Wednesday, 22 February 2023
Tim READ (Brunswick) (17:01): Today I rise to grieve for those Victorians struggling to find a secure, affordable home to rent. We are in the midst of a rental crisis like nothing I have seen in my lifetime. Finding a place to rent has never been harder or more expensive. We are hearing stories of a hundred or more people queueing at rental inspections, while landlords and agents are using the opportunity of low vacancy rates to push rents to record highs. I recently heard from one uni student wanting to leave home. Seeing families with children queueing up at inspections makes him feel guilty about applying for the same place. One constituent, Joseph, has been looking for a place to rent since November. He has not had any responses to his applications. He got in touch with me because he is not seeing any urgent government action.
Another constituent, Thea, was given notice to vacate her Brunswick share house in August last year. Thea is in her 20s, studying law at uni and working part-time. After she was given notice from her Brunswick place she searched for a secure lease but was forced out of her house before she could find another place to live long term. She did manage to find a six-month sublet in another share house in Fitzroy North, but that sublet runs out this month. With the semester starting soon and time running out on her sublet, she is working hard to find a secure, affordable place. For the last two months she has been applying for an average of two places a day, but so far from dozens of applications she has had just five interviews, and from that she has had one offer – but again, this was just a short-term spot in a share house. The other residents told her that the owners would be selling soon, so she has declined that one. Thea has to be out of her current room in just a couple of weeks and does not know where she will go. As semester starts she expects to be sleeping on friends’ couches and continuing the search for a secure and affordable place.
But the numbers show her prospects are not great. Vacancy rates have plummeted to record lows, down to 2 or even 1 per cent in some reports, and with such low vacancy and high demand, landlords have taken the opportunity to bump up rents, squeezing people for as much as they can get. In just the last year median Melbourne rents have increased by anywhere from 8 per cent to 25 per cent, depending on which survey you read. Thea says she is expecting to pay 30 per cent more now than she was in her last place, but as a student relying on youth allowance and part-time work, there is only so much she can afford.
Real estate agents have reported receiving 20 times the usual amount of people applying for some properties, and they are leasing properties within days of listing them. This high demand is giving landlords and agents cover to raise rents. We know some estate agents have been coaching landlords on how to best maximise rents, and we have heard that Consumer Affairs Victoria has received ongoing reports of illegal rent bidding, where agents are advising desperate applicants to offer more rent than the listed price.
It is even worse in regional Victoria. Anglicare last year found that on a given day two out of three regional towns had no rentals listed whatsoever. These communities do not have enough rental housing for local families as well as essential workers who want to move in to work in local businesses.
Small business is suffering, services are understaffed and people are struggling with rising housing and living costs. Some 2021 census data shows that almost 31 per cent of Victorian renter households were in rental stress, and since then rents have only increased. With rent up and inflation still sitting at 7.8 per cent, the costs for the essentials – food, transport and bills –all high and rising, unemployment increasing with interest rate hikes and wages not nearly keeping pace, more and more Victorians are being pushed towards poverty and homelessness.
The Council to Homeless Persons recently reported a spike in people accessing homelessness services. There have been particularly severe increases in demand and particularly in the number of First Nations people, young people and older women seeking help. Crucially here, many people now accessing homelessness services are employed. This is a new class of working poor that is being created by government inaction on cost of living and the housing crisis. Similarly, Foodbank has been struggling to keep up with rising demand for food aid. There are already over 120,000 people on the public housing waiting list in Victoria, and that number is climbing. So how can governments sit by and watch this happen? Why aren’t we seeing serious and urgent action to address the rental crisis? And what does the government plan to do to help people like Thea and the thousands of other Victorians who cannot find a place to live right now? I asked Thea this, and she said she did not think this government was doing anything meaningful that would help her and other people in the short term. She has only seen things get worse over the last couple of years. The Greens have been calling for caps on rent increases, and while this would protect renters from poverty and homelessness in the short term, I am not here to discuss that today.
I know the government likes to talk about housing supply as a solution to rental costs, so let us look at how we could quickly increase the supply of available rentals in Victoria. While I recognise the government is doing some work in this area, the 12,000 homes in the much-touted Big Housing Build pipeline that are part of this project will not come close to meeting demand for new housing. We need to do more, and fast. This week the Greens have been calling on the government to address the shocking fact that in the midst of historic rental shortages there are tens of thousands of properties around the state which could be used to house people that are sitting empty or are being used as short-stay holiday properties through platforms like Airbnb. Recently research from Prosper revealed that there are almost 70,000 vacant properties around Victoria. Their owners have chosen to land bank these houses rather than rent them out or sell them on. Sitting empty, these properties have no productive use beyond enriching their owners, who are simply watching the capital gains pile up while ignoring the responsibility they have as property investors towards the hundreds of thousands of people who are looking for a secure place to live. Indeed these empty houses could house 185,000 people. To have that much housing sitting empty while so many people are seeking a home is an egregious policy failure, but it is what we get from decades of poor policy that has prioritised housing as a money-making venture rather than as a basic necessity. On this, we need to fix Victoria’s vacancy tax to more strongly encourage property owners to lease or sell their properties rather than keep them vacant.
I will get to the vacancy tax in a moment, but first I want to talk about short-stay properties. There are almost 20,000 Airbnb properties across Victoria. Most of them are entire houses or apartments rather than just someone’s room, and many are offered as holiday rentals for the majority of the year. Entire properties are removed from the private rental market and put onto the holiday market instead. There is big money to be made in Airbnb, and it is having a big impact on the private rental market, decreasing the number of long-term rentals available and in turn pushing rents up. For instance, in the suburb of Brunswick right now there are 73 properties listed for long-term rent on Domain and there are over 300 listed for tourists on Airbnb – that is just Brunswick, 3056. The balance is completely out. The impact of Airbnb and other short-stay providers is particularly disruptive in the regions. In popular holiday destinations in regional Victoria rents are at record levels while the number of available rental properties has plummeted. In Apollo Bay right now there are over 500 Airbnbs available to rent and only two properties up for lease long term. Those arguing to allow Airbnb to continue unregulated may claim that these are mum-and-dad investors occasionally leasing out a spare room or a granny flat or the holiday house while they are not there just to help make ends meet. That may be true for some operators, but the reality is that the short-stay sector without decent regulation has become big business. Some operators are running dozens, even hundreds of properties, unchecked. If these properties were not being run as unregulated mini hotels for holiday-makers, they could be offered as long-term homes for people like Thea or Joseph.
That is why this week the Greens have called for strong regulation of this industry and strong incentives for landlords to list houses as long-term rentals rather than short-stay holiday properties. In cities around the world – Amsterdam, London, New York, Berlin, San Francisco, Tokyo, Singapore, New Orleans – the short-stay industry is regulated. In these places good regulation has allowed small-time Airbnb operators to continue supplementing their income through Airbnb while also reining in the big operators, returning their properties to the long-term rental market and addressing runaway rents.
Under the Greens plan we want to see three things. First, a 90-day cap on how many nights a year you can rent out a second property as a short stay. This will not affect your own home. This will change the balance. It will encourage those who have created big businesses around Airbnb to move out of the short-stay market and instead offer their properties as long-term rentals, which will become a more attractive money-making method when Airbnb is capped. The cap will still allow those who have got a spare room, a holiday house or are away from home for a while to continue drawing on some supplementary income by offering short-stay accommodation. Second, we are calling for rules to allow owners corporations to regulate short stays for properties that are not a host’s principal residence in their buildings. The short-stay industry has seen residential apartment buildings become multi-storey party venues for tourists and backpackers where permanent residents have to put up with constant noise and mess. We should be allowing owners corporations to manage and reduce the impacts of short-stay accommodation in residential buildings. Third, we want a new mandatory public register of short-stay operators, which will increase transparency for communities, create more clarity around the impact that Airbnb is having on our neighbourhoods and make it easier to hold dodgy providers accountable.
As I mentioned before, beyond the short-stay sector there are more properties, tens of thousands more, sitting completely vacant and unused, and there are hundreds of thousands of people looking for places to live. Wouldn’t it be good if we could put the two together? Wouldn’t it be good if some simple policy change such as the one we describe could liberate tens of thousands of houses in a short space of time? In 2017 the government attempted to address the problem by introducing the vacant residential property tax. Its purpose was to penalise property-hoarding investors who leave houses empty, happy to set and forget while capital gains pile up, rather than renting them out or selling them to people who want to live in them. When the government introduced the vacancy tax in 2017, the Premier said:
… I would be pleased if that measure raised not one dollar, and if people, instead of having properties dormant, having them vacant, having them performing no meaningful or productive function, made those properties available.
Not a bad idea, and indeed part of the Premier’s projection came true. The tax has raised a pittance since it was introduced – a little over $6 million on record – when if it had been implemented correctly, it would have raised up to $500 million. That is why this week the Greens have called for strong regulation of this industry and strong incentives for landlords to list houses as long-term rentals rather than short-stay holiday properties. We should strengthen the enforcement of the vacant properties tax and not rely on people to just self-report that their property is vacant.
In places like Amsterdam, London, New York and so on with a regulated short-stay industry small-time Airbnb operators can continue to supplement their income and they would not be affected by this. The idea of combining that with a properly enforced residential vacancy tax would mean that we could have even the majority of those 70,000 vacant properties liberated for people who are looking for a place to rent.
If we talk more about the tax, between 2017 and 2019, after the tax was introduced, the number of vacant properties did not drop – it actually increased by over 13 per cent – and the number of properties available for short-term rent fell. The vacancy tax is a good idea, and I urge the government to revisit it but to introduce better enforcement and also a higher rate of tax. We should incentivise property owners to start allowing people to live inside the houses that they have been hoarding.
Dealing with the vacancy problem is something we can do in the near term to increase the availability of rental properties, but we need to do much more much more quickly to address the broader housing crisis. For far too long governments made housing policy to cater for investors, treating housing as a commodity to be hoarded, traded and gambled on for the purposes of wealth accumulation. We need to remember that having an investment property is a luxury, while having a place to live is a basic necessity.