Landlords more likely to sell investment properties for capital gains than reforms to renters’ rights

More than half of the rental properties in Sydney and Melbourne that entered the private rental market since 2015 exited after five years.


He said the turnover of rental properties in major state capitals highlighted that current tenancy laws favored landlords, rather than tenants.

“The loss of property through the private rental sector is huge. As investors keep moving in and out of rentals, renters keep moving in and out of their homes, and that’s a fundamental problem,” Martin said.

“Our tenancy laws do accommodate the dynamic nature of investment in rental properties, with landlords frequently buying, selling or repurposing them for other purposes.”

He said tenancy laws were very favorable to landlords, not to protect tenants, but at the expense of tenants. For example, no-reason evictions remain an “untouchable” feature of several states’ rental legislation, allowing landlords to terminate tenants’ leases without cause.

“It’s at the tenant’s expense. The cost is financial, logistical and emotional,” Martin said.

“It’s this chronically insecure, volatile housing that landlords have been investing in and disinvesting as they see fit.”

Half of the investors surveyed said they sold their investment property because it was a good time to realize capital gains.

Meanwhile, 47 per cent said they needed funds for another investment, 36 per cent said insufficient rental income and only 14 per cent said dissatisfaction with tenancy laws was an important factor in their decision to sell their property.


He said the private rental industry was so lucrative for landlords that many were free to sell and pick as they pleased, as was evident from the volumes in the bond data and their findings.

“The divestment claim is an argument against tenancy law reform. But the point we are making is that the evidence shows that landlords have been divesting all the way down to the banks.

“They sell because it suits them and a lot of people come back because it suits them.”

Martin said the property lobby was sounding the alarm for tenancy law reform because it would disincentive landlords at a time when macroprudential regulation, such as restrictions on investor lending, had a greater impact.

Stronger, more cohesive rental regulation across the states and territories would set higher standards for renters and attract better landlords, Martin suggested.

“We should push harder to reform our laws…to raise standards, drive the unwilling and incompetent out of the industry, and make room for more owner-occupiers and better providers of rental housing space.”

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