Property experts at the University of South Australia are urging the government to implement immediate rental subsidies for tenants as financial hardships continue to wreak havoc for property owners and older Australians.
The call follows the Prime Minister’s announcement for a six-month freeze on evictions of tenants who are unable to pay rent as a result of Covid-19.
Property and investment researcher, UniSA’s Peter Koulizos says while this is the right move to look after tenants experiencing significantly financial hardship, it only looks at one side of the equation with older Australians, property owners and tenants all feeling the heat.
“One third of Australians rent their home. So, while the government is trying to support struggling tenants, it’s overlooking the impact on landlords, many of whom need to pay mortgages, or rely on rental income as self-funded retirees,” Koulizos says.
“Simply asking landlords and tenants to negotiate individual arrangements to withstand the crisis is not enough.
“One solution is to initiate immediate rental assistance for tenants so that landlords do not experience flow-on impacts to their own mortgages or income. This assistance could be a percentage of the rent that tenants are currently paying, up to a certain limit, and varying according to the city in which they reside. But the point is to address problem in its entirety and to keep it fair.”
Banks have responded to the issue by offering six-month deferrals in mortgage payments, but as Finance and investment expert, UniSA’s Dr Reza Bradrania says, they’re still not considering the full picture with mortgages continuing to accrue interest and add to the overall expense.
Dr Bradrania says self-funded retirees are likely to feel the brunt of changes to the rental market.
“Older investors who have paid off their mortgages and are using rental incomes to live as self-funded retirees are at particular risk right now, as they will not be receiving any of the same supports that old age pensioners will receive,” Dr Bradrania says.
“These people rely on rental income to fund their retirement, but with no rent coming in, they’re in a very precarious position.
“The government should be looking to help out self-funded retirees whose income falls below that of the old age pension, and then consider an appropriate portion of the old age pension to top up their income until the situation improves.”
For older Australians, the pandemic has struck hard, particularly for those drawing upon their superannuation to survive. Housing and property researcher, UniSA’s Dr Braam Lowies, says he is very concerned for older home owners amid Covid-19.
“Older people on the brink of retirement represent one of the most vulnerable groups affected by the pandemic – not only due to health reasons, but also because of the future superannuation income losses,” Dr Lowies says.
“These people will find it extremely hard to regain these losses when they retire, and may be forced to work longer, if indeed they still have employment.