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The PROPERTY DOCTORS, Sydney Australia Novak Properties
EP.1380 THE LANDLORD PUNISHER…..Landlords are leaving due to harsh rental laws
Dive into the complex world of property management and the latest legislative changes impacting landlords. This episode uncovers the significant shifts in the legal landscape, focusing on how recent reforms have altered the dynamics between tenants and landlords. We'll explore the abolition of no grounds notices, increased compliance requirements, and the financial burdens these laws place on landlords.
Join us as we examine how these changes could potentially drive landlords out of the market, ultimately affecting rental prices and availability for tenants. Our discussion features insights from experienced property managers who share their emotional responses to these reforms. What does it mean for the future of renting? Are landlords being punished for trying to provide homes?
Engage with us as we navigate these pressing issues and consider the implications for both tenants and property owners. Tune in, and let’s keep the conversation going! Subscribe, share your thoughts, and leave a review to help us understand your perspective on this vital topic!
New reforms coming to us very soon. How are landlords going to be impacted? We're going to talk about it now.
Speaker 2:I'm the ringleader, so let's go. This is pretty incredible news. This is pretty incredible. You are four senior, super senior property managers reduced to tears no exaggeration. With the latest legislation that's come through, I just can't believe how difficult it is to be a landlord and what I've witnessed every quarter every year the last 15 years in changes against landlords. Great for tenants and I'm compassionate that it's making life easier for those guys, but I'm considerate that landlords are leaving the market because it's just too hard to be a landlord. What's happened, Cleo? What's happened?
Speaker 1:It's true, and it's hard to smile because I was so angry after the Office of Fair Trading webinar we did yesterday with the senior PMs. The landlord is being punished and I don't know why the landlord's being punished They've been punished enough in the last couple of years. To have this come through at a time where a little bit of reprieve could have been, you know, offered is just brutal. It's scary. As a property manager, some people might think oh well, you know, it's just compliancy. What's the big deal?
Speaker 1:There's a lot of changes that impact the bottom line for an investor to keep a property as a rental, which is mind-blowing when there's no properties available and people are saying tenants don't have homes. So why are we doing this? To make it even harder for landlords to consider having an investment. One of the key changes that I was furious about, with these no grounds terminations being abolished. That was the only way a landlord could actually move a tenant along in a nice way, without discriminating, without giving a reason. That's why it's called no grounds. Sometimes, when you go to a shop and you put a jumper on and you don't like it, you want to take it back, and a consumer has the right to do that or you want to say we will come back later because you feel so bad we'll come back later.
Speaker 1:Sometimes a tenant is not the right fit for a property, whether it be they annoy the neighbors, they're over the top with maintenance, it's just not a right fit. And if it was a relationship and you know it was deemed toxic, you'd say, well, let's call it quits. That's what the no grounds notice was, for. You could just say you know what. You've been a great tenant, thank you. Here's your 90 days. I've made different plans and you didn't have to get involved and the tenant can do the same thing with yeah, you don, you don't have to go to.
Speaker 1:NCAT, you don't have to do it In three weeks.
Speaker 1:Dissect it. Now they're making us and property managers go through all these hoops and compliancy and they haven't even you know they've drafted the legislation. It hasn't come through yet. I'm guessing they're trying to figure out how they're going to mandate this. But one of the key points that also annoyed me yesterday was that saying a landlord says well, I've got a family member moving in to the property, you have to supply evidence that your family member is going to move in. I don't know how they're going to do that, but then if you change your mind, whatever the reason is, there is penalties involved. So you cannot relet your property within six months of having put in that notice to evict the tenant for that reason. And if you do, there is penalty points and a fine imposed, like what? I can't understand this.
Speaker 2:like I just cannot you've purchased the property, you've paid the mortgage, you're paying the mortgage and then you're being told you can't put the rent up in a manner you wish. You're being told that you can't. You know, but what people aren't considering is they're winning the battle for the tenant but they're losing the war for the tenant. So what's actually going to happen is landlords dispose of their properties. Um, what is happening is landlords are disposing of their properties. That it's just too hard.
Speaker 2:The interest rate is half a percent higher to be a landlord. So if I have a mortgage and I live in, my interest rate is half a percent lower. There's so many disincentives. I've got a landlord that had a land tax bill go from $100,000 a year, $2,000 a week to $400,000 a year. Right, so you know it is, and he's he's renting this property for three thousand dollars a week. And I'm thinking to myself like there's just no incentive, like why would you, why would you offer up a property if it's just really hard as a landlord? If there's no, if your taxes are too high and your legislation is too constricted, I'm out.
Speaker 1:It's unfortunate and, like our title says, it feels like a punishment for the landlord. It's a punishment, to be fair, it's a punishment for the property manager as well. We've got so much more paperwork to do and in this webinar they said that you put your reason forward online to their website and they can get back to you within two days with the answer, supplying documents, again going online for these reasons that you know. Most of the time, the landlord just wants the tenant out, it's not working out or they don't know what they're going to do. But now they're going to have to really think about and strategize how they're going to do this. Like it's, it's uh, I don't know. It's infuriating, actually.
Speaker 2:I think I really feel strongly about that. The it's choking out the landlord and when that happens there's just it's harder for tenants in the marketplace. So it's great to introduce all this legislation in favor of tenants and out of favor of of the landlord, but what's the net effect going to be in the end? I understand the effect on that legislation they bring in very clear but what does that actually sum nate to over a period of so long when landlords are having that? You know, look, I guess we're the largest rental agent on the northern beaches and I guess it's great for existing landlords in a way, because when everyone zigs, you zag.
Speaker 2:So it's going to skyrocket rents for existing landlords as legislation gets harder and as landlords leave the marketplace. So the existing guys with their properties are just going to get these phenomenal rents. Tenants are going to have to pay more if there's less rental properties in the market because it's disincentivising landlords. Tenants are going to have to pay more for rent. That's what I'm talking about when I say they'll win this battle, but they'll lose this war, not what we want.
Speaker 1:No, it's not, and it's a shame for you know the tenants that are out there that you know their end goal is to own a property themselves. You know, now, whatever the government got wrong with this housing shortage? It shouldn't be. You know it's always been passed on to the landlord during COVID, no evictions. During the bank, interest rate rises. Now the reforms, it's like I, I don't know I'm glad I don't rent out my investment property.
Speaker 2:My dad lives in it, so yeah, probably for the same reasons, you know, but I think I counted 18 things um that have been again ruled against landlords financially um, over the last probably 10 years, 15 years. It it's just, it's unbelievable. I think the last incentive a landlord had offered and put on the table was negative gearing, that's when the government came along and said how long ago was that?
Speaker 1:I was a baby Right.
Speaker 2:And they came along and said look, we want to introduce more properties into the rental pool. We want to give incentive into the Australian property market for landlords to put properties in the pool and that in turn kept rents lower. So I think you know, if we want rents to be lower in the marketplace, offer incentives to landlords so more landlords buy properties and more tenants are offered up to landlords, so more landlords buy properties and more tenants are offered up. There's a there's a tax out there for build to rent models that I've seen. That's been introduced. They've halved the tax if you're a corporate, right, if you're a corporate doing build to rent, so that's a scalable rent model where you've got 200 apartments in one building, they'll your, your. Your tax is half. And I'm thinking what about the mums and dads? Shouldn't they have this incentive instead of the corporates?
Speaker 2:yeah so, look, you know if you've just turned in. Guys, we're talking about the massive changes that have happened, that are they're going to be coming in the fair trading's introduced, where landlords basically can't re-let their property for six months once they've removed a tenant out of their property on a certain basis. And just another disincentive for landlords. And you guys came out of that meeting absolutely rocked.
Speaker 1:We did. The whole time I was thinking I hope there's no audio on these webinars because I was commenting on everything like what. This is outrageous. I mean, I can see value in certain things and reforms are good, it keeps our industry fresh, but I'm not a fan of these ones. The pet, the pet one as well. I'm the first one to say I love a pet, I love a dog, I love a cat In a rental property. It's hard, they're going to say if you don't get a response from your agent or owner within 21 days, it's assumed that the pet is approved. What so okay, I'm just going to say I emailed the property manager. They never got back to me. So now I have a horse in my lounge room Like, honestly, yeah.
Speaker 2:There's just some common sense stuff there that's just not, that's not being applied to that legislation. But look, I get what you just said. Like there are problems that need to be fixed, but I think you've also got to make sure that when you're fixing these problems with legislation, that you're not creating a bigger problem it's true, and you know the only takeaway from this for me, the sore points, these no grounds notices.
Speaker 1:Um, as a property manager all these years, that was my little golden reserve that I would use to make a bad situation amicable for everyone. I just recently did one because the tenant had a cat. The owner said you could only have a dog. We had a mutual understanding. The tenant found a new place. They weren't getting rid of the cat and it just was all beautiful and tenants moved out, new tenants gone in. The reason is that the owner's neighbour has a dog that's at home all day and he'd just bark all day because of the cat. So they didn't approve cats to begin with. But yeah, having this no grounds notice, the other option is what? Go to NCAT, issue a breach, follow up on the breach. That's three or four applications. The tenant gets to stay there with the cap. The owner gets no control over that whole process and someone from NCAP can decide on this owner's property whether the tenant can stay, whether they are in breach or they're not in breach. I can't, I don't know.
Speaker 2:Yeah, well, well, well, it's going to happen's gonna happen um it's inevitable and uh, and just remember this, like as these.
Speaker 2:If these rents end up skyrocketing, people go. I don't understand why there's not more landlords in the marketplace or more rental properties and um, it's, it's, you know, you know it's and it's also a fine line. People choose to be professional tenants. They don't, and I think the government has a policy to get everyone into a property that they own, which is great, but there are people that it just doesn't work for them and we need rental properties in the marketplace for those guys. So you know, I've seen what the rents have done in the last year. It's been reported in the media, which shocks me, that rents are no longer going up Like talk about a bunch of crap. We're seeing the last six months, three months, one year rents just continue to pound, pound, pound, increase on increase, on increase. It's the marketplace in the northern beaches, so it's counterintuitive to what we're seeing in the media.
Speaker 1:Weird it is, and you know every conversation I have with a landlord at the moment is they say is my property at market rent? And as soon as I go on and then I have a look, it's gone up by $50, $60, $80, depending on how many they've done over the you know tenancy duration. But every property I look at at the moment when you go to CoreLogic or RP Data, it's usually the market is saying us with high confidence that the owner can have an increase and they want their increase because they didn't have it during COVID. They've had all these interest rates. They can only do one per year. They can't pivot and change. This is what's happening. It's a bloodbath. It's a bloodbath out here right now.
Speaker 2:Yeah Well, that's just so much money, like for a tenant. Like I've seen these rental increases. We report them on our social media. Every time we do one and I just think it's just like. You know, I've been doing this for 30 years and I've never seen these sorts of increases in the marketplace. I'm astonished by it.
Speaker 1:Um, and I think it's, I think I think the legislation's not helping it no, you gave a 10 out of 150 or 100 dollar rent increase back in my early days. You'd be an end cap within that week straight away, whereas now it's become normal.
Speaker 2:It's, it's and it's like why it's? Just you know why? Because, I'm telling you, landlords are leaving the marketplace.
Speaker 1:It's true. It's true there's too much compliancy. It's good to be regulated, but too much compliancy and some owners just aren't for it. I don't know no crystal ball Tenants, owners. That's what keeps me employed and I will continue doing the best I can, but I'm, you know, a little disappointed with how this is shaping out right now.
Speaker 2:Yeah, leo. Expert property manager. Thank you so much for your time. Have a good long hard. Think about what you wish for guys and girls. When we're talking about this legislation against landlords, for tenants, um, I think for tenants, in the long run it's it's not a good thing either. So we've got to just be really careful on this stuff when it comes in. Uh, and respectfully to both, to to all parties, like I think um, yeah, we just got to make it better for everyone.
Speaker 1:I agree, have a great day everyone. Happy thursday, cheers.