Property investors dogged by flawed pet-friendly rental reforms
New regulations designed to be more pet-friendly for renters could backfire against those it is intended to help.
On 19 May, the NSW Government’s residential tenancy reforms come into effect. Investors will be required to allow tenants to keep up to four pets in their property and their right to unilaterally recover possession of their property will be removed.
These reforms discourage investment in residential property at a time when the opposite is so desperately needed. And despite the political posturing, it seems voters are wise to the reality.
Consider the election outcome for The Greens. Internal reviews will no doubt attempt to pinpoint where it all went so wrong, but from the outside, the reasons appear clear.
Policies like rent freezes and winding back negative gearing have been met with such a firm “no” from the electorate that even the party’s leader, Adam Bandt has lost his seat along with his housing spokesperson, Max Chandler-Mather.
The result should serve as a reminder that property investors vote too. The vast majority are mums and dads, owning a single investment property, typically the result of years of hard work with the objective of securing their financial future.
The very same people Government expects to provide homes for people to rent. Obviously, federally, seeking to punish this cohort through populist policies has seemingly backfired for one party.
Labor has been returned at the Federal level following an election campaign that talked a lot about housing. Time will tell if all the talk will turn into action. The supply front is where action is most desperately needed.
There are various policy settings the federal and state governments need to get right to increase rental supply.
One important piece of the puzzle is increasing investment in residential property.
Unfortunately, this is where current policies in NSW are lacking. The reforms in this state have the potential to backfire in unforeseen ways.
Tenants, desperate as they are to secure a rental, are already offering over and above the advertised rent in many circumstances. Rent bidding has always been driven by desperate tenants and the Government’s ‘ban’ on agents and landlords engaging in this practice demonstrates its market ignorance.
Pets the new rental battleground
Pets now represent a potential new avenue for desperate renters to stand out and make their rental applications more attractive.
As with rent bidding, landlords and agents can’t suggest to tenants that their application may be viewed more favourably if they state their intention not to keep pets. But tenants are well within their rights to offer to waive their right to keep animals.
The Victorian example provides food for thought. Similar reforms requiring landlords to allow pets were introduced in Victoria several years ago.
The Renting in Victoria: 2024 Snapshot released recently by the Victorian Government’s own Commissioner for Residential Tenancies states that, “Many renters feel as though pet ownership reduces the likelihood of approval at the application stage.”
Hardly the tenant and pet-friendly outcome envisaged. The irony is that renters with pets may find they are being ‘outbid’ by tenants who offer to waive their rights to keep them.
In an environment of persistent tight rental vacancy, who can blame tenants for playing all the cards at their disposal in order to find a home?
And who knows what other desperate measures tenants in NSW will increasingly be forced to take?
