COVID-19 impacts on the Australian economy & housing market

The repayment pauses are pretty innovative.

 

Why if a landlord is forced to sell will the tenant lost their home. The population is not currently increasing so who will live in all of these untenanted homes. The most logical outcome is that rents will decrease and tenants will stay in their home.
The bank won’t be forced to foreclose if the landlord sells the property. The only loser in this situation is the landlord.

 

And sorry I should add that the landlord has likely gained some previous benefit for owning the property either through capital gains or positive cash flow. They may not experience a net loss, but a loss on their paper wealth. As someone who bought, renovated and rented my first property in my teens in Elizabeth, I don’t recall ever signing a document stating my investment will appreciate in value without disruption.

 

On the other hand, the tenant did sign a piece of paper stating that they will pay rent without disruption, or vacate.

allowing one side to break their agreement is not fair, but there is immediate social value. Forcing owners to default or sell, has less social costs in the short term, but mum and dads will be scared away from investment property.

and if enough people have to sell, prices will crash. Home ownership is around 70%. That’s 70% of voters.

what happens when this is over and population increases?

renters will pay more in the long run. The majority will lose money, a few fhbs will benefit. The rich will get richer. Is that a fair outcome?

 

I agree with this. The downside for the landlord here is that if the tenant can not pay the rent the landlord is arsed anyways, so it’s in the interest of the landlord and tenant to strike a deal in the short term. Landlords are getting some government relief in land taxes (?, I know I am in the commercial space) that should support the tenant / landlord negotiation.

 

They can reduce the rent.
A tenanted property will be attractive for purchase at the right price.

 

And if it is an owner / occupier they are moving out from somewhere. The overall balance of properties available for rent, or occupied by an owner isn’t changing that much at the moment.

 

if it was the tenant lost their job, and vacated, and the landlord has to lower rent or sell at a lower price, thats normal.

should a landlord be forced to take losses because the tenant is allowed to change a signed agreement?

 

Tenants are receiving government support to avoid an immediate risk being realised as you’ve described above. The landlord has had ample time to assess their risk and respond.

 

I'd argue that a property investor who doesn't have a minimum 6 months of rent as available capital shouldn't be in the business of owning property. Probably why I don't have much empathy for investors in this current environment. Even without a pandemic to consider, there are so many things that can unexpectedly go wrong with a property that as a landlord, you need to be aware of your legal obligations to rectify at short-notice. Buying is only the start of the journey, not the end.

 

The eviction moratorium is a financial response not a safety one imo. The majority of Australia is safe to inspect and purchase a property. Reduce the price of the house and this solves the issue.

 

Maybe it’s worth using a real life example of what I believe is a likely outcome.
Tenant loses job, or goes onto Jobkeeper.
Tenant has reduced income and little to no savings.
Tenant speaks to landlord and negotiated a reduced rent. Tenant makes appropriate personal budgeting adjustments.
Landlord should be in a position to absorb the reduction for a short term. In this period they can make an assessment on the future returns of their investment property. If they can’t afford to hold with lower rent, put it on the market.
House price will be lower than say 12 months ago. The landlord has either banked some profit, or will lose some money.
The landlord can absorb the loss, or use other personal assets to securitise the loss, or sell their other assets.
This all works fine imo.

 

HN ad in today's Age: four full pages of wine fridges - for those who aren't doing it tough presumably.

 

Not every landlord is a rich greedy ******* like me.

Plenty of old people who own one property and live off its rent. It’s their retirement plan and their contribution to this society without drawing on government pension.

Allowing tenants to break leases or worse to remain occupied for over half a year without paying rent is just throwing these retirees under a bus. I’m sure these stories will emerge over time of some of these retirees going into financial stress and going under. And people want to tell me it’s ok because they should put back into society and absorb the loss?

 

And at the same time we are wasting billions of money(you know where I mean) that could be used to subsidize landlords and keep tenants in there houses the money pit is now running low - that's why I'm so against money being wasted especially in a world wide Pandemic.
As this Pandemic goes on the impacts of the wastage will get worse and the natives will become restless.

 

There called businesses with free jobkeeper cash fridges

 

No, they can sell the house. They chose to invest money and they need to accept the risk attached to that investment. Society doesn’t guarantee that you can retire off the rental income from an investment property. A retiree that is able to afford an investment property is likely to also have a PPOR with no mortgage. If life gets that tough financially sell the PPOR and move to a cheaper house.
No one is asking them to put into society and absorb a loss, people like me are saying society is not responsible for funding their losses.