
Rental Reforms
Investors have been leaving the market in droves given the ongoing interest rate hikes, tighter lending criteria and the fall out from the pandemic. Investors, in general, have also been called out for price gouging when it comes to increasing rents on existing tenants. While this might be true for some landlords, many of us are simply trying to cover costs. All of this has led to a severe under supply of both houses and units for rent in Perth.
REIWA has just announced it’s support for Rental Reforms and we want to know whether the new tenancy laws will make you more or less likely to become a build-to-rent investor. With the ‘no grounds terminations’ laws remaining in place, this gives some certainty to investors that they are able to deal with their property as they see fit. Also allowing pets and minor modifications will help to attract tenants and give landlords some certainty in charging applicable bonds and recovering costs for damage.
One of the biggest changes is the limiting of rent increases and banning rental bidding and this is where it becomes interesting … Banning rental bidding in itself levels the playing field for prospective tenants where they can be assessed on merits beyond how much money they have to spend. Limiting rent increases in a market where multiple interest rate hikes are still on the table seems a bit more problematic. Will investors be happy to lock in their rates for twelve months and have to cover any shortfalls themselves? Or will they factor in multiple rate increases at the time of renewal and have the tenant pay a higher price up front to cover any foreseeable costs?
Being a property investor is primarily about building wealth and passive income. If these things are put in jeopardy, it’s no wonder that investors are deciding to leave the rental market.