THE historic rental crisis gripping Australia can be solved in 24 hours according to one of Australia’s most successful property investors.
President of Property Club Australia’s largest property investment membership group, Kevin Young, said it needs to be a two-fold process.
“Firstly we have to immediately remove the two bureaucratic wrecking balls that have played havoc in the rental market since 2015.
“If the Federal Government restored interest only loans long term to property investors and restored depreciation benefits to second hand properties, they would result in a massive increase in rental supply very quickly.
“Property Club members for example would triple the number of rental properties they are buying because these two measures would make it financially viable for them to own more rental homes.
“Limiting the time from for interest only loans by the unelected APRA in 2015 saw thousands of property investors throughout Australia exit the rental market as they could not absorb the huge increase in repayments when their interest only loans were unexpectedly switched to principal and interest after 10 years.”
Mr Young said the 5000 members of the Property Club saw their mortgage repayments more than double and as a result more than two thirds of the members were forced to sell their rental properties resulting in the massive under-supply of rental properties we have today.
“I alone was forced to sell off over 180 investment properties providing accommodation for more than 500 tenants.
“Due to the interest only changes I now have only seven rental properties left. The vast majority of my rental properties were purchased by owner occupiers.
“The second wrecking ball hit the property investment market in 2017 when the Federal Treasurer Scott Morrison removed depreciation benefits from second hand properties.
“These second-hand properties offered renters much lower weekly rents compared to new properties.
“Property Club, which has been operating for 30 years, predicts that restoring depreciation to second hand properties would quickly result in the availability of over 100,000 affordable rental properties throughout Australia.
“In one disastrous move the decision of Scott Morrison saw a flight of investment capital from second hand properties to new properties resulting in a famine in low-cost rental accommodation in Australia.
“Housing supply is at the very core of our rental crisis in Australia.
“It cannot be fixed by attacking landlords even further with punitive measures such as a cap on rents or the Federal Government borrowing billions of dollars for social housing.
“It can be fixed within a day by immediately removing these two wrecking balls – time limits on interest only loans and removing deprecation to second hand properties.
“This would create a ‘big bang’ effect in the property investment market with mum and dad property investors moving back into the property market in their thousands,” he said.
