REIWA calls for balanced rental reform ahead of state election
Ahead of the upcoming Western Australia election, the peak body urges the new government to carefully consider the potential impact of rental reforms on investor sentiment and rental supply.
A recent survey of the Real Estate Institute of Western Australia (REIWA) members revealed that changes in property tax settings or tenancy legislation are decisive in investors’ motivation to sell their investment properties.
In total, 83 per cent of respondents stated that changes to property tax would influence their decision to sell their investment property, while 74 per cent indicated that changes to legislation would drive them to sell.
REIWA CEO, Cath Hart, said that Western Australians have “made it clear” they are very focused on housing policies, which will be key pledges in the upcoming state and federal elections.
“Supply and affordability are the key issues in regard to housing and we know that private investors provide 85 per cent of rental housing in the Western Australian rental market. About 70 per cent of investors are mum and dad investors with one property,” the CEO said.
Hart also noted that investors in Western Australia have historically been highly sensitive to changes in regulatory settings.
She said the COVID-19 rental legislation enacted in Western Australia from 2020 to 2021 was “deeply unpopular with investors” and was applied after a long market downturn in which rent prices declined significantly and vacancies were high.
“This was one of the contributing factors to a mass exodus of investors from the market in a short period, reducing rental supply by about 20,000 properties and contributing to the rental crisis of the past few years,” Hart said.
However, the CEO acknowledged that recent improvements in stock availability in Western Australia’s rental market were partly due to the state’s legislative environment.
“While our relatively affordable housing and the potential for strong rental yields have played a role in attracting investors, the balanced Residential Tenancies reforms announced in 2023 provided certainty for investing in WA,” Hart said.
“In addition, the short-term rental accommodation and vacant property incentives have seen over 420 properties added to the rental market since launched,” she added.
Hart said that Western Australia’s legislative approach contrasts with states, such as Victoria where reduced land tax thresholds for investors as part of the COVID-19 debt levy and high compliance requirements for landlords have contributed to a decline of rental supply in the state and resulted in investors leaving the market.
Yet, Hart shared that Western Australia’s rental supply still has “some way to go” to return to a balanced market.
“Private property investors supply the vast majority of stock for WA’s rental market, so ensuring stable and balanced regulatory settings is important for tenants and owners alike,” she concluded.