Most landlords would support regulation of rent increases, according to a new national report that challenges claims that tighter rent controls would drive investors out of the market.
The report found 65% of current and former landlords back regulated rent increases, while 71% say renting should be more affordable.
Although landlords were broadly supportive of some rental reforms, there was less enthusiasm among surveyed landlords for potential changes to investor tax breaks, which are expected to form a key part of next month's federal budget.
The research, commissioned by Anika Legal, Better Renting and the Consumer Policy Research Centre, is based on a survey of more than 1,000 Australians including renters, homeowners and landlords.
About 30% of respondents were current or former landlords, while 31% were current renters.
The report, Essential Homes: Why renting is an essential service, argues that governments have failed to recognise the necessity of access to affordable, stable rental housing in the same way that healthcare, water and energy are considered essential services.
It says shifting responsibility to the private market has led to fierce competition for unaffordable rental homes, with renters facing the looming spectre of rent hikes and evictions.
Renters face stiff competition for properties on the market, with affordability at the lowest levels in decades. Picture: Sam Ruttyn
Underscoring the extent of Australia’s housing affordability crisis, 77% of survey respondents believed that an entire generation of renters may never afford a home of their own.
Rental affordability is at its worst level in decades, according to the latest realestate.com.au Rental Affordability Report with rental price growth outstripping income growth and affordability significantly worsening since the pandemic.
Rents across the capitals jumped by 4.6% in the past quarter, equating to about $30 per week, according to the latest realestate.com.au Market Insight.
The survey found 83% of respondents believed renting was an essential service, and a similar proportion said landlords should be required to provide safe, affordable and secure homes.
“Where services are treated as essential, governments shield people from harm,” the report stated. “Where they aren’t, people are left exposed.”
More than three quarters of respondents said governments should invest in building more social housing.
Almost the same proportion of people wanted the government to reform the rental system so it works fairly for renters.
Among several recommendations for reforming the rental system, the report proposed phasing out capital gains tax and negative gearing for investment properties, claiming generous tax concessions for landlords made property investment a “particularly lucrative option” and incentivised speculation.
Under current rules, landlords who make a loss on a rental property can use that loss to reduce their overall taxable income, known as negative gearing.
A new report argues that tax breaks for investors encourage speculation and should be phased out.
In addition, the capital gains tax discount allows individuals to pay tax on only 50% of the capital gain made on an investment held for more than 12 months.
While the majority of landlords were broadly supportive of regulating rent increases, they were divided on the effectiveness of potential changes – only 49% believed that reforming tax breaks for landlords could make renting fairer.
Treasurer Jim Chalmers is anticipated to announce changes to capital gains tax and negative gearing in the federal budget in two weeks' time. Picture: Martin Ollman
Changes to the capital gains tax are on the table for this year’s federal budget, set to be delivered on 12 May.
Options under consideration include restricting negative gearing to new homes only to boost housing supply, and limiting the number of homes to one or two properties per landlord.
Other reform recommendations in the report included mandatory registration of landlords and enforcement of minimum rental standards, including stopping non-compliant homes from being advertised and requiring rent reductions until homes meet standards.
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