Should Rents Be Capped?

Lhawkshead on 29/12/2022 - 11:33
Last edited 29/12/2022 - 15:58

I dont really understand finance, so there's probably some big brain banker who thinks different.

Why is my rent going up because my landlord's mortgage is going up?
I didn't take out a loan on a home I won't live in. I'm not getting more house, im not getting better services? they havn't improved the house in any tangible way.

I think if rents were capped based on objective features of a house like rooms, amenteties, idk water efficiency? like actual tangible definable things it would be good for people.

I get that might mean that investors can't afford their mortgages, but why are we basing housing on the reckless financial decisions of investors? if you can't afford that 2nd or 3rd property maybe you should just sell it? and not make tennants pay for what you can't afford.

The banks and landlords have had decades to tackle homelessness and they havn't. Maybe their way isnt actually good.

Maybe this would just have aweful consequences though. So apart from rampant greed what would go wrong with capping rents?

(EDIT) I really appreciate the perspectives and comparisons between attempts in other parts of the world as a way to explain things. Keep em coming.

Poll Options expired

  • 89
    Cap rents based on objective features of a property
  • 601
    Don't cap rents based on objective features of a property
  • 11
    Cap rents based on things like income amounts
  • 13
    Don't cap rents based on things like income amounts
Financial Rent

Comments

    • Adredocto on 29/12/2022 - 13:15
      +2

      Reckon you would struggle to get anything at $300k these days. And then the add on costs for driveway, utility connections, flooring etc.
      Not sure about refional Aus but metro would be much more. Plus the legacy supply chain issues from last few yrs pushing up prices

    • hawkshead on 29/12/2022 - 14:06
      -5

      why are tennants the ones paying for that risk?

      • Ughhh on 29/12/2022 - 16:07
        +4

        Oh, will the bank chase you for the money and ruin your credit history? It's not your job to make sure the house is occupied with a tenant, so feel free to leave and let the landlord go broke.

        If you want something, get/buy it yourself, otherwise theres going to be conditions.

      • Nucleus Acumbens on 29/12/2022 - 18:20
        +1

        Why shouldn't they?

      • Extreme on 30/12/2022 - 09:01

        Because it comes down to the purchase price of the asset and then the holding costs.

        The more a house costs, the higher the holding costs.

        Landlords aren’t there to provide tenants with free or discounted housing.

        Naturally, as costs increase, they are going to be passed on. It’s an investment after all.

    • mrXO on 31/12/2022 - 09:19

      Nah. He wants other people to subsidise his purchase

    • cadwalader on 01/01/2023 - 16:03

      More, because land isn't just drawing boundaries and selling off parcels. It cost money to connect the land to utilities and infrastructure as well as preparing the land for construction.

  • CurlCurl on 29/12/2022 - 12:08
    +9

    The banks and landlords have had decades to tackle homelessness and they havn't. Maybe their way isnt actually good.

    I thought that's why we elect Governments.

  • Ocker on 29/12/2022 - 12:21
    +4

    troll post by newbie for sure

  • Hardlyworkin on 29/12/2022 - 12:22
    +4

    Supply and demand is also a big reason why your rent is increasing. Don't need to be a big brain banker to get your head around that. They are increasing your rent as if it's too much for you there will be 20 people lined up to take it over.

    • avoidfullprice on 29/12/2022 - 12:43

      This. Unless OP takes a loan to buy a house, OP will be homeless in most places OP wants to live in

  • illusion99 on 29/12/2022 - 12:24
    +4

    "Why is my rent going up because my landlord's mortgage is going up?
    I didn't take out a loan on a home I won't live in. I'm not getting more house, im not getting better services? they havn't improved the house in any tangible way"

    Does the above make sense when you apply it to investors? Why is my mortgage going up because my bank's interest rate is going up? I'm not getting a better loan or a better service. They haven't improved my loan in any way

    • supersabroso on 29/12/2022 - 17:00
      +1

      Agreed, this just goes up the chain forever. Why is my gas bill going up? I'm not getting better gas why should I care that the private company that supplies my gas has to pay more to get it to me. So silly, just get your own mortgage. Once you finally pay it off, you get to live the rich life. No rent or interest payments for the rest of your life (and possibly your grand kids lives depending on your situation).

  • TheMindsetTraveller on 29/12/2022 - 12:25
    +4

    No.

    Close thread.

  • BugsBunnyAUS on 29/12/2022 - 12:27
    +4

    No.

    Stop interfering with the free market.

    That goes for the supply side as much as the demand side.

    • supersabroso on 29/12/2022 - 17:05
      +3

      He's not wrong in thinking that something should be done. Just instead of capping rents, they should abolish negative gearing. That way we truly stop interfering with the free market. Right now it's rigged against people who are rich enough to buy investment properties instead of normal people like us who are struggling to pay their crushing mortgage.

      • BugsBunnyAUS on 29/12/2022 - 18:27

        That was my point re stopping supply side interferences

      • od810 on 29/12/2022 - 21:54

        There are many ways the gov can help the owner occupiers. Remove negative gearing (but it will be applicable to all type of investments including shares), loss to be accummulated and deducted from the cap gain (Shorten's policy), APRA can tighten the lending criteria for investment properties, make sure banks only lend investment properties with lower LvR i.e 70% and stress test with higher buffer (similar to 2018).

        Even though i own an investment property, but i think it is lazy investment. People leverage through their nose and make a bet on forever increasing property market. Imagine mom and dad with 2 3 millions shares portfolio with no ideas what they do, people will freak the crap out. But that is exactly what property investment is right now.

      • cauilfield on 30/12/2022 - 23:41
        +1

        abolishing of the negative gearing will drive the rentals through the roof.

      • cadwalader on 01/01/2023 - 16:05

        We should also remove all restrictions on foreign ownership. That way we truly stop interfering with the free market.

    • Mistredo on 30/12/2022 - 11:40

      Sadly, we cannot allow free market to control these things, because there is no free market, because people need a place to live, so they will endure even horrible conditions. Basic needs such as food, healthcare, and housing should be regulated, because people cannot live without them.

    • idonotknowwhy on 30/12/2022 - 19:53
      +1

      Then (profanity) all these kind of policies off as well:
      https://www.vic.gov.au/our-plan-help-first-home-buyers

  • jjjaar on 29/12/2022 - 12:30
    +5

    TL;DR There’s some good things about rent capping, but also some bad things, so unfortunately not as simple as it seems.

    I used to be 100% pro rent capping, until I had some conversations and looked at both sides. Here’s some information I found that helped reform my opinion.

    Ireland capped rents for a while - so you can have a good read of how it went. Some of the things I’ve read about how this worked are pretty biased against capping, mostly written by landlords, but even in saying that, there are still some good points to be made against rent capping. (FWIW if you ever wanna see two sides to a story, do two google searches: “benefits of rent capping” and “why rent capping is bad” should get you both sides of the coin.)

    Firstly, the initial rent will increase, which will mean over the life of the lease, the tenant is likely paying more. Instead of a landlord charging $500 for a property now, and increasing it $25 a year each year to $525 in Y2 and $550 in Y3, if rents are capped for 3 years, they’ll just ask for $600 at the start, possibly more, to cover these losses. That’s $81,900 VS $93,600 over the three years.

    The other outcome is that landlords sell their investments altogether, making fewer rentals available.

    It is likely that by selling investment properties, more properties are available to buy, thus possibly reducing the cost to buy a house.

    However, this combined with high interest rates, and people who just generally have no desire to own, doesn’t always mean that renters become owners and all of these properties will just magically go from being rented to owner occupier. Some will, sure, but it’s also possible that houses just become vacant/stay on the property market rather than owner occupied.

    In simple terms, 20% of investors try to sell, but only 10% of existing renters can enter the owner market, so 10% of properties sell and that balances out, but 10% of properties stay on the market, but are no longer available for rent. This further reduces the supply available to renters, increasing the demand, and increasing the rental prices.

    That being said, there are some benefits to rent capping. Tenants know how much they’re going to pay for the 3 years of the lease from the start. They can better plan their expenses, even if the cost is higher, or they can make compromises about where to live before settling down, minimising costs and time associated with finding a new place each year and moving.

    Rent capping is therefore likely to encourage people to stay put for 3 years (or however long the cap is), rather than move each year when the rent increases, which provides more housing security for renters, but also for landlords who may not want to deal with finding new tenants each year.

    • hawkshead on 29/12/2022 - 14:11
      -3

      so it sounds like a feasable thing with nuance to it. I dont know how to word it, like I don't mean no other supporting systems, but that what we have now clearly isnt enough as it currently is.

    • od810 on 29/12/2022 - 21:46

      I mentioned earlier in the other thread, we just need to have different residential property contract, something similar to commercial property. I bet that many many investors are happy to do 5+5 lease contract or 3+3 contract with 3% annual increase. It costs landlord about 5-10% (or more if the property is vacant for long) of the annual rent to get new tenant, so it is in landlords interest to have long term tenants.

  • stringbean402 on 29/12/2022 - 12:32
    +1

    You mean rising interest rates are going to increase the cost of living across the board? Who would have thought access to cheap capital helps keep costs down across all sectors of the economy….

  • Almost Banned on 29/12/2022 - 12:46
    +14

    You aren't paying more rent because your landlord's interest rate is going up.
    Your rent is going up because the rental market is tight and landlords believe they can get more money for their investment.
    If they are wrong, the market won't support the price increase, the property will not be let, and the landlord will need to reconsider.
    The cost of your landlord's inputs factor into the desired return landlords might want to achieve - but they do not set the market. Rents will find their own level based on demand for the property.

    • CyberMurning on 29/12/2022 - 12:48
      +1

      yes. even if interest rate going down /steady, but if demand is up, landlord will increase.
      cant afford then move to smaller house or further from cbd

      • Almost Banned on 29/12/2022 - 14:20
        +6

        Your analogy is inapt because:
        1. there are no alternatives to air, and
        2. your analogy suggests there are no other suppliers.
        There are literally thousands of properties available for rent at any given moment. No-one is forcing you to rent from any given landlord, or any given property. If you don't like the price, you rent somewhere else. Maybe you move suburb, or even state. But you have alternatives if you don't like the offered rent.

        • supersabroso on 29/12/2022 - 17:12
          -1

          Exactly, we know for a fact that a virtually identical property can be rented for $500, $1000 or $2000/week depending on the location. So OP is definitely not stuck with ridiculous rents if OP is willing to compromise and move further away from the CBD.

      • Mrgreenz on 29/12/2022 - 21:13

        Jackiechanwhat.gif

    • arescarti42 on 30/12/2022 - 10:03
      +1

      Great answer.

      Residential landlords have no market power, they charge what the market can bear, or go without a tenant.

  • Quantumcat on 29/12/2022 - 12:47
    +2

    It's supply and demand - when there is a lot of demand and not much supply, prices go up. There are probably a lot of homes sitting on the market without tenants waiting to be sold (interest rates making it not worthwhile keeping as a rental), and others that have been sold and turned into air bnbs. If you want prices to come down, you need to look at the bigger picture rather than individual landlords. You need the government to invest more in social housing, release more land for people to buy and build on, etc.

    • hawkshead on 29/12/2022 - 14:14
      -1

      so like a complex solution? Yeah that sounds great, but I still think there needs to be some more regulation and I think that free market ideas might not be the ideal system.

      • Quantumcat on 29/12/2022 - 17:39
        +1

        Regulation in terms of rent capping won't help at all, and will just create new problems. There will be more demand for the same places as there isn't the price difference to reduce demand. At the same time there will be much less supply as investors leave the market because there are better places to put their money. Some people might be able to afford to buy with the cheaper prices, who couldn't before. But not too many people, lots of people rent because they don't have a deposit ready or they move a lot so don't want too rent instead of buying and selling constantly. So what you'll have is a lot more homeless people because while rents are more affordable, there just aren't enough places for everyone who needs one. The only thing that will help is more supply. That could happen by the government speeding up land development somehow, or investing in more social housing. I think the latter is better, then the people right at the bottom are taken care of, and the people not quite at the bottom get a hand as the demand is sharply reduced in the bottom end of the market, making it much easier to compete to get a rental, and bringing the prices down a lot too. Those reduced prices will filter up as well with the reduced demand overall. With the former, I am ignorant of exactly what slows the development of new houses (whether it is slow land release or something else) so can't really say what the government can do that will help. And with the news of so much shoddy work in new apartment blocks you don't really want the developers to be rushing too much and neglecting to build them properly.

    • Thaal Sinestro on 30/12/2022 - 07:52
      +1

      Also a moratorium on immigration. More people = more demand = higher prices.

      Australia is overpopulated because of high immigration intakes over a long period of time. In comparison older nations like Ireland and Norway only have populations of 5 million.

      People say we need more skilled workers, but skilled workers take their spouses and children and siblings with them, creating a spike in demand requiring even more immigration to fix. It is a Ponzi scheme that benefits the rich by causing the price of their investment properties to surge.

      • Ghost47 on 30/12/2022 - 17:14

        That'll never happen even though I agree with you.

        We've been hooked on two things the past decade to boost our economy; cheap money and high immigration. Now that the era of cheap money is over (although I suspect since we're hooked on it so badly that we could see cheaper rates again in 2-3 years, below 2% at least) all we have to rely on to grow our economy is immigration. This is even more the case since the LNP really wrecked our relationship with the country that we export to the most (China). Luckily Labor is here to save the day and they are currently trying to make amends.

        We've been reliant on immigration to boost our population since the early 2000s, after Costello's/the LNP's stupid baby bonus policy failure. Have a baby and we'll give you $3000 lol, yeah because that'll help in the long run when it'll eventually cost >$100k to raise a child lol. Remember the slogan "One for mum, one for dad, and one for the country"? Thankfully back then most Aussies were clued on and the policy was basically a failure and did nothing, just like the LNP.

        With housing prices so high, it's taking longer for people to save a deposit and most people (those with actual functioning brains I would say) would rather be secure paying off a mortgage (i.e. having a place to live where they won't risk getting kicked out for whatever reason) first before having a baby.

        As a result of all this we need to let in more immigrants and migrants otherwise our population and economy will stall.

      • TEER3X on 01/01/2023 - 10:50
        +1

        I'm not against that or for it, but the tax collectors want more people in, instead of upgrading infrastructure first or while it's happening.

        I moved away from Australia for 10 years and when I returned, I couldn't believe how bad the traffic became, and how roads and public transport barely changed.

        Also notice the suburb I grew up in had so many houses knocked down in order to build 3-4 townhouses on.

        Government coffers are perfectly happy with inflated house prices too and the average family with both parents working forever to pay off a house/pay the rent…. more money for them

  • 7ekn00 on 29/12/2022 - 13:23
    +2

    Spoken like a true renter ;)

    Interest rates are on the rise and there is no cap on them!

    The real question you are asking is "Should property owners subsidize their tenants?"

    I sure as hell wouldn't, tenants don't give a sh!t about my property, why should I give a sh!t about their financial issues ;)

  • Adredocto on 29/12/2022 - 13:27
    +2

    The choice is to be a renter or a home owner. Unfortunately for many renters this isnt a choice. Rent may cost more than a mortgage payment but without the initial capital for a deposit then they have poor chances of securing a loan.

    Rents are going up because landlords can charge more because there are others willing to pay. Interest rates arent the cause, but it likely makes some of them more inclined to raise rents sooner to cover rising costs and risk losing tenant and going unrented for a period

    • gromit on 29/12/2022 - 14:34
      +2

      while interest rates alone are not the cause they do have an impact. What has a much bigger impact is current inflation with soaring cost of tradies, insurance, rates and land tax all of which need to be passed on to the renter. I am glad I am not a land lord at a moment, very happy to be out of that game for now.

  • 2jzzzz on 29/12/2022 - 13:44
    +5

    Feel free to move to somewhere you can afford, or better yet, buy yourself and be self sustainable.

  • berry580 on 29/12/2022 - 14:09

    Cap on rent? Lol
    How about just confiscate everyone's house and let the government redistribute wealth equally?
    Oh, i think that didn't really work last time mankind tried it

    • barratttc on 30/12/2022 - 07:26

      Sounds like Albo utopia!

  • Tsubasa on 29/12/2022 - 14:27

    I feel the ask is more akin to rent controlled apartments or housing blocks as seen in some US cities.

    This may work for large landlords (thinking commercial entities) but not so much individual landlords. The government could provide tax incentives to support such arrangements. Downsides could be that landlords are less likely to maintain the building beyond baseline compliance or provide additional amenities for tenants' use.

  • samyall on 29/12/2022 - 14:32
    -3

    My personal POV: link negative gearing to the efficiency of the house.

    If the house needs aircon 24/7 to stay cool/warm (just one example), the landlord cannot negatively gear the property. This would incentivise rentals to have double glazing/insulation. For some properties they will be too expensive to rent out without negative gearing and so that will raise supply in the purchase market, lowering prices for inefficient houses and raising prices for efficient houses all while lowering the overall electricity burden of Aussie housing.

    • cauilfield on 30/12/2022 - 23:44
      +1

      double glazing my place will cost $75k. Will the tenant cover this cost? or who will? thank you

      • samyall on 31/12/2022 - 09:52
        -2

        Why would the tenant cover the cost? its not their investment. However, if that tenant owned the house they probably would.

        My point is if landlords like yourself have no interest in creating a dwelling that is comfortable and energy efficient because it costs too much then there should be a financial penalty. If the investment property is no longer profitable, it gets sold, likely to an owner-occupier who will be more willing to invest in making the home efficient as they will be paying for the power it wastes.

        We view housing too much as an asset in Australia and need to remember that they are also people's homes. Why should renters have to choose between a house with floor boards that have a constant draft or a house with paper thin windows, both if which require AC 9 months of the years while the owners of those houses are offsetting their income tax using negative gearing.

        The knock on effect of this is that efficient houses will be worth more as they can be negatively geared so your $75k investment will pay dividends when it comes time to sell.

        • zoob on 01/01/2023 - 13:02

          There is no way anyone is making their investment back double glazing a property for $75k unless there are some astronomical government subsidies

        • cauilfield on 01/01/2023 - 13:54
          +1

          you do understand, that someone still needs to pay $75k right? and it aint coming back when you sell the property…

          • samyall on 01/01/2023 - 15:41

            @cauilfield: It would if the market valued efficiency which it doesn't now. This would make the market value efficiency.

            • cadwalader on 01/01/2023 - 16:09

              @samyall: Do tenants value efficiency?

              How much more a year would you pay to rent property that has double glazing?

              • samyall on 02/01/2023 - 09:31

                @cadwalader: I do. I would pay $10-20 more a week.

                Many other tenants would too if power/gas prices continue to increase.

                The problem is that efficiency is currently an afterthought. I want that change.

            • brendanm on 02/01/2023 - 13:48

              @samyall: How much electricity/gas can you buy for $75k?

              I do. I would pay $10-20 more a week

              Wow, only a 3750 week payback, or 72 years, at $20 a week.

              • samyall on 02/01/2023 - 15:58

                @brendanm: Most of the payback would come from the sale of the house as a property eligible for negative gearing would be more valuable.

                Like I said, the objective would be to make the (sale) market value efficiency not for the renters to give the return. If renters would pay more for efficiency then there wouldn't be a need to change anything.

                My reasoning is that owner-occupiers are incentivised to make improvements (e.g. solar panels) because it makes sense for them financially while a rented property would likely never see those improvements as there is currently no payback. This plan would make efficient homes more valuable.

                • brendanm on 02/01/2023 - 16:13

                  @samyall:

                  while a rented property would likely never see those improvements as there is currently no payback. This plan would make efficient homes more valuable.

                  It doesn't make sense for anyone at that price, as it is cheaper to pay the higher energy costs. People aren't going to sink in that much money for that return.

                • cadwalader on 02/01/2023 - 20:06

                  @samyall: Why would an owner-occupier value it at a different yearly rate from a tenant?

                  Resale cost is determined by the financial benefits. The yearly financial benefits is the same to both a tenant and an owner occupier. Essentially, tenants and owner-occupiers have the same value analysis as residents.

                  Owner-occupiers would only be willing to pay around (the yearly financial benefit X the estimated duration of ownership minus the maintenance cost) + any expected resale value to investors or owner occupiers after depreciation. Which starts to diminish transaction after transaction.

  • srr on 29/12/2022 - 14:50
    +3

    Let’s set all prices like in Soviet Union. Such a great example.

  • monky on 29/12/2022 - 14:55
    +1

    if monky provide labor, monky essential needs to provide labor should be provided by chief baboon… why should monky work hard for chief baboon if chief baboon doesn't guarantee safety and security for monky?

  • cobknob on 29/12/2022 - 15:01
    +3

    Didn't like your polls. Not many good options. Simple approach always best for capping rent.

    *Scrap state based gov rental administration and form national system, so same rules across all states regarding tenancy.
    *Introduce cpi suburb rated rental increase caps and only allow once a year.
    *If you own vacant land for more then 5 years you pay an increasing land tax that will eventually force you to sell or build.
    *If you own more than 3 properties and they remain vacant for too long you get charged a an increasing vacancy tax.
    *Remove negative gearing on 4 or more properties.
    *Increase taxes for wealthy, I like brackets of 60-80% for multi-millionaire.

    Free enterprise needs more regulation cause people are greedy, corrupt and arrogant. And want too much power!

    • lachhelix on 29/12/2022 - 15:02
      +1

      cobknob for PM!

      • cobknob on 29/12/2022 - 15:21
        +1

        Couldn't imagine having that much power. Probably piss off a lot of people. Governing should always be a team in agreement.

        Being homeless puts things into perspective too.

  • LoserScott on 29/12/2022 - 15:03
    +1

    Birth by right or marriage ownership.
    The end.

  • drfuzzy on 29/12/2022 - 15:08
    -2

    They should be capped at the highest market offer

  • drfuzzy on 29/12/2022 - 15:11
    -3

    If you want your rent capped for 5 years or 10 years then negotiate a 5 year or 10 year lease.

    • monky on 29/12/2022 - 15:19

      Residential Tenancies Act 2010 does not protect residents from rental increases, it only protects them from liability if they break a rent agreement early on the grounds of a rental increase. (see section 99 below)

      Landlords can legally raise rent once per 12 months in any rental agreement 2 years or longer: There is no limit by how much rent can be increased, but you're protected by tribunal decision if they decide the increase is unreasonable.

      https://legislation.nsw.gov.au/view/html/inforce/current/act…

      • cobknob on 29/12/2022 - 15:23
        +1

        As clear as that is, legislation is so far backwards I feel like I stepped out into 1866.

        • monky on 29/12/2022 - 15:34
          +1

          I'm sure it was a lot simpler back then; but yeah, the whole system is designed to protect those with the capital to own multiple properties.

  • Poor Ass on 29/12/2022 - 15:27
    +1

    It's usually capped for the duration of the lease up to 1 year

  • pogichinoy on 29/12/2022 - 15:29

    No.

    Why is my rent going up because my landlord's mortgage is going up?

    Whilst a LL's mortgage has 'some' weighting on the rent, it is highly dependent on the income of tenants in the rental market.

  • tsunamisurfer on 29/12/2022 - 15:30
    +5

    I dont really understand finance,

    This we can agree on.

    Why is my rent going up because my landlord's mortgage is going up?

    Landlord's mortgage has very little to do with your rent. The demand and supply of rentals is the main driver for rents.

    I didn't take out a loan on a home I won't live in. I'm not getting more house, im not getting better services? they havn't improved the house in any tangible way.

    What has that got to do with anything?

    I think if rents were capped based on objective features of a house like rooms, amenteties, idk water efficiency? like actual tangible definable things it would be good for people.

    Good for what people? Renters? If the rents were capped, investors would simply shift away from renting by selling or going AirBnB, renters would be worse off.

    I get that might mean that investors can't afford their mortgages, but why are we basing housing on the reckless financial decisions of investors? if you can't afford that 2nd or 3rd property maybe you should just sell it? and not make tennants pay for what you can't afford.

    Again mortgage rates have little to do with rents. It is due to more prospective tenants wanting limited stock.

    The banks and landlords have had decades to tackle homelessness and they havn't. Maybe their way isnt actually good.

    Banks and Landlords are not responsible for homelessness, the homeless are.

    Maybe this would just have aweful consequences though.

    You think?

    So apart from rampant greed what would go wrong with capping rents?

    Greed is wanting something for lower than market rate.

  • hitworm on 29/12/2022 - 15:34

    It’s supply and demand, isn’t it? They increase the rent because people is willing to pay that much to live in that area. So you pay for location as well, not just the house

    • hasher22 on 29/12/2022 - 19:12

      This is the problem with supply and demand, there is no real cap in a certain time thus the market just allows it because….. it can.

      • People will pay more rent and pay more for a home than the asking price cause they can and will just to be in that home. This creates a huge problem long term, thus we're living in it right now. Oh home A is renting for 800 p/w but it was listed at 740 p/w, when other people's rent is due in the area and similar homes, landlords and agents will look at current data and price match home A….

      For example in NSW, landlord raises rent by 30% because they can and it's aligned with similar homes around the area… and when home B renters disputes it, they lose instantly cause the area is worth around the 30% rise. But no one wants to look at data to see why it's gone up by 30% organically.

  • narcoleptic-haze on 29/12/2022 - 16:00
    +6

    Most of my rent increases have literally come with the phrase "Your rent is increasing because the market allows it" .. in other words, 'We're raising the price for no other reason than other people are raising theirs'.

    Yeah thanks.

    My rent has gone up almost 26% in 6 years, but in that time my pay has only increased around 3%. I work 42 hours/week and still have very little savings.

    • cobknob on 29/12/2022 - 16:23
      -1

      Jobseeker allowance is indexed to CPI but the pension is indexed to 3 different systems which is why it's better. I was thinking we could index the rent to CPI and see how property investors feel. Oh what's that no your not getting an increase for 2 years lol. Wage stagnation in this country in the private sector is horrific except for all those running the company from the top or at least pretending to run it - what most CEOs claim to do.

      • Nucleus Acumbens on 29/12/2022 - 17:41
        +4

        Well jobseeker is not supposed to be a long term financial plan.

        If you prevent property investors from making the profit that they desire (get the return on the money they desire for their investment) then they will seek out alternative avenues for investment and stop buying IP houses for people who want/need to rent.

        I read last year that investing in LEGO has yielded the third largest returns on investment for the last 25 years running. Between the shed load of that I bought over COVID and my first edition and Phantom and Batman comic book collections - they're my retirement plans.

        Over the average 17 year life of an IP, there are years when there are losses, there are years when you come out even and sometimes, if you're really lucky, there are years where you come out ahead and make some profit.

        Not all IP owners are rich, wealthy landowners. Many of them are simple ma and pa operators struggling harder than their tenants to make ends meet.

        This IP property investment is too much hard work! Full of whingers who want to deny you an income and not enough profit for the amount of energy you have to expend to see a return.There are easier ways to make money than to supply houses for people expecting you to operate a charity.

        I once had some people who worked at Centrelink who moved into one of my houses for 5 months. In all that time they never paid Bond or rent. And the kicker was, they didn't move out because the law/legal process told them to, they moved out when they were ready to - when they decided they wanted to.

        • cobknob on 29/12/2022 - 19:00

          Well jobseeker is not supposed to be a long term financial plan.

          Lol, never implied it was but it should help people!

          If you prevent property investors from making the profit that they desire (get the return on the money they desire for their investment) then they will seek out alternative avenues for investment and stop buying IP houses for people who want/need to rent.

          They desire.. what drugs you taking. That's not how the market works. You get what you can get and sometimes be gracious if you have long term tenants otherwise karma be biting u in the ass.

          I read last year that investing in LEGO has yielded the third largest returns on investment for the last 25 years running. Between the shed load of that I bought over COVID and my first edition and Phantom and Batman comic book collections - they're my retirement plans.

          That's a collectors market.

          Not all IP owners are rich, wealthy landowners. Many of them are simple ma and pa operators struggling harder than their tenants to make ends meet.

          This IP property investment is too much hard work! Full of whingers who want to deny you an income and not enough profit for the amount of energy you have to expend to see a return.There are easier ways to make money than to supply houses for people expecting you to operate a charity.

          Laughable. No sympathy

    • Nucleus Acumbens on 29/12/2022 - 17:22
      +4

      If you don't like it. Why do you stay there?

      You do realise that most people buy IPS to make money, that IPS are businesses and people go into business to make money, yeah?

      Your LLs profit margin for HIS business, the services of which you are voluntarily using whilst excluding his utility and possession of it, has nothing to do with your pay increases, your savings or how many hours a week you work.

      At least your LL told you his personal business. There is nothing that mandates or compels him to give you a reason for a rent increase.

      If the market will bear such an increase, fantastic news for the LL. If the market won't bear the increase, that's good news for the tenant.

      At the end of the day, the private landlord is not a charity and he is in business to make money. That's kind of the whole point of capitalism

  • imurgod on 29/12/2022 - 16:17
    +2

    Tall poppy syndrome is rife in this country.

    The fact is that investors invest (i.e. take on risk) in things that provide a suitable ROI.

    That's business. It's not a charity. It's designed to make money.

    Instead of complaining, why not look at bettering your position (educate yourself, start a partnership, etc)?

    I've seen a fair few landlords now have to sell their investments at a loss in the current climate. Should the renters chip in and help cover the loss?

  • Nucleus Acumbens on 29/12/2022 - 16:18
    +4

    The cost of your rent is presumably going up because your land lord has purchased an investment property and is in business. I would argue that the purpose of going into business was to make money so it makes sense to me that most people, including landlords, go into business to make money.

    Ideally, a businessman wants to generate enough money so that he makes a profit.

    Generally speaking, you make a profit by generating more money than you spend.

    Now, all those costs you mentioned such as insurance or interest price rises might not affect your ammenities, but in some cases, they do effect the expenses that a landlord incurs (he might not even have a mortgage) and he needs to generate more revenue to cover his rising costs to ensure he continues to make a profit.

    In some cases, he may be bleeding revenue from an unrelated asset source and the IP is the most feasible asset with which to right the ship.

    Important to know is that the debt over the IP does not reflect how much rent can be charged for that house. Your LL may own your rental unencumbered or he may owe a million dollars on it. Neither of these scenarios dictates how much he can charge you (or anyone else) to rent/use that property.

    Usually, the price achieved for a good is what the market sets. This is a fancy way of saying supply will equal demand. So if a house has a rent of $500 and there is at least one person prepared to pay that, this means that supply equals demand.

    Now, say your landlord thought his house was worth $2000 to him to go through the processes of making it available for rent, even if he owed more than that, or owed nothing, just that this was the best way to generate that amount of revenue. So he puts the house up for $2000 rent but nobody takes up his offer (probably other similar houses in area for cheaper), this is an example of what happens when demand doesn't equal supply and the house owner generates no revenue and makes no profit on this investment.

  • Nucleus Acumbens on 29/12/2022 - 16:28
    +1

    You might not be getting more house and you might not be getting more ammenities and services, but you are likely getting a higher priced house with higher priced and better valued ammenities.

    So without you doing anything, market forces have likely driven the value of house you're living in and it's associated costs up, so this increase in amenity is passed on to the renter to probably make sure that the LLS profit margin remains unchanged but maybe even because conditions are favourable and he can raise the prices in line with market conditions for no other reason than to increase the profit he is making.

    If he had possession of the property and presumably some form of ownership/right to ownership, he gets to make as much legal profit as he chooses to by setting whatever price he charges for the use of his asset.

  • elgrande on 29/12/2022 - 16:28
    +2

    Landlords get rent increases too..

  • Nucleus Acumbens on 29/12/2022 - 16:47
    +1

    How do you objectively cap costs on features and inclusions when there are countless variables that need to be considered from location of property, management of property, external frameworks governing property, proximity to beach/work/shops/medical/ public transport/mobility aids/school zones, what features and inclusions the contracting party actually values or wants - just to name a few.

    A four bedroom house in a low crime rate area on a quiet street close to good schools and public transport costs more to Aquire than a four bedroom house in Inala or Logan on any street near any school and attracts more rent and so it should.

    Hate to tell you this but a central idea around choosing a commercial or residential property as an asset is so that the person who does rent it contributes to its operational costs in some way.

    I agree with you. If an investor cannot afford their investment, be it an IP or comic book collection, then they should sell it. But if there are legal things they can do so that they can continue to own those assets and don't need to sell them, then why shouldn't they do what they are legally allowed to do to keep them, if that's what they decide is in their best interests?

    Are you saying that a person shouldn't be allowed to earn money? Are you saying that there should be a cap on how much money a person is allowed to make? Are you saying that a person should not be allowed to start their own business/engage in trade and commerce (you do realise that people trading on eBay are engaging in trade and commerce, don't you?) and are you saying that those businesses shouldn't be allowed to make money or set their own profit margins?

  • Mumbles on 29/12/2022 - 16:49

    Your not being punished because of individual bad investors.

    It's a structural issue. Baby Boomers are just that, they were the biggest demographic of their time. All the government and structural advantages follow them because they are the biggest demographic of the population.

    The federal Labor government campaigned to abolish negative gearing but too many voters own property investments. It's totally rational for individuals to protect their interests.

    Capping rents will never happen. Capping rents would be an election loser for any party to campaign on. There are too many property investors. Unfortunately the only sure way is to out number them. Ie. Wait till the Baby Boomers expire and the youngsters can vote.

    • Nucleus Acumbens on 29/12/2022 - 17:06

      I own IP. I am not a Baby Boomer.
      Each of my children in their 20's own an IP (one still has a mortgage), they are not Baby Boomers.

      My parents are 93 and 100. They might be Baby Boomers. They own a lot of property. If I outlive my siblings (who are considerably older than me - I was a late surprise), I might inherit the whole bloody lot! Still won't make me a Baby Boomer though.

      But I will potentially be like that elf of Santa's who won lotto….=>Welfy boom tish

      Even if the parents spend the lot or leave everything to charity, my kids and I will still own IPS, but we will never be Baby Boomers.

      • JohnHowardsEyebrows on 30/12/2022 - 06:03

        Plenty of selfish non-Boomers, they just don't represent their generation like greedy Boomers.

  • Nucleus Acumbens on 29/12/2022 - 16:57
    +4

    Why do you think that it's up to the banks and landlords to tackle homelessness?

    Banks are a business. They are in business to make money.

    Landlords are a business. They are in business to make money.

    This is the only place in Australia where I have ever heard the suggestion that it is up to banks, landlords or even other private businesses, tackle/solve homelessness.

    I put it to you that the only homelessness a landlord is obliged to look after is his own.

    A landlord might own the IP outright, have no encumbrances or outgoings on his property, that doesn't mean he can't legally charge you fair market rent and be making 100% profit.

    • cobknob on 29/12/2022 - 17:55
      +1

      Don't think banks or landlords tackle homelessness. Banks are in the business of fraud too - and the gov bailed their sorry asses out of gfc 2008-09. What should happen when the gov bails a company out is when back in profit pay em back with interest.

  • Trying2SaveABuck on 29/12/2022 - 16:58

    lmao no

  • Slippery Fish on 29/12/2022 - 17:08
    +1

    Your rent didn't go up because the interest rate did, it went up because the market is more competitive pushing prices up

  • mavack on 29/12/2022 - 17:09
    +2

    It's all a delicate balance that regardless of what you do will benefit someone more than someone else. Your in a postion that your hard done by because rents are increasing.

    I had a guy at work that had a similar argument about house prices a few years ago saying he should be able to buy a house for $xxx. I said sure go buy a house in rural suburb blah. He said "But i don't want to live there"

    And thats the crux of it, the govenment doesn't set the prices of property, the market does. Rents and Property as a whole are worth what people are willing to pay for it, if you have more insufficent supply price goes up, more supply, price goes down.

    I have no problem with landlords that have high rents on properties and tenant paying it, and adjusting as required as people are willing to pay. I do have a problem with landlords that keep houses empty because they are just happy to sit with capital growth. I'm not sure if that happens as much as it used to, and there has already been policy in victoria (residential vacant land tax) that tries to prevent that.

    The solution to rents is to have more available properties to rent, but as we already know construction takes time in relation to population growth.

    capping rents is not the solution to your woes.

    • cobknob on 29/12/2022 - 17:58

      Just kill Airbnb. You will see a supply of properties like never before. People are just plain greedy.

      • Extreme on 30/12/2022 - 09:06

        Killing Airbnb would bring its own issues, such as a shortage of holiday accommodation, pushing up prices.

        Then you’ve got a downturn in tourism. I’m sure that’s exactly what this sector needs after 2 years of covid.

        • cobknob on 30/12/2022 - 16:02
          +1

          What happen before airbnb. We're there not hotels, resorts, etc?

          Airbnb is a problem. That much is obvious. SBS cited this last night in the news and ABC in an article today. I would never remove airbnb completely but I'd introduce legislation and specific taxes to focus on having them in the right areas to cater for tourism and introducing limits too.

          What about people who own bed n breaks, motels, resorts, hotels. They lose out too to airbnb. It's a case we're taxis losing out to ubers etc but a lot (profanity) worse. Generally u don't live in a car.

          • Extreme on 02/01/2023 - 09:48

            @cobknob: There’s always been short term holiday rentals. Just using other platforms.

            Airbnb has just made it much easier, but they aren’t the only platform.

            Ever heard of stayz?

  • Needausername on 29/12/2022 - 18:02

    Rent cap is only possible if everything capped, including salary.

    Maintenance, insurance, council rate, land tax, etc… increases every year.

  • DV0993 on 29/12/2022 - 18:14
    +1

    Its likely that your landlord's expenses (land tax, rates, interest) have increases disproportionately to your rent increase.

    Rental Properties are scarce - I suspect that legislation that heavily favours tenants has a part to play here.

    Accordingly, they will become more scarce if landlords exit the market (which is likely what the cap on rents will do).

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