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Why do Tasmanian Residential Tenants Need Quality Standards?

Tasmania presently has the聽聽for rental standards in Australia.聽 In fact, there are no standards under the聽Residential Tenancy Act 1997.聽 Some say that renting a property is just like any other contract but we think:

1. that shelter is a basic need that requires extra protection.聽 It is a base from which we conduct the rest of our lives.聽 If you don’t buy that then…
2. people are being forced to take substandard housing that 10 or so years ago would have remained vacant when vacancy rates were considerably higher.聽 Vacancy rates are low in most of Tasmania and the market is not creating enough housing to keep up with demand.聽聽聽 If the free-marketeer in you is still not convinced, then…
3. landlords have little incentive to improve their houses in situations where the tenant pays the bills (eg heating).聽 This is known as the problem of split incentives.聽 But if you still think that market forces will compensate the tenant in this situation through lower rent…
4. most tenancies are entered into in the warmer months and at that point landlords know far more about the condition of the housing in terms of heating and weatherproofing than tenants.聽 Economists call this the market failure of asymmetrical information.

How will this affect investment in housing in Tasmania?

First may we say that every person deserves to live in decent shelter and that it is up to everyone to ensure that there are enough resources to make that happen.聽 Second, we think that investment will not be adversely affected anyway.聽 Tenancy Quality Standards will not be as high as those in the Building Code that regulates new housing, so there will be no direct impact on the supply of new housing.聽 For existing rental housing some properties will require modifications and that will require investment (therefore investment increases).聽 A possible effect could be that some landlords (including Housing Tasmania) may have money tied up in renovations that otherwise may been used to increase housing supply – but if the demand is there for new housing, then landlords should be able to borrow for it.

How will this affect rents in Tasmania?

There are two schools of thought about the im