As Australians are fighting to find a place to live in the current rental market, which is being marred by a shortage of affordable housing, the spotlight is on the government to make drastic changes. This is the message from Investor Finance chief executive and founder Adam Thomas who claims the industry is heading for crisis.

“Seeing that over 30 per cent of Australian families live in rental accommodation and rent is increasing at record rates this issue must be addressed as a matter of priority”, he said.

The major contributors to the rental crisis are the decline in new home starts, the subsequent increasing underlying demand (currently at 180,000+ homes) and the declining interest for property investors as a result the impact of inflation.

By addressing these issues, Thomas proposes a solution to the rental crisis in Australia, starting by instituting a subsidy for those who are prepared to partner with the Government to address a specific need in specific areas.

This will include introducing a First Time Investor’s Grant (FTIG) to inspire new investors into the market under strict conditions that would promote new home starts and provide affordable rental accommodation, and a Once-off Investor’s Grant (OIG), which would be provided to current residential property investors.

“The terms of the grants would restrict investors to new homes only in low vacancy / high demand areas and the house prices and rental returns would have to be relative to the current median prices. This would stimulate new home construction, focused in areas of greatest need, addressing the growing undersupply issue,” said Thomas.

In addition, it is proposed that the FTIG and OIG should be reimbursed to the investor via the Income Tax Variation Withholding system on a weekly basis to address the increasing shortfall investors are currently experiencing.

It is this shortfall between rental income and increasing holding costs (such as rising interest rates) that has been one of the main contributors to rental increases hurting the 30% of Australian families who rent.