BS Shrapnel

Forecasters to the real estate industry, BIS Shrapnel, are in the media today with a prediction that rents will increase 20 per cent over the next three years.

At the Brown Couch we are not in the business of making predictions, but we are blessed with the power of hindsight. Let's look back to what BIS Shrapnel were predicting for 2009 this time last year...

"In Sydney, the number of new medium and high density dwellings being completed is forecast to fall to a 20 year low in 2009, pushing the vacancy rate to below one per cent,” explains [BIS Sharpnel Managing Director, Robert] Mellor. “Rental properties will remain in short supply, and the national average rental growth is forecast to rise to 10 per cent in 2009, up from the current rate of 8.2 per cent, according to the Australian Bureau of Statistics rental index.”

10 per cent. Over the year to September 2009, Sydney rents actually went up 6.6 per cent (the national figure is a little lower - 6.2 per cent). BIS Shrapnel was out by a factor of 50 per cent.

Tricky business, forecasting.

(Asterix and the Soothsayer.)

Startling Steve and the draft Bill

While the Tenants' Union continues to pore over the details of the new draft Residential Tenancies Bill (I'll post some comments on it shortly), the president of the Real Estate Institute of NSW, Steve Martin, has today blitzed the media with his own analysis.

(Steve Martin. Yeah, a cheap shot, I know. As the namesake of another famous Martin, I'm allowed.)

Through this morning's Australian Financial Review, Steve startled the big end of town with his warning that the draft Bill was 'investment vandalism' that would 'deliver carnage to mum and dad investors and tenants across NSW.'

This is because, says Steve, the Bill would introduce 'rent controls.' Yes, RENT CONTROLS. I kid you not.

By the afternoon, Startling Steve was down the other end of town, accosting Sydney workers through the commuter organ mX with predictions that 'Sydney rents could jump 20 per cent in just one year' if the Bill is implemented.

This is because, says Steve, it would be so costly for landlords and agents to comply with the Bill's conditions. 'On an average rental of $500 per week, these new costs could be as high as $100, which is a 20 per cent increase', he said.

Perceptive readers may have spotted something of a contradiction in Steve's statements. Will the draft Bill punt rents through the roof, or freeze them where they stand?

It takes a special kind of analysis to come up with two contradictory propositions and get both wrong. Regarding the rent control nonsense – and it is nonsense – the draft Bill's provisions relating to rent increases are the same, almost to the letter, as those in the current Act. No rent controls there.

As for the rent increase nonsense – and it is nonsense, and they've tried it on before – Steve doesn't say how he came up with such extraordinary estimates of the costs of compliance. Unless he shows his workings (whether on the back of a napkin, or a coaster, or whatever), the rest of us are entitled to think that he's just making it up.

New draft Residential Tenancies Bill

At last, the long-awaited draft Residential Tenancies Bill has appeared.

The draft Bill is the product of the review of current New South Wales residential tenancies legislation that began in 2005 (though those with long memories will recall that our legislation first came under review way back in 1998)... as well as the efforts of the Tenants' Union, the Tenants Advice and Advocacy Services, other housing advocates and numerous individual tenants to draw attention to the deficiencies in the current law.

First impressions of the draft Bill: mostly good. It would make numerous sensible improvements on the current law. Some of these improvements would be very significant: in particular, the provisions about residential tenancy databases would finally set out an effective set of rules about how a person might get listed on a database, and how they can get off the wretched thing.

There are, however, some less happy provisions: in particular, changes to restrict the discretion of the Tribunal in dealing with no-grounds terminations.

In the coming weeks, the TU will pore over the draft Bill and keep Brown Couch readers posted as to what we make of it.

The status of the draft Bill is that it is an exposure draft: that is, it is not law yet, and it has not even been introduced into Parliament. Fair Trading is seeking comments on the draft Bill until 18 December, before it goes to Parliament next year. You can make comments to Fair Trading online, but please also let us know what you think, through comments here as we discuss the draft Bill, or by dropping us a line at the TU.

Dine out... help out

The good people at StreetSmart, who raise funds to help homeless persons, have launched their 'dine out... help out' appeal for the coming festive season.



How it works: dine out at a participating restaurant between 9 November and 24 December, and add $2 to the bill to help the homeless. Bon appetit.