As many Aussies would know the rental market in some areas is astounding at the moment. Rental bidding wars, some official some not official. People going in to sign their new lease papers only to find out another renter has been given the property even after said tenant was approved for the property.
I know that the rental vacancy is low but the tactics we are seeing in Melbourne are disgusting. I have friends (lovely family with 2 kiddos and one in the oven, have been very good tenants the last 2 and a bit years in the same house) their landlord has kicked them out of their house so that the can renovate and get more money a week.
Yes their house was becoming a bargain at $230 for the 3 bedroom in a popular inner city suburb (well if you ask Mum 20 mins on the train isn't inner city though :D) but they were not even given the option to stay. They were not even offered a rental increase notice to stay in the house. Most likely because the landlord thinks they can get a whole lot more per week if they just paint and rent out again.
I have even seen evidence of this greed around where we live, this is a 90 min drive from Melbourne and a basically rural area mind you... The house 2 doors down was around $150 when we were looking to rent here. Now just to put things in perspective, the house we live in is 3 bedroom, as is this other house. Our kitchen is much nicer, lounge is larger and the house generally looks to be in better condition than the other house. We also have been paying $150. Our rental increase will be $160, that was the original price of this rental when we saw it so that's no shock to us. What IS shocking is that I now see the house 2 doors down asking for $175 a week in rent!
While I know there are interest rate rises and things that the actual home owner has to contend with and that many of them have losses on rental properties, that jump in price for a rural area property is just greedy. I foresee that house being on the rental market for quite some time!
So with the pile of ranting over with, it would seem that Victoria has already had enough of these antics and is going to do something about. Rental war agents face bans if they do not adhere to the new guidelines set out by Real Estate Institute of Victoria stating that:
■That once a tenant has been told their application is successful, no counter-offer can be accepted.
■Not to use a range of prices when advertising.
■To ensure the initial advertised price is realistic.
■To not initiate a bidding process for a rental property.
Maybe by putting these guidelines in place the price of an average 3 bedroom house for rent wont cost the same as a mortgage. And maybe it would mean that my friends could find a house for their growing family without having the price of it go up before they have even seen it.Rant over!
10 comments:
I thought this was a good move, but it won't help those who are looking for a family home, or a flat for under $300 a week that isn't in the boon docks. I suppose all that the rental property owners and estate agents will need to do is surge their price and lock it in; they’ll be within the rules.
Many galling and ignorant articles in business news in recent weeks, with commentators carping on about how much house purchase prices have gone through the roof, but rental prices haven't kept pace.
Fucking ding bats.
They pay zero heed to the fact that the quality of rental stock in the market, even at the best of times (ie, with sufficient rental stock) is disgustingly below par when compared to houses being bought or sold.
The two actually can't be compared. Rental property doesn't and shouldn't keep pace with home owner prices for the simple reason that the rental stock is often so fucking dilapidated that the places are unlivable, or at best, just barely suitable for human habitation. Sure, many non-rentals are like that too, but people only buy such places because they are going to immediately renovate. Rentals don’t get renovated, not by the landlords, and, for obvious reasons, not by the tenants.
It’s comparing apples and oranges.
I say the following in my dual capacity as a renter and a rabid free marketeer -
The only "rights" a renter should have are those specifically laid out in the contract drawn up between them and the landlord.
So if a landlord agrees to rent a place out to someone and then gives it away to someone else - well that should be illegal. In fact, I think it is. A verbal contract is just as valid as a written one; it's just harder to enforce if one party denies accession to it.
However I don't have a problem with landlords maximising the return on their investment, even when this is done via so-called 'rent auctions' - the owner should be allowed to charge what they want for the letting of their property and derive that amount in any which way they see fit prior to a contract being signed. The government should butt the hell out of this process, interfering bastards that they are.
Yeah, it might suck to be a renter in the boom time, but conversely in the lean years a landlord can wait months to fill a vacancy. This can really hurt. When it's a buyer's market (and it was thus not all that long ago) I don't see a movement to extract extra concessions out of tenants in favour of landlords.
Okay, y'all hate me now. I'm off to go and drown some kittens.
Except that it doesn't really work that way Jimmy.
Negative gearing has distorted the property market, in all regards, thereby artifically inflating all pricing, locking people out of home ownership, which screws up the rental market something awful, and lets face it, the rental market is always pretty awful, except if you're renting at the seriously high-end.
Blah, blah, blah - it's all interelated, except I'm too lazy to write an essay about the intertwinned economics of it all.
Notably you're happy for the government to butt-out ot the leasor / leasee rental arrangements, but pressumably don't mind the government butting-in with an ever increasing tens of billions of dollars each year in negative gearing benefits to tax payers who have investment properties?
You can't support both. No siree!
As already alluded to, negative gearing doesn't increase rental stock (well, this problem wouldn't exist if it did - duh), but it does decrease the affordability of home ownership ... and around and around we go ... or not - still being too lazy to write an economic essay on this.
Cazzy, you shouldn't assume that I'd support negative gearing - I don't support any tax breaks or any other govt attempts to railroad (pervert) the market in a given direct.
Anyway, lengthier response will follow tomorrow. Now, I'm tired.
Nighty night!
(when I say I don't support tax breaks, I mean I support one low "flat" tax with no deductible items)
Ah, interesting. At least you are consistent in your thinking James.
So many people aren't, hence why I felt the need to throw negative gearing out there. It distorts the market something shocking, and only a small percentage of tax payers reap the billions of dollars in tax breaks, but no government is ever going to have the guts to get rid of it now that it's so entrenched for the few. I could be wrong on that last point, but I don't think so - even the ALP would be too lilly-livered to tackle it.
What REALLY pissed me off was hearing Howard commenting on the rental shortage - insisting that THIS was precisely why negative gearing was SO IMPORTANT for housing stocks. Oh FUCK! Jeez that made me angry. I know you're a fan of Johnny's, but he often treats the hoi polli as if we're all idiots. Or maybe he keeps his fingers crossed and hopes that we are. Or in this instance, he simply under estimates the number of people who have studied economics.
Caz! Enough with the assumptions! I am not a fan of Johnny's! I'm a fan of these guys.
Now, regarding your previous post, you might have a point if negative gearing was a primary cause of the tight rental market, but it isn't. This issue has far less to do with the increasing proportion of "mum and dad" property investors in society (a phenomenon that the negative gearing tax break can partially account for), and far more to do with the sclerotic zoning process that isn't allowing land on the urban-rural fringe to be developed for dwellings fast enough. The total housing stock isn't keeping pace with the growing population, and the resulting growth in scarcity has (is) driving up rental and land prices. Negative gearing has no influence over this phenomenon whatsoever. After all, there's nothing to restrict people wishing to take advantage of improving rental returns from using the negative gearing mechanism to purchase vacant land on the outskirts of town and develop it into rental properties - however this land simply isn't available.
This is a far more important factor driving the rental price spike than the negative gearing tax break.
Either way, to claim that the solution to a problem caused by government interference (planning or targeted tax breaks) is more government interference (restricting the price mechanism) is silly - such a response only causes further problems and requires further government interference to "fix" things up. It's a vicious circle that should be avoided.
It is WRONG to tell people who own land on the edge of town that they can't develop their land for housing. And it is equally wrong to tell a landlord that they cannot set a price, in any which way they please, for the usage of their property. It's coercive and immoral. Nor do renters have a right to a three bedroom free standing house if they can't afford it - or any place they can't afford. If they can't afford the place they want, they'll have to lower their standards or live in a tent until they find someone willing to rent them a place below market value. It's as simple as that.
I'll respond to your "culture" post later :)
Love J
"Either way, to claim that the solution to a problem caused by government interference (planning or targeted tax breaks) is more government interference (restricting the price mechanism) is silly - such a response only causes further problems and requires further government interference to "fix" things up. It's a vicious circle that should be avoided.
Ah, but James, this is exactly how capitalism works! Whether looking at land and the availability of affordable housing, or business, everyone wants the goverment to step in and "do" something for them. They flip flop like an uncontained blob of jelly. When it suits them, they want the goverment to get out of the way, but only some of the time; the rest of the time they're busy lobbying the government to prop them up in some manner.
It has always been like this though. We don't and never have had a pure market place, or anything approaching such.
You thoughts on land availability are true enough, and certainly contribute to the artificial escalation of housing prices.
The down side is that housing out in the middle of no where, with no infrastructure, inevitably locks renters into being socially marginal, with no access to the opportunities and facilities, which creates a lot of problems in itself. That's in the extreme. It can help some to become home owners though - all those families in their McHouses out in the Delfin estates.
The Lib Dems?
They still exist?
You sure?
Ah, but James, this is exactly how capitalism works!
No it isn't. That's a corrupted, adulterated version of capitalism - precisely the sort of thing I'd argue against.
Whether looking at land and the availability of affordable housing, or business, everyone wants the goverment to step in and "do" something for them. They flip flop like an uncontained blob of jelly. When it suits them, they want the goverment to get out of the way, but only some of the time; the rest of the time they're busy lobbying the government to prop them up in some manner.
Yeah, and I've maintained a consistent line against this kind of lazy thinking, which is why I spurned both interference in the price mechanism of rental properties as well as the controls on the release of land for housing. I am completely consistent in my laissez faire attitude.
It has always been like this though. We don't and never have had a pure market place, or anything approaching such.
This isn't really true. Throughout most of the 19th century, the government's role in the economy was of trifling concern in both the United States and Great Britain. During this time, the welfare of the ordinary individual improved at a rate that had never been seen before and has never been seen since.
The down side is that housing out in the middle of no where, with no infrastructure, inevitably locks renters into being socially marginal, with no access to the opportunities and facilities, which creates a lot of problems in itself.
No, the market provides. If there's a market for particular goods and services, it will be catered to. The free market is perfectly able to tackle even large infrastructure projects. Consider that the London Underground - far and away the most comprehensive subway system in the world - was largely created with private money and little government regulation.
The Lib Dems? They still exist?
You sure?
Um, absolutely. They're not that old - I think the party was formed in 2001, and it's growing at quite a nice clip, to boot! Perhaps you're thinking of the DLP?