Private residential landlords are unfairly demonised

The bottom line is that the first 8 per cent or so of any nominal capital gain on a property sale simply recovers transaction costs, whereas the transactions cost on most other forms of investments (especially shares) is next to nothing.

In addition to buying and selling costs, there are a lot of special imposts on landlords:

• Investors are generally slugged an extra 0.5 per cent p.a. in interest over and above the rate charged to owner-occupier borrowers. For investor borrowers, this can amount to thousands of dollars annually depending on loan size.
•  In many jurisdictions small flats (mostly owned by investors) are charged almost the same council rates as bigger units, despite having lower valuations and fewer occupants.
• In turn, units (favoured by investors) commonly pay disproportionately high council rates relative to larger (mainly owner-occupied) houses with more residents.
• Many councils, especially in Queensland and WA, now apply a "differential rates policy". In essence, they charge higher rates for a given property, if it is owned by an investor
• Then there is land tax on rental properties. It is not a coincidence that the ACT, which historically has had the most savage land tax, - up to 1.26 per cent of residential land value and no tax-free threshold at all, also has some of the country's highest rents.
• Victoria in 2024 notoriously increased its land tax rates up to a maximum of 2.65 per cent and reduced the tax-free land tax threshold to $50,000 and is now considered to have the highest land tax in the country. The Northern Territory is the only jurisdiction not to charge land tax.
• Queensland in 2022 (unsuccessfully) sought to tax landlords based on their total Australian land holdings, not just those owned in Queensland. The measure got shelved because other state governments refused to cooperate.
• Many state governments have increased investor land tax rates, with larger increases for overseas investors and owners leaving properties vacant.
• Changes to income tax law have also penalised landlords. From 1 July 2017 property investors could no longer claim travel expenses incurred while inspecting, maintaining or collecting rent from rental properties.
• From 1 July 2017, new rules also abolished deductions for second-hand depreciating assets in residential rental property, so that landlords now generally cannot claim a deduction for what is a real and genuine cost.
• State and territory governments of all varieties have failed to rein-in stamp duty charges on property transfers (except in the case of concessions for first home buyers). In NSW, for example, the first three stamp duty thresholds for properties are $17,000, $36,000 and $97,000. What can you buy at such prices these days? Most houses now attract stamp duty rates of 4.5 to 5.5 per cent at the margin due to bracket creep.
• State and territory governments have also legislated a list of standards that rented premises must comply with. The long list, which varies by jurisdiction, include smoke alarms, electrical safety, gas safety, swimming pool safety, etc. The compliance costs (including safety certificates) are borne by landlords and eventually get passed on to tenants.
• Overall, landlords pay a much higher level of taxes and charges than most people realise.

State governments, especially Labor state governments, have also made life difficult for property investors in other ways. Arguably the balance of tenancy laws has been shifted unreasonably in favour of tenant protection, despite bad tenants often costing landlords large amounts of money.

It has become increasingly difficult and time consuming for landlords to remove bad tenants (e.g. those who don't pay their rent, damage the property, engage in anti-social behaviour). Several states and territories have moved to also force landlords to accept pets (potential damage by dogs being the big issue) with many states also banning "no grounds evictions", when leases expire.

From May 2025, NSW tenants will be able to apply to keep a pet in their rental home, with owners only able to refuse for specific reasons, such as the owner living at the property or failure to comply with local council laws. Owners will now also be required to provide a valid reason to end all lease types. Longer notice periods will apply for some leases. On the other hand, renters who find a new property after receiving an eviction notice will have improved rights to end a lease early.

Almost all these "reforms" brought in by state Labor governments tilt the balance unreasonably in favour of tenants.

The biggest problem faced by landlords is that rental bonds (generally capped at four weeks rent) regularly prove inadequate to cover rental arrears and damage by bad tenants. Problem tenants, who cause damage, often stop paying rent and can end up running up many weeks of arrears.

It can be very difficult to evict a problem tenant, who may continue to cause damage. In state tenancy tribunals it is not uncommon for landlords to encounter members, who are very sympathetic to errant tenants. Landlords and their agents are responding by becoming increasingly careful about who they let into a property.

It can take weeks to obtain a tribunal or court hearing. The process involves significant costs and awards may leave landlords substantially out of pocket. For example, tribunals are generally reluctant to order tenants, who break their leases, to pay more than four weeks rent. (A property vacated before Christmas can take until the end of January to re-let. It will take much longer if tradies are needed to fix damage.) In any case, offending tenants often abscond or have little means.

I have personally had bad experiences with dogs in my rentals.

On one occasion I gave permission for a (high-income executive) tenant to keep a "stay outside" dog. (I have learnt through experience that such conditions are very difficult to monitor or enforce.) The dog subsequently caused $6000 worth of damage to the polished hardwood floors inside the large residence. On another occasion a tenant kept more than the single dog approved, and the dogs dug holes all about the garden. Cats are less destructive but on one occasion the single approved cat grew to about nine or ten because the tenant took in strays. Another tenant kept an unapproved dog in a second-floor unit.