. Apartments were used as short-stay accommodation during the Games and then transitioned back to long-term rentals afterwards.
Read: ARAMA advocating in action on the national stage in AccomNews. HERE.
ARAMA members were perfectly positioned to manage these shifts in supply and demand.
Brisbane and South East Queensland councils should consider how the 2032 Olympics can deliver long-term residential apartments once the short-term accommodation demand for the Games subsides.
Raising taxes will not solve the housing crisis. It will simply generate more revenue. Buildings with management and letting rights operators allow flexibility, supporting both short-term stays for visitors and long-term leases for residents. Apartments provide this flexibility. Suburban houses do not.
Australia is facing a housing crisis, not an apartment crisis. This flexibility proved critical during COVID, when short-stay apartments were converted to long-term residential use.
That model works in strata developments. It does not work for detached Class 1 houses in suburban areas, which are ideal for family homes or shared accommodation.
ARAMA is calling on councils across Australia to ban short-term letting in detached housing (Class 1 dwellings) while creating incentives for apartment investors and agents, particularly management and letting rights operators.
Councils may require state government support to implement or enforce legislative change. ARAMA is calling on all levels of government to work together to achieve this outcome.
A ban on short-term letting in detached houses would still allow investors to earn strong returns from long-term residential rentals while creating more housing opportunities for Australian families.
While legislative changes may be required, ARAMA believes this approach would go a long way toward easing a housing crisis that has worsened in part due to tenancy laws that disadvantage landlords and agents without increasing supply or reducing rents.
Restricting Class 1 suburban houses to long-term rentals would significantly increase housing availability and help soften rental prices where most families want to live. Removing these houses from the short-term rental market would be unlikely to harm tourism or cost jobs. ARAMA members are well placed to absorb demand within appropriate accommodation settings.
Increasing rental supply nationwide would also help stabilise escalating rents.
MLR operators can host holidaymakers in strata-titled properties designed for both short-term and long-term use, depending on market demand. This would help ease the housing crisis and return more families to suburban homes at more affordable rents.
Read the latest edition of AccomNews HERE
