Get all your news in one place.
100’s of premium titles.
One app.
Start reading
ABC News
ABC News
Business

Could rent control help to ease Australia's housing crisis?

Industry experts say Australia's rental affordability crisis won't be ending any time soon, but they disagree on the best way to solve the problem. (ABC News: John Gunn)

Families are living in tents, caravans, cars, hotels or sleeping rough as Australia's rental crisis continues to worsen.

With flooding in Queensland and New South Wales wiping out thousands of homes and rising fuel costs adding to household budget pressures, rental affordability won't change in a hurry.

While there's no easy solution, industry experts believe government intervention is needed, but to what extent?

One suggestion is rent control, a measure that divides opinion.

Opponents, like Real Estate Institute of Queensland (REIQ) chief executive Antonia Mercorella, say it won't address supply issues at the heart of the crisis.

"Each time you start to introduce more and more limitations on what one can do in relation to that [rental] property, it makes owning it far less appealing," she said.

But UNSW researcher Chris Martin believes the right form of regulation is needed in the short-term to improve rental affordability and keep people in their homes.

"It's been off the agenda in Australia for far too long and governments have been afraid of it," he said.

What is rent control?

Rent regulation, also known as stabilisation or control, can involve capping the maximum amount a landlord can charge a tenant.

But it isn't limited to that. 

There are varying models of regulation around the world — Ireland, Scotland and Spain have capped rent increases in tight markets, while some Canadian provinces set an annual rate of increase.

Chris Martin says it's time to reintroduce rental regulation. (Supplied)

Australia has also regulated rent at various points in the past 100 years, most notably during the World War II, when the Commonwealth fixed rents at 1940 levels.

Independent tribunals were tasked with administering variations until the states took over again in 1948 and wound back the measures until they were effectively ended.

Dr Martin, who specialises in rental housing affordability and tenancy law, says Australia would benefit from reintroducing a form of regulation, but only in the short-term.

He suggested a model where rent could increase but would be tied to the Consumer Price Index (CPI).

A similar model is used by the National Rental Affordability Scheme and is applied to 22,000 properties nationwide, but that scheme will end in 2026.

Why not try it?

Ms Mercorella is wary of imposing restrictions.

Antonia Mercorella says rent regulation won't address the supply issue at the heart of the housing crisis. (Supplied)

"More people are just making the decision that it's too hard to own an investment property and they're selling up, and that's actually contributing to the tight vacancy rates that we're seeing, because supply is so limited," she said.

"It's difficult to know whether, when we're through the pandemic, we'll see a default back to normal conditions, or whether this is the new normal.

"But I think we need to just acknowledge that there are a number of factors at play and we've got to be careful not to be viewing this through too simplistic a lens."

But Dr Martin said tying rent increases to the CPI should not deter "genuine investment".

"If you're a landlord who has bought an existing property and your rents are still allowed to increase, but they increase in line with the CPI, then that property is maintaining the value of the return on your investment," he said.

"Landlords who claim to need more than that have either overextended themselves or paid too much for the property and have contributed to the housing affordability problems that would-be home purchasers are facing, or they're out for something for nothing."

Ms Mercorella encouraged cooperation across all levels of government and said the REIQ supported an extension of Queensland's first home-owner grant.

"We know that there's a range of established housing for sale in regional Queensland but, of course, first time buyers are only able to access a grant for newly built premises or for the purposes of building something new," she said.

The Queensland Treasury said offering the grant on new dwellings supported "an increase in housing supply" and stimulated "activity in the construction sector" with flow-on support for jobs throughout the supply chain. 

Experts say Australia needs more social housing to address the rental crisis. (ABC News: Liz Pickering)

Social housing is common ground

Dr Martin and Ms Mercorella agree there is an urgent need for more social housing.

Australia is "at a historically low level of social housing", according to Dr Martin.

"Our private rental sector is not only unaffordable for people, but it's also chronically insecure with people selling houses … and that means tenants have to move as well," he said.

Last year the Queensland government committed $1.9 billion over four years to increase housing stocks, but the Grattan Institute believes the federal government should step in with a "social housing future fund".

Sign up to read this article
Read news from 100’s of titles, curated specifically for you.
Already a member? Sign in here
Related Stories
Top stories on inkl right now
One subscription that gives you access to news from hundreds of sites
Already a member? Sign in here
Our Picks
Fourteen days free
Download the app
One app. One membership.
100+ trusted global sources.