Message from the CEO: A cultural shift is long overdue

It is not a stretch to say that 2017 was a dynamic year for Victoria’s rental market.

In June 2015, the State Government announced that it would undertake a review of the Residential Tenancies Act (RTA) – the Act’s first significant reform in almost twenty years.  An Options Paper outlining possible reforms to the Act was released in early 2017. Tenants Victoria and over 60 other community sector organisations and local councils responded to the call by forming the Make Renting Fair campaign.  Thousands of individuals joined the fight calling for changes to the RTA that would make renting safe, stable and private for all Victorian renters.

The State Government listened.  In October 2017, they announced a 14-point list of reforms as part of their ‘Rent Fair’ package for the RTA review.  These announcements included a ban on ‘no reason’ evictions, the creation of a landlord blacklist, a crackdown on rental bidding and welcoming pets in rental properties.

The surge of renters calling for better protections was clearly alarming enough to warrant the creation of a new political lobby group which a Domain article rather humorously described as, “determined to fight for the rights of that most oppressed class: wealthy people who own lots of property”.  The REIV and its members were up in arms, opting for their stock-standard claim that better protections for renters will spell doom and gloom for the Australian rental investment market.

Common sense and even a basic knowledge of economics tells us that these fears are entirely fiction.  A recent study published by the Australian Housing and Urban Research Institute (AHURI) titled ‘The changing institutions of private rental housing: an international review’ confirmed it.

The report, which examined regulations in ten countries, found that stronger regulations protecting tenants did not lead to decreases in investment or housing prices.  In fact, stronger regular in Ireland and Scotland has been continually implemented as the private rental sector has grown.

One of the countries examined in AHURI’s study was Germany, whose successful rental market continually puts less progressive countries to shame.  Theirs has long been a glowing example of how a cultural shift in the way we view renting and renters’ rights can yield positive results in a society.  The rights of landlords vs tenants are considerably more balanced than those in Australia.  Landlords must provide a valid reason for eviction.  Rent increases are capped to the country’s CPI without proof that a larger increase is warranted.  The common claim that ‘mum and dad investors’ will be hardest hit by stronger rental regulation is turned on its head by Germany, where the majority of investors are still individuals.

What I think makes Germany most remarkable is its general attitude toward renting: Despite having more renters than homeowners, 93% of Germans who responded to an OECD survey said that they are happy with their housing situation.  The ‘great Australian dream’ of home ownership equating to one’s happiness simply doesn’t translate.

Australia’s penchant for home ownership isn’t going away anytime soon, but there needs to be a cultural shift in how we view renting in this country.  Data from the 2016 Census shows that more Australians are renting than ever before and are doing so longer into their lives.  It also proves that renting in Australia is more diverse than the old stereotype of students and young couples.  People of all ages, genders, marital statuses, incomes and cultural backgrounds now rent.

The rental reforms aren’t designed to make landlords look like bad people.  They are designed to balance the power between landlords and tenants and provide much-needed health, safety and privacy protections for renters that the current tenancy legislation lacks.  We cannot continue to view renters as the second-class citizens any more than we can ignore the health and wellbeing of one-third of the population just because they rent their homes.

 

Related links:

Make Renting Fair: First big win for renters?