Podcast: Housing crisis advice that Albo can’t take

The housing crisis is still uppermost in many minds but there’s a new twist with a former Mirvac boss, now an advisor to the government, telling the Prime Minister to do something he knows is right but is political poison.
Then there’s a new way of investing in rental properties without becoming an evil landlord (or lady).
Airbnb founder Brian Chesky “airbrushes” the global holiday letting monster, saying he wishes he’d never let it loose to take people’s homes. (Pauses to sniff away a tear.)
And Sydney MP Alex Greenwich wants to make life just a bit easier for renters.
Also, before we go, next week we’ll have the first part of the recent Lawyer in the Hot Seat webinar here as a podcast. Enjoy.

Transcript in full

Jimmy  00:00

I’m back; sitting opposite you, not on the other side of the world, for a change.

Sue  00:05

Fantastic! Hopefully, you’ll stay in Australia for at least another couple of weeks, Jimmy. 

Jimmy  00:10

A couple of weeks, if they’ll still have me.

Sue  00:14

I think you probably won’t want to go away for a little while now.

Jimmy  00:17

No. Three international flights in as many months is just too much.

Sue  00:23

Well six, if you’re talking about  going there and back again…Too much.

Jimmy  00:28

Alright, today; what have we got, Sue?

Sue  00:30

We’re talking about Susan Lloyd-Hurwitz, who was the head of Mirvac, talking about how she feels we can solve the housing crisis. And we’re talking about a different way of investing in properties, to try and solve the rental shortages. We’re talking about Airbnb; an interesting admission from Airbnb. And we’re talking about Alex Greenwich in Sydney, who is proposing a change to tenancy bonds to help renters, as well.

Jimmy  00:55

Okay, that’s a lot to be getting on with; we’d better get down to it. I’m Jimmy Thomson, I write the Flat Chat column for the Australian Financial Review.

Sue  01:03

And I’m Sue Williams and I write about property for Domain.

Jimmy  01:06

This is the Flat Chat Wrap. 

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Jimmy

Susan Lloyd-Hurwitz; I know that name. Where do I know that name from?

Sue  01:25

She used to be CEO of Mirvac. She was there for a number of years and she was incredibly innovative, especially in the sustainable area. And also, she started a lot of build-to-rents. I mean, Mirvac was the first developer to go into build-to-rent in a big way. She was very convinced that that was a way of the future. She’s an extraordinary woman, really. She’s now left Mirvac and she’s now advising the Prime Minister, on how to fix the housing shortage. You kind of think they’ve chosen a good expert this time, really.

Jimmy  02:02

And what kind of things is she suggesting?

Sue  02:06

She says she favours curbs on negative gearing. 

Jimmy  02:09

Oooh!

Sue  02:10

You know, that poison chalice again. And capital gains tax deductions.

Jimmy  02:16

Curbs on them? 

Sue  02:17

Yes. It’s kind of different to what Anthony Albanese has been saying for a while. 

Jimmy  02:24

Opposite, almost.

Sue  02:25

Yes. He ruled out those kind of policies, after Labor lost the 2019 election. But now, she’s kind of reviving that idea, I think. She believes that negative gearing and capital gains tax concessions do contribute to Australians investing in real estate for capital gains, rather than for income. And she thinks they could help the limits around those concessions. Because we don’t really want speculative investment in real estate, for capital gains purposes. We want stabilised income gains for investors and that would create a less volatile market, as well.

Jimmy  03:07

I mean, the thing that occurs to me is (while I totally agree with getting rid of negative gearing), that negative gearing exists so that people can basically, take less in rent than they pay in mortgages. Isn’t this going to push rents up even further, or will it push house prices down?

Sue  03:30

One would imagine it would push prices down a bit, really. Negative gearing in lots of ways is quite crazy. I mean, why would you make an investment on which you plan to lose money and then recoup the money from elsewhere? That money that you’re recouping could be used by the government to invest in more housing. I think at the end of the day, the only thing that’s going to solve this housing crisis is if the government suddenly becomes much more proactive about building houses themselves; building apartments themselves. Working with developers, and revising much of the red tape, which is strangling, I think, lots of developers. We need (obviously), proper controls around developments. Somebody I know is trying to build an apartment in a very, very small complex, somewhere in inner Sydney. He’s been waiting two-and-a-half years to get an answer to his DA, to his development application. I mean, that seems to be crazy. Why can’t that be rushed through? Especially today, when we need more apartments.

Jimmy  04:35

But if you’re talking about inner Sydney, you’re talking about lots of NIMBYs around, saying “we don’t want this.”

Sue  04:43

But in the inner-city, they’re kind of ‘in-fill projects,’ so they’re converting old warehouses, or factories, or unused space into housing and hopefully, making much better use of that space. You know, if it’s smartly-designed and well-located, that’s going to be really popular. But yeah, nimbyism!

Jimmy  05:03

Well, anything that hasn’t been burned down by small boys, is  game for being renovated and turned into apartments, I think.

Sue  05:12

Because Susan Lloyd-Hurwitz has been saying as well, we just don’t build enough places for people to live in the right places. I mean, we are looking much more now at building apartments, over rail stations, over shopping centres; that kind of thing. Which is great and people who live in those kinds of places love it, because it’s so convenient. We just need to do more of that.

Jimmy  05:34

I mean, there’s a massive plan to build a huge complex over Central Station, I think. It would  be handy for transport, but then you’re already there. See how that one pans out. I’ve got a feeling it’s like the fast rail from Brisbane to Canberra and Melbourne; it’s a great idea that never gets off the ground. When we come back, we’re going to talk about how you could maybe invest in property, without actually owning a flat or a house. 

[MUSIC]

Sue  06:17

So Jimmy, what’s this new idea and where does it come from?

Jimmy  06:20

Well, actually, it’s not a very new idea, because I remember floating that idea on this very podcast. 

Sue  06:26

Oh, so it was your idea originally? 

Jimmy  06:27

It was my idea; pretty much my idea. Evan Thornley, a former Victorian MP, and now a member of the board of a company called LongView. He is taking a ‘long view’ to property development and property investment, saying what we need is more companies that are set up to develop property and invest in property, so that investors can invest in those companies, without actually owning a property themselves.

Sue  07:09

I think that sounds a great idea, because I’d like to have a stake in some investment property, but I don’t want to spend a million dollars on an investment unit.  I’d be happy to spend (if I had it), $200,000, or $100,000, or $50,000, on buying shares in an investment property. That’s the idea, isn’t it really?

Jimmy  07:28

Yes. And also, when you’ve got a big company, like LongView, or whatever the companies are that they’re suggesting, going along to a developer and saying “okay, we want an eight-storey building with 60 apartments in it. And by the way, don’t even dream about cutting corners on the quality, because we’re not going to stand for it.” That’s a lot different from Joe Blow turning up and saying  “I want to buy a property off-the-plan,” and then hoping that he doesn’t get screwed on it.

Sue  07:59

That’s right. So those companies will be able to check the quality and they’ll be in a much better position. I mean, developers won’t try and…

Jimmy  08:08

Mess around with it, because if they do a good job, then that same company is going to come back and say “okay, we’ve got another project here; how abaout it?” It sounds like a great idea; I wonder if they’re also talking about moving into existing properties and taking them into their portfolio?

Sue  08:26

Oh, that’d be interesting, too. I mean, a lot of people want to invest in build-to-rent. It’s kind of interesting, because it’s institutions that are investing in build-to-rent, really. So you can take shares in those institutions, or leave your money with those, but you can’t actually physically invest in build-to-rent.

Jimmy  08:48

You could also find that they’re investing in things that you don’t want, like puppy farms and logging.

Sue  08:56

Logging ancient forests… I think it’s a really good idea. I mean, it would require a huge overhaul of the system, but why not?

Jimmy  09:07

So that story was in the Sydney Morning Herald. Hopefully, if you have a subscription, you can read it. If you don’t have a subscription, you can use up your free story allowance to have a look at it. But I think it’s a really interesting concept. When we come back, we’re going to talk about the confession-admission-apology from the founder of Airbnb. That’s after this. 

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Jimmy

Okay, everybody knows by now that I have a track record of dumping on Airbnb. 

Sue  09:47

For good reasons.

Jimmy  09:48

I think they know this too. I think they’ve got my name. The red flag comes up against my name, every time I even look at a property somewhere. And the reason for that is basically, because of what they’ve done to so many cities around the world, by pretending that what they’re selling is sharing your home; like renting a room in your home to a visitor, so that they can come and have a nice time and you can show them around and show them your favourite cafe. And it’s turned into this monstrous…

Sue  10:19

Money-making  operation.

Jimmy  10:21

Which has basically emptied out flats in cities all over the world… Created what’s called a doughnut effect in the middle of a lot of cities, where all the people who live and work (or used to live and work there), have had to move out, because they’ve been kicked out of their flats, so they can go on Airbnb, so thhat the landlord can make a lot more money. Now recently, Brian Chesky was interviewed for a short-term rental magazine thing (I think it’s called Skiff or something; I’ll put the link up.) This was picked up by a travel writer at The Sydney Morning Herald, Lee Tulloch, who said that he regrets the way Airbnb has turned out, and they’re changing it all… They’ve got a new thing, where they’re promoting what was their original idea, which is staying in someone’s room in their house, and everything’s going to be nice and lovely again, and he’s a bit guilty about it all. She used the phrase that the brand Airbnb has become ‘poisonous’ in certain areas, which I think is true. Certainly, they have a problem in Paris and London, and they’re trying to find ways to restrict it. What do you think, Sue? It’s like ‘sports-washing,’ but I think you said it’s airbrushing.

Sue  11:40

Look, I think when Airbnb started up… 10-years ago, I stayed in somebody’s house; it was their apartment in Melbourne, when I was doing the book on Father Bob McGuire (the late Father Bob McGuire). I stayed with her for a couple of months in Melbourne, when I was researching that book and doing a series of interviews, and it was fantastic. You know, we’d often have dinner at night together. She’d tell me the good places to shop and to go, when I had time off. We’d eat breakfast in the morning and her father got sick halfway through and she just left me in the place on my own and asked me if I’d put out the bins and all that kind of stuff. I was very happy to do that and we became really good friends. That was a fantastic experience of Airbnb and I’ve never had a great experience since really, because the system has changed so completely. It’s very sad. I mean, that was a great way for things to to work out.

Jimmy  12:39

I’ve had the opposite experience… When I was researching my last book, I went to Saigon. I found this apartment, so close to the cathedral. I mean, it’s like half-a-block from the cathedral, so it couldn’t be more central. But it struck me after a couple of days that normally, Vietnamese people are so friendly and they’ll always say hello as you pass. It was kind of like a laneway; you know, like a horseshoe-shaped building and they’ve got a gate at the end. In the morning, they’d all come out and they’d have their little stalls for food and things like that and they never smiled. Not once; all the time I was there. And the second day, somebody started renovating the flat next door and it was quite obvious… In fact, by the end of the week, somebody had moved in. It was being converted to Airbnb. And the other people who were still there, were looking at me and thinking “yes, we’ll be next; we’re going to lose our home because of people like this guy.” 

Sue  13:41

How uncomfortable. 

Jimmy  13:42

I moved out. And the funny thing is; this is why I think there’s a red flag against my name… I wrote to the host, and said ‘look, I’m not looking for a refund. I’m moving out; I’m gonna go and stay in a hotel, because this is really uncomfortable. Just to let you know, you’re going to have to come and pick up the keys.’ Within about 20 minutes. my phone pinged and it was a refund from Airbnb and within the hour, an Uber had arrived to take me to the hotel, at their cost. 

Sue  14:16

That’s strange, isn’t it? 

Jimmy  14:18

It’s very strange; I don’t think everybody gets that treatment. That experience made me very wary. It made me realise, in a very real sense, how Airbnb is getting ordinary people kicked out of homes. You know, families; we’re talking about families…There was two or three adults and two or three children, living in this fairly small flat and obviously, they’re going to have to move out of the city, because somebody wants to put tourists in their property.  So Mr. Chesky, your airbrushing has come a bit late, mate. What were you thinking? Didn’t you notice that your company was getting people kicked out of their homes? And here’s another thing; one of the things he could have done as CEO of Airbnb, is say “we’ll open our books, we’ll let academics, or lawyers or whatever, look at our books and see how many apartments; whole homes and apartments we really are renting out.” They could have done that years and years ago, but they always use this fairly pathetic excuse, that there was privacy issues involved. It’s nice to come to the party at last, but he’s not really making any changes. He’s actually just expanding the way (backwards; he’s doing a reverse expansion), Airbnb was supposedly intended… I think actually, genuinely intended it to be, to begin with, but maybe put some of those squillions that you’ve earned into helping the people that you’ve forced out of their homes. That would be a nice thing to do, wouldn’t it?

Sue  15:16

It’s horrible, isn’t it?  It’s really interesting; in places like Noosa Heads, unit prices have gone up by the most out of the whole country, over the last five years. The median price has now gone up 179.5% in five years. And I was talking to a real estate agent and saying why has it gone up so much? I mean, obviously, during COVID, lots of people went there for a tree change; it’s a really popular place. And one of the big things he said is that the Noosa town plan changed and the council banned a lot of houses from being used on short-term renting platforms like Airbnb. So then people stopped buying houses and instead just bought apartments to use for Airbnb. So you just transfer the problem from houses, to apartments, as if apartment dwellers are second-class citizens and it doesn’t matter so much. 

Jimmy  16:58

But in fact, a lot of councils have; when they give permits for apartment blocks… Even in Queensland, you get a certain permit that says ‘this is not for short-term letting,’ but the council’s don’t enforce them. What they do have though, is their hotline. You’ve got a number and you’ve got to register your property, if you’re going to put it on short-term rentals. The neighbours are given a number and if there’s a disturbance, they call that, but you’ve also got to register as the host… Somebody who lives within 30-minutes of the property, who will come and investigate, if there are any complaints. So what happens is, you phone the hotline, the hotline phones the registered person, they come and check out what the noise is, but the next day, the people running the hotline phone the people who made the complaint and say “okay, what happened?”

Sue  17:57

Sure. And are you satisfied with the resolution? 

Jimmy  17:59

I don’t know what happens after that. I’d love to hear from somebody in Noosa, if this is actually working or not, but it sounds like a good idea. And before we go, talking about renters; our friend, Alex Greenwich, the MP for Sydney, has been involved in formulating a new law for the State, to do with renters. And what they’re trying to get passed, is a law that allows bonds to be transferable. So you go into your first apartment as a renter, you put down your bond money, and that gets registered somewhere. And then if you want to go and live in another apartment, instead of having to go…

Sue  18:42

Claim your bond back…

Jimmy  18:43

And hope that the landlord isn’t a dickhead (and isn’t going to claim that you damaged the property, when you didn’t), and then you get some of your money back and then you’ve got to put it in again. He’s saying we want this law, where you put your bond in once and it transfers, from property to property.

Sue  19:02

It makes perfect sense, doesn’t it? You think, why didn’t that happen before?

Jimmy  19:07

Because it’s for tenants. If apartment owners are second-class citizens, then tenants must be way down the scale, as far as politicians are concerned.

Sue  19:22

But that’s a great idea, Alex. Well done! 

Jimmy  19:24

And we hope it gets through. Well, we’ve got a Labor government; I wouldn’t call them socialists by any stretch of the imagination… They’re kind of slightly less right-wing than the previous guys. But this makes perfect sense and it will just make life a little bit easier for people who are struggling to find somewhere to rent. Okay. Have we solved enough of the world’s problems? 

Sue  19:28

We’re on the right track. 

Jimmy  19:39

Sue, thank you very much. Thanks for letting me come home. Thanks for picking me up from the airport

Sue  19:58

Thank you for coming home!

Jimmy

and thank you all for listening.

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Thanks for listening to the Flat Chat Wrap podcast. You’ll find links to the stories and other references on our website flatchat.com.au. And if you haven’t already done so, you can subscribe to this podcast completely free on Apple podcasts, Google podcasts, Spotify, Stitcher, or your favourite podcatcher. Just search for Flat Chat Wrap with a W, click on subscribe, and you’ll get this podcast every week, without even trying. Thanks again. Talk to you again next week.