There’s been much speculation as to what will happen when the COVID-19 rental moratorium in WA ends on Sunday the 28th of March.
Will thousands of tenants become homeless? Will rents leap astronomically? Will the State Government move to cap rent increases?
It’s worth mentioning that any fallout is, to a significant extent, of the government’s own making. The decision to extend the moratorium by a further six months at the end of September last year, at a time when the rental market had already sharply tightened, simply made a looming problem worse.
Much of the media focus has been on “greedy” landlords. In my experience, and maybe it’s just reflective of the areas I work in, the vast majority of landlords are regular Mum & Dad investors who have bought investment properties to top up their super because it seemed safer than shares. They don’t own these properties – they were bought with debt. Most have seen their investments suffer a significant decline in both value and weekly rental returns since they purchased them, particularly if they bought in the last 10 or so years. In fact, the only reason many have been able to hold onto those homes is due to the prevailing low interest rates. Many are hanging out for the market to recover to get out of their investments altogether.
Whilst weekly average rents have risen from $360 in February 2020 to $400 in February 2021, WA is still the most affordable place for rent in the country. And rents are still cheaper than they were in 2016.
What’s needed to boost WA’s rental supply is a return of investors to the market and support for younger tenants to buy their first home. Private investors are essential to maintaining a healthy housing supply as shortages can’t be covered by the government. Returning the First Home Buyer Grant for affordable, established dwellings would povide a much needed boost to first time buyers – rather than the current situation that pushes them into new builds in the outer ‘burbs. Stamp duty reform, which is being implemented in the ACT and soon too NSW, and a responsible approach to the review of the WA Residential Tenancies Act, are also necessary to stimulate investment activity, as well as encourage movement and increase supply across the housing sector overall.
For now, we have to wait and see how the end of the moratorium plays out and hope that the situation isn’t made worse by the government sticking its finger in the pie again. The market needs to find it’s own level. And capping rents or placing further restrictions on landlords is just kicking the can down the road again.