Friday, January 24, 2014

These are our landlords, and they're doing okay...

Earlier in the week the Institute of Tenancy Culture Studies took a look at what makes a good tenant, from a landlord's point of view. Someone who can pay the rent, and keep the place standing, is usually all that they're after. Just don't get landlords started on the question of rights, because things can get a little heated.

There are some good examples of landlord indignation over on the 'Hack on Triple J' facebook page (we've referred to this once before). But you probably know the sort of thing we mean - especially if you've ever found yourself in conversation with a landlord who has had 'trouble' with a tenant.

No doubt it's tricky. Imagine borrowing a large swathe of money and parking it in real estate, hoping that over time it will grow into blooming great fields of gold. Deep down you know that the greatest risk to success will be whether or not you can find a tenant. If you can't find one, the bank will send you out backwards, and you'll probably lose the deposit. But if you can find one, they'll have to... *gulp* ... live in your lovely house. What if they scuff up all the carpets? It could end up costing you a fortune!!!

No doubt this particular anxiety is made all the more nerve wracking by the prospect of having to go to the Tribunal if the tenant doesn't just cough up the bond... (good grief, that could take up an entire morning!)

Not to worry - the Real Estate Institute of New South Wales has got your back. In their Real Tenancy Policy, which we discussed on the Brown Couch back in 2010, the REI suggested we'd be better off without all this needlessly complex and prescriptive regulation in the Residential Tenancies Act. By way of explanation, they said:
A would be landlord confronted with a choice between owning a property where recovery of water consumption depended, on the one hand, on agreement between the landlord and tenant, and on the other hand on numerous factors including not exceeding a prescribed rate of water flow from the taps, may think twice about becoming a residential landlord.
The implication was that property investors would turn their backs on New South Wales, and park their investment funds in South Australia or the Australian Capital Territory instead (where the laws are much 'smaller', after all...) This is in keeping with earlier comments, made in their formal submissions to the NSW government while our current renting laws were still in draft (we wrote about this at the time, too):
The NSW property market (upon which the Government is heavily reliant for revenue) must be attractive for both NSW and external investors. 
An investor selects an investment for return, and is not driven by a desire to provide housing.
Interesting observations.

Fast forward to the beginning of 2014. As we noted a little over a month ago, there has never before been so much borrowed money parked in real estate in New South Wales:

... and demand for housing transfers in Sydney, in particular, is being driven by our landlords.

This is not because the regulatory burden has been reduced - we're still operating under the same Residential Tenancies Act that the Real Estate Institute said was needlessly complex and prescriptive, way back in 2010. The same piece of legislation that was supposed to scare all our landlords away, because making properties more water efficient was just too much to ask.

No. It's because of cheap debt and rapidly rising house prices. Prices that rose by almost 15% over the course of 2013, if you're prepared to believe the data. And as we know, an investor selects an investment based on a return...

Perhaps this is something to keep in mind, the next time you're discussing the burdensome world of over-regulation with your poor, poor landlord.

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