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To: Melinda Pavey MP, Hon Michael Sukkar MP
Affordable housing through long term leases
Make offering long term, commercial-style leases mandatory for all residential properties across Australia.
Why is this important?
Housing affordability in Australia has never been worse; even many people with fulltime employment are struggling to be able to find an affordable rental, let alone buy a place to call home!
I believe that one of the biggest, and most ignored drivers of this lack of affordability is the short-term leases that are offered to residential tenants across Australia. My wife and I were fortunate enough, thanks to a very generous gift from a relative, to buy a house a few years ago, but we spent well over a decade on the rental rollercoaster. We were constantly offered 6month leases on properties, and lived in fear of being evicted at short notice through no fault of our own. We were at the mercy of our landlord, and a lease period barely long enough to settle in to a place before potentially being asked to move out!
This lack of security was one of the main reasons we were desperate to buy a home; had we known we had stable residency for a number of years we wouldn't have felt the same pressure to leave the rental market. I know we're not alone in this; many of the friends I've spoken to feel exactly the same way, and if you're reading this I'm sure you can relate.
Short-term residential leases drive up the cost of housing in 2 ways. Firstly, they allow landlords to frequently increase the rent on their property, not because their costs have increased, but simply because they can. Residents can either accept the increase, or deal with the cost and stress of relocating (moving house is recognised as one of the most stressful life experiences). This means that many tenants will simply have to shoulder the rent increase, and the knowledge that they are potentially faced with an ongoing series of future rent increases. And so the cost of rental housing goes up.
Secondly, the insecurity around residential rental means that, like my wife and I, many people will feel that their only option to find stability and build a "home" is to buy one. This leads to an increase in buyers in the property market, who might otherwise have been quite happy to simply rent if they had security of tenure. An increase in demand (more buyers) in the property market inevitably drives purchase prices up. And so we have a double-whammy of housing inflation, all linked back to the same problem of lack of security in residential properties.
When we look at places like Europe, many people do not own a home, and have no desire to, because they have residential leases that can be anything up to 99years in duration. They have security of tenure; whether they own the building or not, they have a sense of stability, and a place which is their "home". These countries do not have the hyper-inflation of the housing market which we see in Australia.
In Australia we offer businesses long-term leases with the option to extend their tenure, and it allows the commercial property market to operate at a profit whilst allowing business tenants to have the necessary security to run their business. Surely we can extend the same practices to residential properties too?!
Housing is a basic human right, and one we as Australians are doing a very poor job of providing. We have fallen into the trap of seeing a house as simply a way to make money, rather than a place for someone to live. It's time we made a change for the better, for everyone. Let's make it mandatory for long-term residential leases to be offered to all tenants!