[Podcast] The Federal inquiry into the rental crisis was a “waste of taxpayers” money, with Nicola McDougall

It has become more and more challenging for Australians to find a rental home since the pandemic started.

Availability has plunged and rental rates have skyrocketed by as much as 33% in capital cities.

Some locations show the vacancy rates moving up slightly in recent months, but the rental market is far from balanced, and this results in a headache for many tenants.

Last year, there was a Senate inquiry on the rental crisis.

Today’s guest, Nicola McDougall, chair of the Property Investment Professionals of Australia (PIPA), says that their recommendation was a waste of money.

Listen to our discussion as we talk about why, discuss the state of the rental markets, and consider what’s ahead.

Decoding Australia's rental market with Nicola McDougall

In my conversation with Nicola, we dissect the inadequate recommendations of a Senate Inquiry into Australia's rental crisis, the investor exodus from the property market, and the broader impacts of rising rents.

We talk about the importance of government and investor collaboration to address the housing supply issue and why financial literacy matters so much.

We discuss:

• Before Nicola broke the story, the Senate’s report on the rental crisis had not been covered in the media. The Senate uploaded the report onto its website quietly enough to escape notice
• PIPA’s role and suggestions to the inquiry
• Many groups provided submissions, but Nicola’s feeling was that a large portion of them came from tenants’ groups. PIPA and its sister association, the Property Investors Council of Australia, were not invited to attend public hearings, despite representing the people providing the majority of rental housing
• Recommendations included:
  • Boosting the supply of public and genuinely affordable housing
  • Relief for renters
  • Increasing renters’ rights
  • Freezing rents for two years
  • A limit, following the freeze, of rental increases of 2% every two years
  • Freezes and ongoing limits should be attached to the property, not the tenancy
  • The Australian government should coordinate with state and territory governments to remove no-grounds evictions
  • Reform of tax measures like negative gearing and capital gains tax
    • Some of these measures have already been rejected by the government and shown not to have broad support
  • PIPA’s annual sentiment survey shows that 12% of investors sold one or more of their rental properties last year
    • The year before, nearly 17% of investors had said that they'd sold at least one property in the previous two years
    • The top reason that investors gave for selling one or more of their real estate assets in the previous 12 months was governments increasing or threatening to increase taxes, duties, and levies.
  • More supply and more investors are what’s needed to fix the rental market

Understanding the important role that investors play in the rental market is important for everyone, and it’s key to achieving workable solutions to the current rental crisis.

Links and Resources:

Michael Yardney

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Results of PIPA’s Annual Sentiment Survey

Some of our favorite quotes from the show:

“The landscape's evolving. A lot of property investors have been stepping out of the market and we'll talk about that in a moment, if you've got time, because of some of these challenges.” – Michael Yardney

“So basically, the inquiry was a waste of taxpayers’ money that could have been spent more effectively helping people who needed it.” – Michael Yardney

“In my mind we need to build a stable future for all Australians, tenants and investors alike, and foster a community where investment isn't seen as an act of greed but a pillar to strengthen our economy, social fabric, provide accommodation, because not all tenants are poor.” – Michael Yardney

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