With the Federal Election approaching on 3 May, both Labor and the Liberal Party have confirmed they will retain current negative gearing and capital gains tax settings if elected.
REIWA President Suzanne Brown said the pre-election commitments from both parties offered welcome certainty for investors.
"Investors are often vilified, but they provide an essential service," she said.
"About 85 per cent of rental properties in WA are provided by private investors. While some own several properties, ATO data shows around 71 per cent own just one, and 19 per cent own two. Without them, the private rental market simply couldn't meet demand."
"Until there is another way of providing enough rental properties to meet demand, we need balanced and stable policy settings that support existing investors and encourage new investment."
Respondents to a recent REIWA housing survey indicated changes to property taxes (83 per cent) and legislation (74 per cent) would influence their decision to sell their investment property.
Changes to property taxes (82 per cent) and changes to legislation (62 per cent) would also deter potential investors from entering the market.
"Investors are highly sensitive to legislative uncertainty. They can and will exit the market if the settings no longer support long-term participation," Ms Brown said.
"For example, the COVID rental legislation enacted in 2020–21 was deeply unpopular with investors. It came after a long market downturn in which rent prices declined significantly and vacancies were high. The market was beginning to show signs of recovery in early 2020 before the COVID legislation banned rent increases and placed a moratorium on evictions.
"While other factors also came into play, this policy contributed to a mass exodus of investors from the market in a fairly short period of time, reducing rental supply and contributing to the rental crisis of the past few years."
"With the nation in the midst of a rental crisis, a sensible approach to rental reform, whether that's tax settings or tenancy legislation, is needed. Otherwise, we risk losing more investors from the market, deterring potential investors, and perpetuating the current situation."
The Greens have maintained their policy to abolish negative gearing and halve the capital gains tax discount. While the major parties have ruled this out, the issue may not be settled.
"It's encouraging that both major parties have ruled out changes to tax settings, but if a minority government is formed, there's a real possibility these policies could be revisited as part of post-election negotiations," Ms Brown said.
"REIWA will continue to advocate for investment-friendly policy in WA, and work with the Real Estate Institute of Australia to ensure national policy reflects WA's unique market conditions.
"Keeping these tax settings in place not only supports current investors but helps encourage future investment in the rental market, which is essential to improving supply and affordability."
