Real estate agents discouraging long-term leases labelled 'culpable' in state's housing crisis
The Real Estate Institute of Victoria wants the state government to reward landlords offering long-term leases with land tax discounts. (ABC Melbourne: Simon Leo Brown)
In short:
A Victorian property investor says real estate agents are "culpable" in the state's housing crisis, and called for their tactics to be scrutinised.
The Real Estate Institute of Victoria (REIV) has proposed property tax reforms to the government to help alleviate land tax pressures on rental providers offering long-term leases.
What's next?
Some landlords say they do not want to increase rents but need to cover themselves due to land tax hikes.
A Victorian property investor says real estate agents are "culpable" in the state's housing crisis and has called for their tactics to be scrutinised.
This week, the Real Estate Institute of Victoria (REIV) proposed property tax reforms to the government to help alleviate land tax pressures on rental providers offering long-term leases.
Land taxes have been on the rise and some real estate agents claim landlords are looking for ways to make up the $2,000 bill from their tenants.
In Australia, lease agreements are often between six months and two years.
REIV has suggested a 10 per cent land tax discount for a three-year lease, 20 per cent for a five-year lease, and 45 per cent for a 10-year lease.
The move would seek to retain properties that are slipping out of the rental market.
Landlord Jenny from Wangaratta, in the state's north, said although it was a reasonable proposal, real estate agents needed to be part of the discussion.
"Everyone is picking on [expensive] land tax, but we need to look at all of the levers being pulled and real estate agents are culpable in this whole equation,"Jenny said.
"I think they actively discourage long-term leases, so we actually moved our former rental property from one agent to another.
"They blatantly refused to help us do a two-year lease for our great tenants."
Jenny said she wanted to keep the rent low and encourage the tenants to stay, but felt the real estate agents opposed a longer lease as it would affect the amount of money they could earn on commission.
"I actually said to the real estate agent that 'I will drop the rent by so many dollars per week to keep the good tenants', but they didn't like that," she said.
"Not just because of the cut of the weekly rent they take, the percentage, but they have an annual lease re-signing fee, and they could lose that if the landlord signs a long-term lease."
That fee could be more than $400 and rent could be increased when the lease agreement ended.
"Why is this absent from the whole conversation?" Jenny said.
One landlord says an agent discouraged a long-term lease because they would miss out on a re-signing fee of $400. (ABC Ballarat: Rhiannon Stevens)
Longer leases can be a problem
Scott Petrie from Trevor Petrie Real Estate in Ballarat said he was happy to provide two-year leases to established tenants.
"If the landlord is happy with how the property is being looked after, we're happy to give a two-year lease," Mr Petrie said.
But he said any longer than that might cause problems.
"Tenants can be harder to evict if there are issues,"he said.
"And it's hard to know what the owner or tenant may want in 10 years' time … They may have to move town, they may need a new property.
"I probably wouldn't want to see longer than two or three years, personally."
'It's just been insane'
In Ballarat, landlord Emma said she would happily extend her tenant's lease if it meant her land tax bill was reduced.
"The government have just made it so hard for us to keep it," Emma said.
"We don't ideally want to sell, but our land went up over a $1,000 in a year, it's just been insane.
"We've never wanted to put up our tenant's rent, but we've had to put it up twice.
"We got asked to put it up again this year, but we can't do this to these people, they're struggling as much as we are."
REIV chief executive Kelly Ryan said it was common to offer five, 10, 15, or even 20-year leases in some European countries.
"We've also taken learnings closer to home in the commercial space, you take [leases] out for extended periods of time, and within that you also take on reasonability as the renter for some of the basic maintenance," Mr Ryan said.
"So if a tap needs to be fixed or a light is broken, you would actually assume some of those responsibilities yourself … it hopefully gives the renter a bit more ownership over their home.
"But we think it's critical that a program is established that could be tied to something like CPI, or just a flat 2, 3 or 4 per cent increase on an annual basis."
The state government has been contacted for comment.