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It is often described as the great Australian dream. The last census showed home ownership is still the norm for just over 65 per cent of Australians. But it is a dream that has been in steady decline, with the rate dropping by around 3 per cent since 2006. Unsurprisingly, the proportion of Australians now renting has increased in the same period, up from 21 per cent in 2006 to almost 25 per cent a decade later. Researcher Chris Martin at the University of New South Wales' City Futures Research Centre is one of the authors of a review looking at rental policy and trends in 10 other countries. Nine of them are in Europe and the United States. He says there is a perception more people in Europe rent than in Australia, but he says that can be misleading.
"Most of the countries we looked at had a higher owner-occupation rate than Australia does, which goes against the popular view that everyone in Europe rents. Although, looking more closely at what happens to a lot of the European countries, what we found was that the renting is differentiated from the wider housing sector. Small households, single people, low-income people, they're much more likely to rent. So that's something a little bit different from Australia, where our rental system is more integrated. We've got more higher-income people renting, more people with kids renting."
The review found renters in Australia are largely disadvantaged in the property game, with protections for tenants some of the weakest in the developed world. Rents in Australia, for example, can be increased with little warning. In some European countries, more regulations apply, not only in rent prices but also in the ability of tenants to negotiate longer leases. Sweden is the only country where regulated or negotiated rents apply across the entire rental market. A system of both regulated and non-regulated rents applies in other countries such as Austria, Denmark and France. Mr Martin says that is the main difference between Australia and the countries in the review.
"Australia lags behind most other places, in terms of the legal protections for tenants and legal assurance of security. In most of the other countries we looked at, there's provision for the termination of tenancies by landlords only on reasonable grounds. In Australia, generally, tenancies can be terminated by landlords without grounds. Most the countries we looked at, we saw examples of legal regimes where you had to have reasonable grounds for termination. But there's also a couple instances of countries where they use long fixed terms. That's not really the major way of providing security."
The review also looked at how finance, the taxation system and subsidies affect the rental market in Australia and overseas. It recommends Australia thoroughly examine how all those factors, separately and together, affect the private rental market. A reader of law at the University of Queensland, David Morrison, says there are no clear answers for how dropping some policies and implementing others would affect the private rental sector.
"It's difficult for the government to know precisely what levers it ought to pull to make it more available or affordable. I think that's the first thing. So you hear about the removal of negative gearing and the removal of capital-gains tax breaks for investors, but it's not immediately clear that the removal of negative gearing, for example, would make housing instantly more affordable for Australians. I think it's a much more complex debate."
Tenants Union of New South Wales senior policy officer Ned Cutcher says affordability in Australia's rental market remains a major issue but seeking solutions overseas may not be the answer.
"We need to be careful not to romanticise the experience overseas too much. I mean, I don't think we could look to any part of the world and say, 'There is a perfect system that we ought to emulate.' But there are certainly some aspects of some countries overseas that we could look to and say they're doing it better -- places like Germany, Central Europe, Northern Europe, where tenants have got much better security of tenure, the landlord needs to really justify taking a property back from a tenant. And that's just not something that we have in Australia. People put up with high prices, all sorts of things that, in other countries, they might not have to, because they're worried about evictions without grounds."
The review also looked at the emergence of large-scale institutional landlords in other countries. After the global financial crisis in the United States, for example, a new sector of landlord emerged, investors who have bulk-purchased former owner-occupied homes lost in foreclosures. In Germany, the largest corporate landlord has more than 330,000 properties alone. In Australia, Mr Cutcher says, it is not a trend that has taken off, with the Australian regulatory system favouring small-scale investors who may own one or two rental properties.
"That's been driving our private rental market at least for about the last 15 or 20 years, but we need to be careful that we don't just make an assumption that an institutional investor is necessarily going to give us a better rental market. We do need to think about what's going to be different from the perspective of the renter. Simply because their landlord is a large corporation may or may not be better. But we need to look at what the flaws in our current renting laws are, and let's plug those, regardless of whether we've got institutional investors or not."