Housing in Australia is in crisis. Australia is seeing the biggest rent increases in 14 years, putting millions of Australians into severe rental stress. We’ve got families sleeping in their cars, workers unable to afford a home near where they work, people being evicted from their homes because they can’t afford 20% rent increases and the governments just sitting on their hands when they have the capacity to intervene and stop the worst of this crisis. In the past 12 months rents in capital cities have grown seven times faster than wages.
Just as the Government coordinated a national response to the COVID19 health crisis, the Federal Government should intervene to coordinate an emergency nationwide response to the housing crisis that includes a rent freeze.
Under the Greens’ plan, National Cabinet would agree on national tenancy standards that include a 2 year emergency rent freeze. This would be followed by ongoing rent caps and an end to no grounds evictions, minimum standards for rental properties and giving tenants rights to make minor improvements to their homes.
With more and more people renting long term, we desperately need legislated protections against unfair, arbitrary evictions and skyrocketing rents.
How would a rent freeze work?
What is a rent freeze?
A rent freeze, a strict price ceiling, is similar to a rent cap but works differently. While a rent cap is an ongoing policy whereby rents can increase by a certain amount and under certain conditions, a rent freeze is a temporary measure that stops rent rises for a set period.
How would a nationwide rent freeze be implemented?
National Cabinet should coordinate a nationwide rent freeze, with each state and territory to implement it via their respective Rental Tenancy Acts. The Federal Government regularly plays a coordinating role on issues like industrial relations or energy, which would usually be up to individual states.
The Federal Government should include rent controls, minimum standards for rental properties and prohibition of no-grounds eviction in the National Housing and Homelessness Agreement with the states and territories.
How could a rent freeze work at the state level?
Our suggested model for a Rent Freeze Bill is:
- Rents will be frozen for all residential tenancies at the weekly amount of rent agreed upon or advertised on 1 August 2022, for a period of two years from the date of the bill being legislated
- If a new tenant starts a lease at that property after that date, the landlord can only rent the property at or below its 1 August 2022 level.
- If the property is a new build, is a new entry into the rental market, or was vacant on 1 August 2022, then the landlord can only rent the property at or below the median rent for that postcode.
- If a property has been recently renovated but was listed on 1 August 2022, then the rent must be the same as at that date. If the recently renovated property was vacant, the rental price must be at or below the median rent for that postcode.
- The relevant state or territory Residential Tenancies Authority will maintain a register of rents based on tenancy agreements and leases. Where a written contract is not in place for a tenancy, the Bill will require the landlord to declare the rental amount to the Residential Tenancies Authority.
- Anyone can dob in a dodgy landlord. If a tenant or a community member suspects a landlord is breaking the rental freeze, that person can apply to the relevant RTA to determine the rental amount, and the tenant or community member can take the landlord to their state or territory’s appeals tribunal. The RTA could also conduct random audits of rents at properties.
Why do we need a rent freeze?
Why is this necessary?
Australia is experiencing a rental and cost of living crisis and the government needs to act now. Too many Australians are one rent increase away from eviction or homelessness, and a two year rent freeze will give people the security they need to start getting on with their lives.
Since mid-2020 rents have been spiking, growing many times faster than wages - freezing rents will give wages and incomes time to catch up. Even under the Greens plan to freeze rents for two years, and cap rent increases at 2% every 2 years, wage growth won’t make up for the impacts of recent rent growth until 2029.
How much have rents been rising?
Across the country, many areas have seen the steepest annual increases on record - 17.9% in capital cities, 20.9% in Brisbane, 19.6% in Sydney, 17.5% in Melbourne and 13.4% nationwide according to SQM Research. A similar study of rents by Domain found house rents in cities around Australia, with weekly rents jumping $70 in a year to $650 in Sydney, increasing by $75 to $520 in Brisbane, by $70 per week in Canberra and $50 per week in Adelaide. Unit rents are also increasing strongly, above 10% in most capital cities, and the number of potential renters per listing is hitting a historic high.
The same report found similarly steep rent surges in regional areas. For example in Queensland, Toowoomba house rents rose by more than 15% in the last year, while Bundaberg residents face rent rises of more than 22%. The five-year data paints an even grimmer picture, with rents in the Central Highlands rising by more than 50% and rents in Gladstone nearly doubling. Similar surges have been seen by renters in regional NSW (Cessnock rents rising 20% in a year and 41% in 5 years, Bega Valley renters facing hikes of 15.2% last year and 47.2% in the past 5 years) and regional Victoria (e.g. in the past 5 years: Alpine region 77.8%, Bass Coast 50%, Corangamite 49%).
Why a rent freeze and not a rent cap?
We are in the middle of a housing crisis. Australia has seen the biggest rent increases in 14 years, with capital city rents rising seven times faster than wages in the last 12 months. An emergency two-year rent freeze is needed to allow wages and incomes time to catch up to rents. Rent caps would be appropriate as an ongoing measure after the rent freeze period to ensure out of control rent rises do not return.
How would a rent freeze affect the housing market?
Won't a rent freeze decrease housing production and supply?
Studies from the U.S. found that rent controls not only dramatically dropped rents, but also dropped house prices as landlords decided to sell their investment properties. This allowed working families, who would otherwise be stuck in the rental market, to buy a home.
Rent controls also had no real impact on housing construction. One 2007 study of 76 New Jersey cities with rent stabilisation found that rent control had little to no statistically significant effect on new construction.
Combining a rent freeze with a levy on empty residential properties would also reduce incentives for investors to leave their properties vacant and reduce supply.
Won’t landlords just leave their properties empty if they can’t make as much from rent?
Alongside a rent freeze, the Greens would advocate for scrapping negative gearing and capital gain tax concessions, ensuring that it isn’t financially viable for investors to leave their houses empty rather than rent them out.
Won't landlords just sell their properties, decreasing the rental supply?
One of the problems in the current housing crisis is that many people who want to buy their first home are locked out by ever-increasing house prices and landlords hoarding properties.
If landlords no longer want to take part in a controlled rental market, they can sell their investment properties and allow someone else to buy a home.
Shouldn't the government just build more social homes?
Absolutely – the government should and could do both!
Building social homes takes a long time. So even if we got the government to commit to mass building public housing today, we'd still need to pursue solutions to the housing crisis in the interim.
That's why we are calling for an emergency rent freeze, to immediately stop the rental affordability and eviction crisis. At the same time, we'll continue pushing for a mass build of social housing.
Will rent controls help stop gentrification?
Studies of rent levels and unit availability in New Jersey - the U.S. state with the most rent controls - found greater housing and neighbourhood stability in areas with controlled rent. Similarly, in San Francisco, renters in rent-controlled homes were 10 to 20 per cent more likely to stay in their homes long-term. Studies of controlled and uncontrolled rents in units in Boston found that having 10 to 12 per cent of rent-stabilized units in an area decreases the rents of non-controlled units by $33 to $44 (USD in 2017).
What if landlords cannot afford their mortgages if they can't increase the rent?
The Greens have already called on the RBA to pause interest rate rises given inflation is being caused by supply side shocks and massive corporate profits. This would give some relief to mortgage holders. Ultimately the housing system in Australia is designed to make massive profits for banks and property developers and the Greens believe whether you’re trying to pay off a mortgage or pay the rent, then you shouldn’t be screwed over just so a big bank can make massive profits.
Inflation has been going up too. Shouldn't landlords be allowed to recuperate those losses?
The inflation we are living through is indeed hurting a lot of people. Everyday Queenslanders are paying more for fuel, food, and groceries while wages have stagnated. According to the ABS, the Consumer Price Index rose by 6.1% over the last 12 months. While landlords are also facing inflationary pressures, the record rent increases across capital cities and regions of high rental pressure in the previous year have been nearly triple the CPI rise. This means landlords are pocketing the difference while working people have to pay more and more to keep a roof over their heads on top of skyrocketing grocery and fuel bills.
If a landlord feels that their rent return is not keeping up with inflation, they can sell their property and allow an everyday family to finally afford to buy a home.
Are there any downsides for renters?
A rent freeze won’t help me deal with the fact my rental property is unlivable, what will the Greens do about that?
We know that many landlords are already ignoring repairs, despite reaping record profits from their investment properties.
Alongside the rent freeze, the Greens are calling for the government to establish a National Standard of Renters’ Rights, to strengthen efficiency, accessibility and environmental standards for rental homes, allow tenants to make minor changes without permission, and prohibit no-grounds evictions.
What's to stop my landlord from evicting me?
Alongside a rent freeze the Greens will call for an end to no-grounds eviction nationwide.
Additionally, since we are backdating the rent freeze to 1 August 2022, and tying it to the property rather than the tenant, landlords will have no financial incentives to evict tenants and then advertise the property at a higher rent. We know that currently, under unregulated rent rises, many landlords are kicking tenants out so that they can get new tenants in for a higher rent. This greedy and opportunistic behaviour from landlords has been a significant driver of the homelessness crisis we see daily in the news.
And since landlords will only be allowed to charge the median rent for their postcode, landlords will have no financial incentive to renovate a property just to charge higher rents.
What would stop a landlord from increasing my rent by hundreds of dollars at the end of the two years?
At the end of the rent freeze period, rents will be capped such that they can only increase by a maximum of 2% every two years. This will give wages and incomes a chance to catch up to rents, and governments the time to pursue long-term solutions to the housing affordability crisis - such as building public and affordable housing, scrapping tax concessions for property investors and introducing longer leases and stronger protections for renters.
History of rent freezes
Has Australia ever had a rent freeze?
In Australia, we have a history of rent freezes during inflation. During the pandemic the Victorian Government froze rents for six months. Recently, Cherbourg implemented a rent freeze to deal with a mass influx of former residents returning home searching for affordable and culturally-appropriate housing. Curtin's wartime cabinet strengthened rent control in 1941, fixing rents at 1940 levels to help deal with inflation caused by wartime shortages.
Have other countries used rent controls?
Rent-freezes have a long history of use in times of rampant inflation. Currently, it's a popular method in several cities across the world. In London, Sadiq Khan has called on ministers to grant him powers to freeze private rents for two years. Until earlier this year, in British Columbia, their rolling rent freezes since 2020 meant landlords could not raise the rent by more than 1.5 per cent. In New York, the city government already has the power to freeze rent rises, and elderly residents can apply for a rent freeze anytime. In Scotland, rent controls are in place in designated ‘rent pressure zones’.