Increased regulations of landlords will not necessarily be a burden to the Australian housing market, says a new report.
The view that introducing tenancy regulations is ‘red tape’ is out of step with the recent experience of other countries, says a report from the Australian Housing and Urban Research Institute. It found that some countries have put in place strong regulations protecting tenants without suffering significant declines in their number of investors or housing price drops.
Lead researcher Dr Chris Martin said Australian policymakers can learn from other markets’ experience as the country experiences a growing share of renters in its housing market.
“State government could legislate to improve security of tenure, for example by removing ‘no-grounds’ terminations, without unduly burdening landlords,” said Martin.
The report, undertaken by researchers from the University of New South Wales and Swinburne University of Technology, compares the private rental sector in 10 different countries across Europe, North America and Australasia.
It found that Australia and Germany have similar negative gearing policies, yet experience very different housing market outcomes.
"While both countries exempt owner-occupied housing from capital gains and provide for negative gearing, in Australia house prices have continued to rise, while in Germany house prices are relatively steady due to a large private rental sector, low population growth, conservative lending by public financial institutions and rent regulations," says the report.
Debates over negative gearing hit the headlines again when a report released earlier this month said the majority of Australian households would gain from the removal of the tax break.
Initial results of the study show that discarding negative gearing would boost the average home ownership rate to 72.2% (from 66.7% currently) and improve the overall welfare of the economy by 1.5%.
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