While the majority of agents are optimistic about rental demand in 2010, there is mounting concern that the proposed changes to NSW’s residential tenancy laws could scare off some investors.
According to the latest Real Estate Business monthly straw poll, 79.6 per cent of agents believe rental demand will increase this year.
Of the 734 respondents, only 20.4 per cent said they didn’t think the rental market would improve.
First National Real Estate property manager Naomi Spiteri told Real Estate Business that the rental market had been performing well in the North Sydney area on the back of tight vacancy rates.
“We had 30 people at each opening last weekend,” Ms Spiteri said.
In addition to high demand, rising median house prices has priced many prospective home buyers out of the market, delivering high rental yields to investors.
According to Rismark, Australia’s houses reported a December rent yield of 4.1 per cent while units performed well with a 4.9 per cent yield.
But Ms Spiteri said that the pending introduction of the Residential Tenancy Act 2009 (NSW) would threaten the performance of the rental market.
“My concern is that the new legislation may deter some people from investing in property, because it restricts landlords’ existing rights,” she said.
Under the proposed Act, landlords will be forced to procure a written residential tenancy agreement (not necessarily at the tenant’s expense) or lose the right to terminate the lease.
Furthemore, landlord’s rights will be restricted with regards to accepting holding fees, contesting tenant sub-letting, and contesting tenant repairs and maintenance.