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MEDIA RELEASE: CEO OF REAL ESTATE INSTITUTE OF THE ACT RESPONDS TO LATEST CPI FIGURES FOR RENTALS
MEDIA RELEASE: 2 AUGUST 2024
Canberra, ACT – 02.08.2024 – The Real Estate Institute of the ACT (REIACT) is deeply concerned about the recent CPI figures for rentals in the ACT, which limit landlords to rent increases of less than 1% annually without being deemed “excessive”. This restriction poses significant financial challenges for landlords providing rental housing in the ACT who have already faced substantial increases in other charges, such as interest rates, land tax, Rates, Body Corporate fees and insurance. Land tax alone has been an increase of 5% in the past 12 months.
In real terms, this means, on a property with a current rent of $580 per week, the maximum a landlord can increase the rent is $5.74 per week. Furthermore, many real estate agencies in the ACT are small businesses which offer property management-only services, and they charge a percentage of rent received as a management fee. In the case above, they would only receive an increase of around 40c per week or an extra $20 per year for managing that property. This is sending those small companies to the wall when trying to keep their businesses running in employment costs alone.
The cap on rental increases, which does not reflect the true cost of maintaining rental properties, will deter future investment in the rental market, especially when coupled with further mandatory upgrades also being proposed in the latest review of minimum standards.
“The current policy is unsustainable for landlords who are already absorbing rising costs in multiple areas. The current cap on rental increases that fails to consider the broader economic context will inevitably lead to a decline in the quality and availability of rental properties along with the Agencies that manage them,” REIACT CEO Maria Edwards said.
“This is particularly hurting Mum & Dad investors, many of whom have worked hard to secure their financial future and that of their children. Capital gains from investment properties are often used to self-fund retirement or to provide adult children with a deposit to purchase their own home, what is the incentive anymore for ACT investors who are currently going backwards financially.
“The ACT government must recognise the adverse effects of this policy on the rental market. We urge policymakers to consider a more balanced approach that protects both tenants and landlords. It is time to ‘scrap the cap’ and develop a strategy that ensures the sustainability of rental housing in the ACT, no other jurisdiction in Australia has adopted such regressive policy and Canberra renters will ultimately pay the price,” added Edwards.
**ENDS**
For more information, please contact:
Maria Edwards
CEO
maria@reiact.com.au
0499 881 168
