Don't let rental reforms force your hand!

Investors should be the most important group of people the State Government focuses on while trying to tackle the current housing crisis. We have said it before, and no doubt we will say it many times again, investors play a key role in bringing more supply to the market 

The Real Estate Institute of Queensland (REIQ) has released the findings of its latest survey, which found 62 per cent of investors have considered selling their rental property in the last two years, and 27 per cent of those said it is due to rental law reforms.

To recap, the Queensland Government passed legislation earlier this year that will limit rent increase frequency to once every 12 months, from July 1. It also opened community consultation (which closed earlier this week) for Stage 2 rental reform laws, which include proposed changes on (in their words):

• Installing modifications
• Making minor personalisation changes
• Balancing privacy and access
• Improving the renal bond process
• Fairer fees and charges

This is the reason many investors are losing confidence in the government. Rather than feeling supported, the reforms are skewed to benefit tenants at the expense of investors. The current regulatory framework is sufficient to protect tenants rights, taking rights at the expense of one group to empower another is simply unjust. In this case it will have the opposite effect of the desired outcome. It will increase rental stress. 

We have to stop the ‘us and them’ mentality. Governments at every level already charge property investors more than other members of the community to provide the same outcome. Where is justice and fairness in that? It’s simply exploitation. The REIQ data also showed that 75.6 per cent of investors in Queensland said the current rent they charge does not cover all their outgoings to hold the property despite the rental increases. It doesn’t have to be that way and it’s forcing investors, especially those without a structured plan (strategy) out of the market. 

Successive Governments (Federal, State and Local) have actively contributed to the undersupply of housing. Now, failing to solve the causes, they are applying demand side solutions to supply side issues. That always creates a worse outcome.

So what should we do as property investors? 

What is more important than ever is that investors have a solid property strategy in place to ensure when they are faced with changes – whether that’s a global pandemic or policy changes – they are ready to weather the storm.

What we need to remember is more people need to rent, not less. For many of our clients, our advice is not to sell due to rental reforms, rather we adapt the strategy for the new opportunity it creates.

Property investors are leaving the market because they don’t have the correct strategy in place. Property alone won’t make you money – your strategy will. Most of these properties are sold to owner occupiers due to the overall lack of supply. This means more first time homelessness and more people competing for rental property. 

More people competing for rental property means less vacancy and higher rents. Terrible news for tenants (hence the comments above about making matters worse) yet it actually presents an opportunity for property investors who have the right strategy in place. These investors are able to be adaptive to changes rather than reactive – because we all know we overreact to negative stimulus and take a long time to react to positive. Managing that is where real success comes from.

If you are worried about the proposed changes, or are looking to begin your investment journey but want to ensure you are making the correct decisions, contact us today for an obligation free chat.

In the meantime, if you don’t like the changes proposed by the State Government – use your voice to speak up by contacting your local member with concerns. Change can, and will, be achieved when we all work together. And we need to shout it loud!

Want to know why, when all the global evidence says to not implement these types of rental controls, the government is still pursuing it? Because (according to the ATO) 7% to 8% of the population are property investors, yet >30% are tenants. It’s about votes, not about what’s right or what is needed.