Australia’s Senate rental inquiry slammed as costly and ineffective by industry group

The Property Investment Professionals of Australia (PIPA) has criticized the Senate Inquiry into the rental crisis, branding it a futile expense of public funds. Following the inquiry—which made no comprehensive recommendations—PIPA has spoken out against what they see as a misdirection of effort and resources.

PIPA Chair Nicola McDougall voiced her dissatisfaction, saying, “The inquiry was not only a waste of taxpayers’ money but was a huge waste of time and resources for the hundreds of individuals and organisations, such as PIPA, who produced submissions or spoke at the four public hearings.” She highlighted the discrepancy between National Cabinet’s support for limiting rent increases and the inquiry chair’s proposal resembling The Greens’ policies, which lacks broader political backing.

The chair’s suggestion of a retrospective two-year rental freeze, with rental increases capped at two per cent biannually, was particularly singled out for criticism by PIPA. McDougall pointed out that such measures, promoted by the Australian Greens and unsupported by the National Cabinet, are at odds with the expert research showing rent freezes can lead to reduced rental supply as investors leave the market.

McDougall commented on the cons of rental freezes, stating, “Yet, after hundreds of submissions, including from PIPA, the inquiry chair still clearly thought it was good idea to suggest rental freezes, possibly because the inquiry spent most of the time talking to tenants and not to the people who provide the majority of rental accommodation in this nation.”

PIPA’s analysis of Australian Taxation Office (ATO) data indicates a 55 per cent drop in the average annual number of people with rental property incomes across the nation within five years. McDougall noted this decline as an exacerbating factor of the current rental crisis, with a stark decrease in investor activity in recent years.

McDougall continued, “Now, we have a variety of potential anti-investor rental and taxation reforms, as well as continued threats of rent freezes, such as this one, at a time when investors are grappling with significantly higher interest rates on their property loans.”

Moreover, PIPA’s 2023 Annual Investor Sentiment Survey revealed that a concerning 12.1 per cent of investors had sold rental properties nationwide in a year. The impending sale of properties by 38 per cent of investors—up significantly from the previous year’s survey—suggests looming challenges for tenants as supply could further diminish.

PIPA’s stance highlights the complexities of addressing Australia’s rental crisis and the need for solutions that balance the interests of tenants and property investors to ensure a stable and sustainable rental market.