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Investor tax hits Victoria’s rental market

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Experts have warned that investor reluctance in Victoria is expected to result in a decline in rental property numbers over the next 12 months.

Victoria’s rental market is currently facing a significant crisis, with MCG quantity surveyors reporting that a sharp fall in new investor lending has exacerbated the shortage of rental property inventory, increasing pressure on the market.

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MCG Quantity Surveyors managing director Mike Mortlock said Victoria’s rental market was “in a precarious position”.

“Over the past three months, investor lending in Victoria totalled 10,220, or an annualised 40,880. Over the same period, the number of annualised rental properties was calculated to be 45,924, which means a net loss of 5,044 rental properties and a one per cent decrease in the number of private rental properties in the state,” Mr Mortlock explained.

The research firm argued the problem is widespread, not only because existing landlords are exiting the market, but also because potential new landlords are wary of investing in Victoria.

MCG said this hesitancy among investors was being exacerbated by new taxes introduced by the Victorian government to repay coronavirus-related debts, as well as market conditions which further discouraged investment in rental property in the state.

“It’s not just about people leaving – many potential investors are now avoiding Victoria altogether and looking for opportunities in other states with more favourable conditions,” Mr Mortlock said.

“Reluctance to invest has led to even fewer properties available to rent, making it even harder for tenants to find affordable housing.”

The MCG said in addressing Victoria’s renter exodus it was essential to “avoid the blame game” and focus on constructive solutions that benefit renters who are already suffering from fewer rental properties and rising prices.

“We need to resist the temptation to blame landlords – blaming them will only make the problem worse and make things even worse for long-suffering tenants,” Mortlock said.

“Instead, we should focus on creating a more supportive environment for property investors, which will lead to a more stable and growing rental market,” Mortlock concluded.

The MCG quantity surveyor also spoke about the worsening underinsurance crisis which will continue to devastate Australians unless decisive action is taken.

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