The Real Estate Institute of New South Wales slammed the state government's decision to extend the rental moratorium for six months, calling the move an "insult" to landlords.

New South Wales followed Victoria, Western Australia, and Queensland in extending the supposed rental support package for tenants and landlords. However, only Queensland has plans to terminate the eviction moratorium by the month's end.

Tim McKibbin, CEO of the Real Estate Institute of New South Wales, said 80% of landlords in the state are mum-and-dad investors and self-funded retirees who are significantly going to be affected by the decision.  McKibbin believes that this move, which coincides with the end of repayment holidays for most borrowers, will spur a "perfect storm" for many small investors.

"How are these mum-and-dad investors, many who have lost their jobs, going to cope? The banks have already made clear that the cold hard reality for many landlords is that they are going to have to sell their property to retire debt. The nest egg people have worked so hard to achieve, and have sacrificed so much for, will be lost," he said.

McKibbin said for the state government to assert that the extension is in support of both tenants and landlords is "insulting".

"To date, the government has provided the Tenants Union $13.5m to assist tenants. Not one cent has been provided to assist landlords. It undermines the absolutely critical role landlords play in society," he said.

The impact of the decision to landlords could ultimately affect tenants in the future, McKibbin said.

"In the end, tenants will suffer too. Fewer properties available for rent at this incredibly delicate economic time pushes more people onto the streets," he said.

A recent statement by Real Estate Institute of Western Australia (REIWA) shared the same sentiments about the extension of the ban on rent increase and moratorium on evictions.

REIWA said that these rental protections have already resulted in low vacancy rates in Perth. If the low vacancy rate environment is sustained, tenants are likely to face a sudden boost in rental costs.

"Low vacancy rates are normally a trigger for investors to enter the rental market which increases stock levels, however due to the Residential Tenancies Act, investors appear reluctant to buy," REIWA said. "If the current ban on increasing rents is lifted in March 2021, it will be reasonable to assume that landlords will have to significantly increase rents to match the market."

Harden Groves, deputy president of the Real Estate Institute of Australia, called out the Western Australian government’s decision, saying it has nothing to do with protecting tenants.

“To date, the conciliation service provided through the Department of Consumer Protection, set up to assist COVID-19 impacted tenancies, has had around 800 applications since the emergency laws came into effect six months ago. The lack of take-up for conciliation reveals there is little need for extending the emergency period,” he said in a report in the Real Estate Conversation.

Groves said the “lazy and reckless” decision could create a rental shock as supply remains tight.

“It is entirely reasonable to continue emergency support measures for COVID-19-impacted tenants. It is simply baffling that the extension has been applied to all tenancies,” he said.