Coalition Government meets with landlords to jack up rents

Under the Coalition Government’s housing policy, struggling renters on public housing lists will be given rental vouchers to help pay more for their rents in the private sector.

According to data from Australian Property Monitors, medium rents increased by only 1 percent in the June quarter with many capital cities recording falls. In overheated Melbourne for example, rents fell 1.4 percent for houses and 2.9 percent for units.

In roughly the last 10 years that Australia’s housing bubble has been growing, house prices have outstripped wages (the owners income used to service the debt). Outside that fact that household debt has ballooned, this has not caused much hardship (yet) as buyers simply borrow more money.

However, rents are not like this. Renters can not simply go to the bank when landlords continue to put rents up greater than wage inflation, year after year. Rents come from the renters income, primarily their wages or pensions.

In recent years, private sector landlords have been spurred on my lobby groups to raise rates by 20 percent per annum. Simply, renters have ran out of capacity to service their rents have have been forced to downsize or move back in with the parents. Worse still, aged pensions have not kept abreast of rents either, forcing many parents to move into their baby boomer sons & daughters homes. Many are not that lucky, having to turn to public housing for help.

However, the Liberal party has a plan to fix all this by offering rental vouchers funded by state money should they gain power.

”The idea is one that obliviously needs to be negotiated with the states, because effectively it is their money we are talking about, although I suppose the implication is that the Commonwealth would help contribute to this over time to sort of make the idea work,” said Gary Humphries, Liberal Senator for the ACT and Shadow Parliamentary Secretary for Families, Housing and Human Services.

It’s said the policy was written after consultation with real estate and property groups. Senator Humphries said “We’ve talked to a number of stakeholders, not particularly any representing renters or people like that”.

Tenancy and social housing groups believe the scheme will drive up rents, no different to a first home buyer’s boost driving up house prices, causing even more problems and financial hardship in the long term.

It’s unclear, if the policy, which is not yet funded, will be indexed at 20 percent per annum, to ensure landlords can obtain the rental increases they deserve. Treasury has been unable to cost the policy due to lack of detail.

» Coalition plan for rental vouchers – The Sydney Morning Herald, 27th August 2010.




14 Comments

  1. Couldn’t agree more Average Bloke & Calico!

    It could be a reasonable plan if we were not in the middle of an unprecedented housing bubble and if rental vacancy rates exhibited oversupply.

    But it is cruel for the government to give these people rental vouchers and essentially told to fend for themselves in a market where vacancies are around 1 percent or less and private sector landlords will take advantage of them. No doubt the gready landlords will try on things which is aganst the law or the contract, like rising rents in the contract period, or kicking them out with no notice.

    The other concern is what happens when the bubble pops and the bank starts repossessing these rental properties? Will these people have the legal aid to fight the banks and the landlords who will overnight put them back on the streets after months of extracting exuberant rents from them? Can you imagine the social housing problem then!

    Sounds like nothing more than a plan to keep landlords happy (and try to keep that bubble from going pop!) at the expense of the less privileged.

  2. “Treasury has been unable to cost the policy due to lack of detail”

    or should that be……

    “Treasury has been unable to cost the policy due to lack of sanity”

    Australia take a bow…….

    Without a doubt the biggest kingdom of real-estate madness on the globe.

    We deserve a depression.

  3. Firstly, and before I vent my distaste, for a second time on the position of the Coalition, can I thank you for this very interesting site. Have viewed it from a distance till now

  4. Nice post Calico. It’s yet another example of a coordinated wealth transfer and unfortunately no different to the tripe served up by Labor over the last 3 years.

  5. I thought communism was dead. Looks like the Libs want to bring it back to life.
    Expect no opposition on this idea from Labor or mainstream media – they are part of the vested empire.

    Rent vouchers Sir? Perhaps some transport vouchers and food stamps?

    On second thought, perhaps communism is not the correct term. How about Neo-feudalism?

  6. What a joke! It sounds like another first home buyer scheme or insulator program. Please leave the renters alone this will make it more unaffordable in the long run.

  7. A five year national plan:

    Everyone has to blow together in unison.

    That will keep this baby inflated!

  8. Is it not possible that many of those in the parliament might also be landlords? Just a thought…

    People often think that high real estate prices are good for them. I guess not. I have a mate whose home is worth 450k. He wanted to build an extra bedroom, but he could not because he needed to borrow an extra 150k for it. My guess is, that is that if his home was worth only 180k (about 3 times the average annual income, as it should be), he would only need an extra 30-40k. I suppose, building products would also be a lot cheaper. Lower real estate and land prices mean cheaper rents, which in turn mean cheaper goods and services.

    Also, when you sell, real estate agents take a certain percentage of the price, as well as governments take another slice (stamp duty), plus you pay taxes on the capital gain. So they have a vested interest in keeping prices high, including land prices. Why would they shoot themselves in the foot?

    Tough the issue is a lot more complex, but I think we can at least say that the real estate market is very heavily manipulated by the governments, for example, by controlling the release of land for development, allowing foreigners to purchase property here without residency, doubling the first home buyers’ grant, allowing negative gearing etc. So we don’t have a free market.

    Why not restore free market? Why not ban the real estate institute and alike that also interfere with the market by persuading landlords to raise rents?

    Also, those poor guys who are the victim of the so-called “wealth effect” and borrowed much against the perceived equity in their homes, will find themselves in a lot of trouble once the bubble pops.

    Since EWI (Elliott Wave International) anticipates the biggest financial collapse of the last 300 years – and they have a very good track record of forecasts coming true – the bubble will deflate no matter what any governments do. Did the Americans or Poms succeed in keeping their bubbles inflated? They didn’t. The bubbles now also deflate all over Europe as well.

  9. Ideologically-driven privatisation gone mad? Or sheer lobbyist-driven greed?

    Either way this proposal is insane!

    Privatise the profits, socialise the losses… that would appear to be Gary Humphries’ modus operandi.

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