Jim Chalmers is hoping Australia’s landlords will be kind-hearted enough to help ease the cost-of-living for their tenants by passing on rate cuts.

The Reserve Bank of Australia cut interest rates for the first time in more than four years on Tuesday, in a move that was immediately passed on by major lenders.

The 25 basis point reduction in variable home loan rates will save someone with an average mortgage more than $100 a month.

Just as the treasurer called on banks to pass on interest rate cuts to mortgage holders, he urged landlords with a mortgage to spare a thought for renters as well.

“We want to make sure that landlords take this into consideration as well,” Dr Chalmers told ABC Radio National on Wednesday.

“Renters are doing it tough as well, that’s why we’re providing two rounds of rent assistance help and all the other cost‑of‑living help that we are providing.

“Because we know as tough as it’s been for mortgage holders who get some relief yesterday, it’s also been tough for renters, and they are a big part of our thinking when it comes to our cost‑of‑living help.”

But Leo Patterson Ross, chief executive of the Tenants’ Union of NSW, doesn’t have high hopes for the better angels of property investors to shine through.

“That’s always the hope. It never really plays out in evidence,” he told AAP.

As rates were going up, landlords capitalised on housing shortages and increased rents higher than they otherwise would have to offset rising mortgage costs, Mr Patterson Ross said.

“But on the way down, there isn’t the same sort of incentive for a landlord to test the market and then see that rents are falling,” he said.

While the cost of rent had slowed in recent months, in reality many renters had been forced to downgrade to cheaper housing, further away from the city centre or move in with more housemates, he said.

That accords with data showing the average household composition was growing, CoreLogic economist Kaytlin Ezzy said.

The RBA also noted in its Statement on Monetary Policy on Tuesday that softening demand for housing was coming through as a result of an increase in average household size.

While some landlords had looked to pass on increasing interest costs to renters, average rents increased by just $472 a month compared to a $1483 increase in average monthly mortgage repayments, Ms Ezzy said.

“Arguably landlords have not passed on that full burden to renters,” she said.

“So I wouldn’t hold my breath for landlords to turn around and pass it on. But there’s definitely some kind-hearted souls out there.”

Jacob Shteyman
(Australian Associated Press)