According to the Real Estate Institute of Western Australia (REIWA), extending the ban on rent increases will likely hurt long-term tenants, as it could lead to sudden increases in rental costs. # 39; next year.
The State Government of Western Australia recently announced that it will extend the Residential Tenancies Act (response to COVID-19) until March 28, 2021 – this means the ban on rent increases and the moratorium on evictions will remain in effect.
In a statement, REIWA said the state's vacancy rate is at a 12-year low of 1.3%, with only around 3,000 rental properties in Perth currently available to renters at to rent. This is a significant drop from the 6,599 properties available for rent and the 2.6% vacancy rate last year.
"Low vacancy rates are normally a trigger for investors to enter the rental market, increasing inventory levels, but due to the residential rental law, investors appear reluctant to buy, "REIWA said.
As vacancy rates drop and competition intensifies, rents tend to increase gradually over a longer period of time and in small increments. This will not be the case under current market conditions, however, REIWA said.
"If the current ban on increasing rents is lifted in March 2021, it will be reasonable to assume that landlords will have to increase rents significantly to match the market," REIWA said. "This will mean tenants will not have the option of raising their rent, in small, manageable increases, but will likely face a sharp price correction."
However, the owners feel the most immediate effects of the extension. REIWA said more investors are forced to sell their investment properties, which adds pressure on rental stock.
"Homeowners haven't seen any income growth for over three years, with the median rent staying at $ 350 for 12 straight quarters," REIWA said.
In an earlier statement, Damian Collins, President of REIWA, said that since the extension was announced, the REIWA Information Service team has been inundated with calls. owners and tenants who have been negatively impacted by the government's decision.
"It is clear from the number of calls to the REIWA news service and recent media attention that unfortunately a significant number of West Australians is unnecessarily disadvantaged due to the general decision to extend the legislation, "he said. .
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