PROPERTY

'Most landlords can't afford to have no rental income'

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On the eve of the government announcing help for tenants who can't pay the rent, landlords are asking for assistance from government, regulators and banks to pay their mortgages.

"Let's be clear - landlords understand the situation. The vast majority are decent, hard-working, average Australians who own just one rental property," explains Ben Kingsley, chairman of the Property Investors Council of Australia (PICA).

There are 8 million Australians living in a rented home and CoreLogic says investment properties account for 27% of Australian housing stock. It says there are 2 million landlords, owning 2.6 million investment properties. Around 71% of landlords own one investment property.

coronavirus landlords property investor

Calls are mounting on the government to put in place a temporary eviction moratorium for Australians who have lost their jobs because of coronavirus and can't pay the rent.

Kingsley says tenants and landlords must treat each other with mutual respect and help each other through these tough times.

Already there are stories of landlords cutting the rent of their tenants so that they can stay in their homes. But tenancy groups say there are landlords who are not so co-operative.

"They (landlords) want do whatever they can to assist the community, but the fact is most can't afford to bear the cost of having reduced or no rental income while still needing to cover mortgage repayments, tax commitments and repairs and maintenance," says Kingsley.

The recent accusations that landlords are unsympathetic and unwilling to fulfil their roles in providing safe housing at reasonable market rents have been both hurtful and divisive, says Kingsley.

PICA has put forwarded a range of ways to ease the burden on landlords including:

  • APRA's relaxation of lending guidelines allowing investors to refinance more easily at better loan conditions.
  • Lining up property investors' interest rates and financial charges in line with those offered to homeowners.
  • Banks passing on rate cuts in full.
  • Easing restrictions so property investors can move easily to interest-only loans.
  • Providing an interest-free loan repayment 'holiday' period.
  • Ensuring interest-only and principal and interest mortgages have the same interest rate applied
  • Tax depreciation breaks to help offset the burden such as allowing investors to claim the actual remaining depreciation on the remaining life of the asset.

"All we are asking is for is some sensible help so we can afford to accommodate rental losses," says Kingsley.

We're cutting through the confusion to help you manage your money during the coronavirus outbreak. Click here for more on how COVID-19 could affect your job, budget, super and investments.

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Susan has been a finance journalist for more than 30 years, beginning at the Australian Financial Review before moving to the Sydney Morning Herald. She edited a superannuation magazine, Superfunds, for the Association of Superannuation Funds of Australia, and writes regularly on superannuation and managed funds. She's also author of the best-selling book Women and Money.
Comments
Daniel Saddik
April 1, 2020 7.47pm

Finally an article that also sees it from the Landlord's view. Every man and his dog is going to try it on, to not pay rent, whether deserving or not. The landlord cannot evict and there will be no grounds to address this, in a timely manner.

DON'T PAY YOUR BILLS for the next 6 months. No rent, no utility bills, etc. NOTHING WILL HAPPEN!!!!

The Prime Minister by stating with regards to the pandemic: "It is not your fault it has happened to you," is a Pandora's Box and will encourage people to abrogate any personal financial responsibility.

Chris Gralak
April 2, 2020 8.45pm

When few years ago real estate market in Sydney and Melbourne was bursting with highest ever prices, banks took advantage and were quick in introduction of higher interest rates to investment property loans. They official excuse was that they want to cool off the market. Now is the time to remove the additional interest rate burden for landlords. The rate for home owner occupier and a landlord should be the same. There is no need to cool off the market now.

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