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WA Government needs a plan to tackle the rental shortage

Damian CollinsSponsored
REIWA President Damian Collins.
Camera IconREIWA President Damian Collins. Credit: The West Australian.

There has been a lot of publicity recently about Perth’s rental shortage – and with good reason. The latest vacancy rate figure is 0.9 per cent, the lowest our city has experienced in 40 years. To put that figure into perspective, just 12 months ago the vacancy rate was 2.2 per cent.

It is often overlooked how important investors are to maintaining a prosperous and fair rental market. When investment levels are high, tenants have a variety of suitable rental stock to choose from and rents are more affordable. When it is low, tenants invariably bear the brunt of this, with fewer available rentals and rising rent costs.

Recent Australian Bureau of Statistics data shows that while lending rates are at record levels in Western Australia’s first homebuyer and owner-occupier markets, investor finance is sitting a long way off what we would expect to see with such a low vacancy rate at just $378 million. For context, the last two times the vacancy rate was below 1.5 per cent, investor finance tracked at $1 billion a month.

It’s clear we need to take action to incentivise property investment in our state. With the rental moratorium ending on the March 28, the time is right for the government to introduce policies that encourage investors back into the market. As part of its 2021 WA Election campaign, REIWA is recommending a two-pronged approach to enticing investors back to the WA market.

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The first is introducing short-term incentives, like land tax rebates, to encourage investors to purchase property in WA. Other states have taken action to incentivise property investment, such as the Northern Territory who have no land tax payable on investment properties. The rental moratorium has clearly dampened investor appetite and a short-term incentive will help boost investor demand.

Given WA’s healthy budget surplus, there is no reason why we can’t do this here. REIWA estimates that a two-year rebate for land tax (based on a property valued at $500,000) would save the average investor $850.

The second part of REIWA’s recommendation is to ensure that any legislative change to the Residential Tenancies Act is fair for both tenants and lessors. If lessors are disadvantaged through legislative reform, they will seek other forms of investment, which will ultimately negatively impact tenants who will face extreme competition to secure a property and high rental prices.

With the State Election just a couple of weeks away, we need all political parties to take this issue seriously and commit to developing a strategic plan of attack to combat this growing problem.

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