Real estate tycoon Donald Trump’s real estate empire is taking advantage a booming property sector to boost prices and drive out tenants, a report has found.
Key points:Landlords have used the property market as a dumping ground for their own assets and other debts to boost their bottom lineThe owners of about 40 properties across Australia are facing an “unprecedented” rise in rents and other costs, the report saysThe report, titled Landlords, Renters and Investors: The Landlord-Ratchet Trap, shows that property owners have become more and more dependent on rent, which has fuelled a boom in profits for the owners of their properties.
“Landlords are increasingly leveraging the property sector as a tool to drive down their cost of ownership and boost their own bottom line,” the report said.
“They are exploiting their position as the sole owner of their land to drive up rents, and the price of land has also soared.”
The Landlord and Tenant Board (LandT) is a body of independent experts that advise the government on property law, and has reported that the housing market has seen a surge in rental pressures.
Landlords and investors, the government says, are exploiting the market as the “fertile ground” for their property, while landlords are becoming increasingly dependent on rents and the cost of land to maintain the quality of their buildings.
“The rise in the rental market has been a direct consequence of landlords and investors making an increasingly concentrated number of purchases and the resulting demand for their properties,” the Landlord & Tenant Boards report said, adding that rents are “higher than they were before the housing bubble burst” in 2008.
“These rent increases have contributed to a deterioration in the quality and quantity of housing stock across the country,” it said.
Landlord rents, rents, landlords and profitsLandlords make a lot of money from their properties, with the average cost of renting them rising to more than $600,000 in 2017, the Landlords’ Association of Australia (LTA) said.
The cost of a single bedroom in a property in Brisbane, for example, is now $2.5 million, compared with $1.8 million in 2011.
And there are also rising rents for apartments in some areas of Sydney, Sydney West and the outer suburbs.
“Many of these rents are being paid by tenants, and many of them are paying more than they are earning,” the LTA said.
“The average rent in 2017 for a house in the inner city was $2,900 per week.”
And while there has been an increase in the cost and quality of housing in recent years, there is a continuing upward pressure on rents that is being driven by the supply of land.
“Landlords can charge a significant markup for their apartments, but this is not always the case, it said, noting that some owners have been able to negotiate lower rents in some cases.
In some areas, rent is “undervalued”, and tenants can be “bought out” for lower prices, the LSA said.
While it did not give figures for Australia’s rent levels, the findings highlight how the real estate industry is becoming increasingly reliant on rent.
Land rents, the landlord lobby says, should not be a problemThe LTA is calling on the federal government to “take immediate action” to ensure that landlords and landlords’ associations are not exploiting rents and “lending the land” to other people, not themselves.
The Landlords Association of New South Wales (LANZ) has welcomed the findings, saying they show how the rental industry is increasingly reliant.”
Our report is an important wake-up call to the government to ensure rental conditions in NSW are fair and equitable for all tenants, including the new and existing renters,” said LANZ CEO Brian Gaffney.”
We urge the federal and state governments to ensure these conditions are maintained, ensuring that the rental sector is not being exploited as a dump for other financial interests.
“The federal government is yet to release a response to the Landlord and Tenants Board’s report.