Transcript
SUMMARY KEYWORDS
legislation, rent, protections, data, affordable rents, evictions, northern hemisphere, tenancy, tenants, dwelling, market, government, property, public interest, vacancy, concerned, affordable, outcomes, held
SPEAKERS
Karl Fitzgerald ALP Senator Walsh Liberal Senator Bragg Greens Senator McKim Independent Senator Pocock
ALP Senator Walsh
00:06
Mr. Fitzgerald
Karl Fitzgerald
00:09
Grounded represents community-led housing, which, in a way, is the inverse of this proposed corporatisation of the rental market.
We are concerned that this legislation rolls out the welcome mat for rent maximisation strategies and takes market outcomes as an article of faith over and above the monopoly power that this legislation enhances.
We are also concerned that Prop tech allows Build to Rent to engage in surveillance pricing, but we see no oversight from the government in terms of requirements for developers to provide the sort of data that would reflect public interest outcomes.
For years, we’ve heard of 3% vacancy rates being equilibrium.
This is a perfect opportunity for this to occur, the government should be ensuring that competitive supply levels are maintained, that eviction rates are monitored, and rental prices are investigated so that there is some public interest return for the millions and billions of dollars of discounts handed to this new industry.
Liberal Senator Bragg
01:23
Mr. Fitzgerald, I was interested in your opening statement. Are you concerned that we are seeing a corporatisation of housing in Australia?
Karl Fitzgerald
01:33
Absolutely. This is delivering horrifying results in the northern hemisphere, and this legislation makes no account of that. It perplexes me that this government, which purports to be in support of labour, is allowing rent maximisation strategies to come through unabated.
And yes, I agree, pushing mum and dad investors out of the housing market will result in less competition. What we’re seeing in the northern hemisphere is a horrific new software program called Yield Star, which, in Atlanta, coordinates rental increases for 81% of rental properties. The Board of Supervisors in San Francisco has now banned this as a monopolistic practice, and there’s just nothing in this legislation that even prepares us for what’s coming.
Greens Senator McKim
02:27
Mr. Fitzgerald, but you’ve mentioned some horrific circumstances as you described them in the northern hemisphere. I specifically wanted to ask you about things like prop tech, algorithmic rent setting, vacancy coordination, and monetisation of data. What do those mean in terms of tenant experience, security for tenants, affordability for tenants, evictions, maintenance, discrimination? So, what’s the tenant experience in general terms? From those things that you’ve discussed.
Karl Fitzgerald
03:09
Tenants can receive a notification at any time of the day that their rent has just increased, and as numerous interviews with property managers have revealed, doing this removes the moral consideration of that interpersonal relationship and dehumanises the process of delivering much higher rents. We have such poor measurements of vacancy rates that only look at advertised vacancies and do not look at speculative vacancies held empty.
The consolidation of market power, as we’re seeing in San Francisco, Atlanta, and other places like Spain, many properties are held vacant and only released to the market when tenants are desperate for property at higher rents. So that’s the sort of future that this bill brings through without concern. I think it should be brought back to the table and these sorts of data privacy issues brought to the fore, because the only way this model works is if this data can be agglomerated and then on-sold to marketers. They’re even measuring the weight of tenants’ pets, they’re getting down to such levels that are recorded on their databases so that they can maximise returns, whether it be dog walking services or whatnot.
Everything comes with a price. There’s no community value to it. We have to be careful because when rental back mortgage securities come through, the market’s going to be throwing money at build to rent. There’s not going to be much room for mum and dad investors.
Greens Senator McKim
05:02
Are there any protections or mechanisms in the legislation as drafted, or, in fact, any other tenancy protections anywhere else to prevent that kind of predatory corporate landlord behaviour that you have, that you’ve outlined if the BTR sector were to emerge as foreshadowed?
Karl Fitzgerald
05:29
As a relatively recent industry, governments around the world are still reeling with these sorts of potentials that algorithms allow. There isn’t much legislation out there, but you know, for a day’s coding, we could have build to rent operators providing this data to the government, they’re already collecting this data, so why shouldn’t it be public interest as well? I implore the government to look seriously at this, because, you know, really the money that is enabled by this sort of data overreach is very, very concerning.
Greens Senator McKim
06:09
So just to be clear, are there any protections in the legislation as currently drafted for that kind of behaviour?
Karl Fitzgerald
06:18
None at all.
Greens Senator McKim
06:19
Okay, thank you. Are there any protections in this legislation for retaining the affordable retaining affordable rents that the legislation provides for? Are there any protections in the legislation for retaining affordable rents after the 15-year holding period, or for maintaining high quality dwellings, given the implied 15-year depreciation period?
Karl Fitzgerald
06:46
I’m concerned about that short window, and what happens between the 10 and 15-year mark. We’ve seen in New York a lot of private capital zeroing in on these sorts of investment opportunities in the last 10 years to turn these into penthouse developments. I think the 15 years should be expanded to 25 if not 40 years, [if] they’re going to get 4% depreciation, which is a serious subsidy, we need a longer window. We can’t have another National Rental Affordability Scheme (NRAS) outcome of 15 years coming through [supply leaving the market]. And we know that build to rent will locate these dwellings, these apartments, in inner city areas where the capital growth is higher, where at that 15-year mark, penthouse development will be extremely lucrative and we will have lost supply again.
Greens Senator McKim
07:45
So just to be clear, there are no protections in place for retaining affordable rents after the 15 years. Is that right?
Karl Fitzgerald
07:54
No, no. There’s no incentive.
Greens Senator McKim
07:58
Thank you. One final question. I want to ask about what the gaps or weaknesses are in this legislation’s requirement for the provision of 10% affordable tenancies. And can I just ask you, in framing your answer to consider the limited number, whether or not they offer genuinely low-income people, whether the 74.9% of market rent for a similar dwelling, whether that could be for a premium dwelling, for example, whether there can be a skimping on amenities or unit size, for example, and whether they can be sold off or made unaffordable after the 15 years?
Karl Fitzgerald 08:53
A 74.9% threshold in inner Sydney or Melbourne is not going to be affordable for anyone on Social Security, or anyone earning under $60,000 – this is more greenwashing. The fact that the whole build to rent movement came to Australia on Treasurer Morrison’s enthusiasm returning [from] the UK, and was all about affordability. Now we’re down to just 10% and the property lobby wants to reduce that to 5%. We know these are going to be one-bedroom dog boxes where minimisation is provided.
There’s no quality of tenure to be provided in this arrangement. It does concern me that the minimum build to rent is 50 units and we’re going to get five affordable units. It [affordability thresholds] should be limited to 30% of median income for the city so that washes out some of the higher incomes in those inner city locations.
Independent Senator Pocock
10:02
Finally, Mr. Fitzgerald, talking about tenancy protections, which I hear a lot about, I’m interested in your view, about the proposed tenancy protections in this joint submission, which has five-year leases, no and no cause evictions. This is the joint proposal from Chia Shelter and The Property Council, and whether that’s something that you’d be supportive of?
Karl Fitzgerald 10:31
That’s an improvement on the legislation.
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