Policy setting important to encourage investment in rental property market to alleviate Albany housing crisis

Albany’s sustained rental shortage should be addressed in a way that encourages investment in rental properties, according to REIWA Great Southern branch chair Rob Mason. The rental vacancy rate in Albany, as reported by the Real Estate Institute of WA, has remained below one per cent for more than 21/2 years since June 2020. REIWA considers rental vacancy rates from 2.5-3.5 per cent as balanced. Mr Mason said because the bulk of rental stock came from private investment there needed to be policy setting by all levels of government which encouraged people to invest in rental properties. He said that included local planning polices as well as fair and equitable regulations on rentals or tax settings. “What we know from the past few years is that when investors exit the market, it simply puts more pressure on Government-provided social housing and support agencies, which are already operating at capacity,” he said. “There is no denying it is very challenging for tenants at the moment, however the market is cyclical and will eventually regain some balance. “Building completions are expected to increase towards the end of this year, which should provide some new rentals and see some tenants move into their long-awaited own home, which will free up more existing properties for rent.” He also said the State Government’s review of the Residential Tenancy Act, which has been ongoing since 2019, was causing some uncertainty for investors. “Some of the proposed changes were seen as potentially negative from a property investor’s point of view,” he said. “Property investors need clarity on any changes to the Act as soon as possible to help make decisions around current and future investments.” Despite the low rental vacancy rate a number of properties in Albany continue to sit vacant, often set aside as either short-term accommodation offerings or as holiday homes. Data from the 2021 census showed there were nearly 2300 unoccupied private dwellings within the City of Albany. When the numbers were released in mid 2022 Albany Mayor Dennis Wellington told the Advertiser it was “surprising” they were as high as they were. He suggested it may be “time to do some sort of advertising or campaign . . . to see if we can get some of those on to the market”. Mr Mason said census data was a snapshot of a point in time and there were many reasons for vacant properties, including FIFO schedules, homes people were waiting to move into and border restrictions at the time meaning residents could not return to WA. “Albany has an extremely low vacancy rate, and while it is a popular holiday destination, there are more factors affecting the rental market than just short-stay accommodation,” he said. “For example, in WA over 18,000 rental properties have been removed from the rental pool since January 2021. “In some cases, this may be due to property owners switching to short-stay accommodation.” He said investors could prefer offering their properties as STA because they believed they would achieve a higher return, so they can holiday at the whole property themselves or they are only making use of part of their residence for STA. He said while enforcing tougher rules on platforms like Airbnb could cause some people to switch back from STA to the general rental market, it would mostly come down to investors receiving a return acceptable to them. “It is only in the last couple of years that rental returns have returned to levels that would be acceptable to many investors,” he said. “Prior to this, investors put up with an extended period of falling or stagnant property values and falling rents — in many cases investors experienced drops in rent of 30 per cent or more. “This is one of the reasons investors have left the market completely, contributing to the current shortage of rentals.”