Nearly 90 percent of real estate agents in Victoria have had an increase in contact from landlords (residential rental providers) who are looking to recover increased costs as a result of the Victorian Government’s new and increased land tax on investment properties.
And seven in 10 agents are reporting an increase in contact from rental providers looking to sell their properties, suggesting the state will see an imminent reduction of rental properties as investors leave the sector.
The insights come from a recent Real Estate Institute of Victoria member survey that also found:
- renters are contacting agents to express ‘extreme concern’ that their rent will increase and that they will find it difficult to find another property in an already tight market;
- more than 110 agents in metropolitan and regional Victoria are ‘extremely concerned’ about the new land tax policy’s impact on rental housing supply; and
- 83 per cent of respondents said that interest in buying investment property has ‘consistently decreased’ since 2021, when more than 120 changes to the Residential Tenancies Act come into effect.
REIV CEO Quentin Kilian said the survey provides hard evidence that the 2023-24 State Budget’s land tax increase is bad policy.
“It beggars belief that while Victoria is facing housing supply and affordability headwinds, the State Government would introduce a new tax that will only exacerbate the problem,” Mr Kilian said.
“REIV members are at the coal face of the housing sector and their engagement with renters and rental providers every day has brought some uncomfortable home truths – the rental crisis is real and will only get worse with the introduction of this new tax.”
The survey, titled Understanding the Impact of State Budget Announcements and published this week, provided direct comments from agents:
“Rental providers are very anxious regarding the investment & own home mortgage stress, new tenancy regulations reducing their control on their own property and the added financial cost on minimum standards and current building act safety compliance. I have multiple calls every day absorbing the rental providers stress in addition to the tenant stress of both my clients.” (Karen Knight – Woodards Elsternwick)
“Some buyer advocacy clients that were already engaged, finance-ready and actively seeking property to buy as an investment in Victoria…have actually
paused services as they are considering buying property interstate due to the uncertainty post the V State Budget.” (Mark Errichiello – Master Advocates)
“With gas and electrical safety checks, increased interest rates and costs and now land tax, landlords are needing substantial rental increases as compensation and to make ownership commercially viable.” (Pakenham)
“Three owners have signed sale authorities to sell since budget announcement and enquiries from at least 15 others considering selling.” (Don Bethune – Methven Professionals Croydon)
“Twenty to 40 applications per property results in homelessness being a high risk.” (Don Bethune – Methven Professionals Croydon)
“We are experiencing record number inspections at rental opens and people are getting desperate to find a property.” (Bayside)
“We have had a sub 1% rental vacancy rate now for several years. It is extremely difficult for some renters to find a home and suspect, many will never find a home unless the market drastically changes.”
“It is already evident since the budget that some rental providers have had enough and decided to sell. It has not been met by an increase in investors, meaning the rental stock will start reducing further.” (Blackburn)
“Rental stock has fluctuated however April was our lowest vacancy ever experienced in 20 years.” (Cynthia Hartnett – Just Rentals Real Estate)
“We require more stock as the vacancies are filling within 1-2 weeks.”
Mr Kilian added that his organisation is keen to see politicians engage with the sector before taking decisions that impact Victoria’s housing sector so significantly.
“Our door is always open; we implore all sides of politics to engage the sector so we can propose and discuss viable and sustainable solutions to address the core issues impacting housing in Victoria.”