{"id":21485,"date":"2023-06-22T01:06:50","date_gmt":"2023-06-22T01:06:50","guid":{"rendered":"http:\/\/www.16news.com.au\/?p=21485"},"modified":"2023-06-22T01:06:50","modified_gmt":"2023-06-22T01:06:50","slug":"would-you-benefit-from-a-rent-freeze-q","status":"publish","type":"post","link":"http:\/\/www.16news.com.au\/index.php\/2023\/06\/22\/would-you-benefit-from-a-rent-freeze-q\/","title":{"rendered":"Would you benefit from a rent freeze? Q"},"content":{"rendered":"\n

Mandated rent freezes, one of the rental crisis solutions proposed by the Australian Greens, seek to address the urgent needs of renters. The solution involves introducing an immediate two-year emergency freeze on rent<\/a>, followed by the implementation of a rent cap where rent increases are capped within certain limits. <\/p>\n\n\n\n

This means that regardless of market fluctuations and rising interest rates, tenants could find solace in knowing their rent payments will remain relatively stable and stress less about their financial situation.  <\/p>\n\n\n\n

\u201cRent increases have been getting much larger and more common,\u201d said Dr Chris Martin<\/a>, Senior Research Fellow in the City Futures Research Centre<\/a> at UNSW Arts, Design & Architecture<\/a>. <\/p>\n\n\n\n

How much have rents gone up? <\/h2>\n\n\n\n

Research has shown that the national average of asking rents has increased by 11 per cent in the last 12 months. Renters in Sydney have seen the median average weekly rent for new tenancies soar by 20 per cent<\/a> over the past year to $650 per week<\/a>.  <\/p>\n\n\n\n

\u201cWhen properties are re-let, a new tenancy commences and 95 per cent<\/a> are getting a higher rent than for the previous tenancy,\u201d said Dr Martin.<\/p>\n\n\n\n

\u201cMost are going for at least 10 per cent<\/a> more than previously let. About 75 per cent<\/a> of properties with existing tenancies have recorded rent increases over the past 12 months, and about 25 per cent<\/a> are getting increases of more than 10 per cent<\/a>.\u201d <\/p>\n\n\n\n

With statistics such as these, Dr Martin said a rent freeze, and a subsequent rent cap, would protect existing tenants from rents rising to similar levels.  <\/p>\n\n\n\n

Dr Martin explained that significant rental increases are a crucial price signal to property owners. This should encourage the supply of new rental properties, ideally from sources outside the existing stock, such as newly constructed dwellings or currently unused and underused properties like second homes and Airbnb listings.  <\/p>\n\n\n\n

\u201cThe goal is to expand the rental market by increasing available housing options.  <\/p>\n\n\n\n

\u201cThat price signal is currently going into the existing stock; as landlords increase rent prices, tenants are being pushed out of their existing homes. That brings the property to the market but also means there\u2019s another tenant looking for a lower-cost rental property or are being made homeless.  <\/p>\n\n\n\n

\u201cBy regulating rent increases for existing tenants, the price signal from the new tenancy market is directed into sources of genuine new supply,\u201d said Dr Martin. <\/p>\n\n\n\n

This approach aims to ensure that the rental market expands in a sustainable manner while simultaneously addressing the immediate needs of tenants facing displacement and housing instability.  <\/p>\n\n\n\n

Rent freeze policy pitfalls  <\/h2>\n\n\n\n

While the rent freeze policy is designed to alleviate financial stress on renters, crucial questions remain about the impact on landlords.  <\/p>\n\n\n\n

With interest rates on the rise<\/a> and mortgage repayments increasing, the policy could have serious implications for homeowners.  <\/p>\n\n\n\n

Dr Peter Swan<\/a>, a Professor in the School of Banking & Finance at UNSW Business School, said the rental crisis would become \u201cfar worse for tenants and landlords\u201d if the policy came into force.  <\/p>\n\n\n\n

\u201cWhile it is true that tenants who are not evicted may gain temporarily, tenants as a whole lose as rental accommodation is withdrawn, fewer new places are provided, and maintenance of rent-controlled housing deteriorates.   <\/p>\n\n\n\n

\u201cRental rates rise due to restricted supply, while landlords with sitting tenants suffer. Eventually, a black market evolves with \u2018protected\u2019 tenants unable to move and with the rampant use of sizeable \u2018key money\u2019 paid by prospective new tenants.   <\/p>\n\n\n\n

\u201cThe latest version of the Residential Tenancies Act 1997<\/a> in the ACT reveals that pre-existing rent control in Canberra has doubled in its severity in 2019.  It now limits rent increases to no more than 10 per cent<\/a> above the increase in the rent component of the ACT Consumer Price Index (CPI)<\/a>. It was previously 20 per cent.   <\/p>\n\n\n\n

\u201cAs a result, it has left some landlords no option but to sell their properties, leaving evicted tenants back on a tighter rental market.\u201d <\/p>\n\n\n\n

Prof. Swan explained how another example can be seen in the Californian Tenant Protection Act<\/a> of 2019, which imposed a 10 per cent<\/a> cap on rental increases.   <\/p>\n\n\n\n

According to a 2018 analysis by the National Bureau of Economic Research (NBER)<\/a> on San Francisco legislation, rent control resulted in a 15 per cent reduction<\/a> in rental supply as landlords converted their properties to exempt building types, subsequently causing a 5.1 per cent rise<\/a> in rents.  <\/p>\n\n\n\n

\u201cThe repercussions of these circumstances result in a significant portion of tenants being at risk of eviction and will face the challenge of re-entering an increasingly competitive rental market, where they may be required to pay, effectively, a substantial increase in rent in the form of a bribe to secure a new place.  <\/p>\n\n\n\n

\u201cInterest rates will persistently climb until we align with the rates of countries like the US, UK, and others. As a result, these escalations will lead to even higher rental prices and if restrictions were imposed on these unavoidable increases, the current inventory of rental housing will diminish even more,\u201d said Prof. Swan.  <\/p>\n\n\n\n

A possible solution: adopting other rental practices  <\/h2>\n\n\n\n

The rent freeze policy has both positive and negative implications, and it has prompted the need to examine the delicate balance between the needs of renters and the challenges faced by landlords.  <\/p>\n\n\n\n

\u201cThe solution to the crisis lies in boosting the housing supply. However, governments and councils commonly exhibit significant reluctance when it comes to permitting new developments or streamlining bureaucratic processes plagued by excessive regulations and prolonged delays,\u201d said Prof Swan.  <\/p>\n\n\n\n

However, governments and councils often hesitate to approve new developments or streamline bureaucratic processes, which can create housing supply bottlenecks. This begs the question: should we turn to international renting practices and consider alternative methods?  <\/p>\n\n\n\n

Dr Martin said: \u201cAll these variations on rent regulations should be on the table. <\/p>\n\n\n\n

\u201cScotland implemented a rent freeze in September 2022, and in April 2023 moved to a rent cap of 3 per cent, in most cases. For years, most Canadian provinces have had rent caps – called \u2018guidelines\u2019 there – that limits rent increases to a certain percentage rate set by the government. <\/p>\n\n\n\n

\u201cIreland has a system of \u2018rent pressure zones\u2019, if a local government area records increases in median rents above a certain threshold for successive quarters, a cap kicks in, currently 2 per cent, and not more than once in 12 months.\u201d <\/p>\n","protected":false},"excerpt":{"rendered":"

Mandated rent freezes, one of the rental crisis solutions proposed by the Australian Greens, seek to address the urgent needs of renters. The solution involves introducing an immediate two-year emergency freeze on rent, followed by the implementation of a rent cap where rent increases are capped within certain limits.  This means that regardless of market fluctuations … Continue reading “Would you benefit from a rent freeze? Q”<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[],"class_list":["post-21485","post","type-post","status-publish","format-standard","hentry","category-aussie"],"_links":{"self":[{"href":"http:\/\/www.16news.com.au\/index.php\/wp-json\/wp\/v2\/posts\/21485","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/www.16news.com.au\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/www.16news.com.au\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/www.16news.com.au\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/www.16news.com.au\/index.php\/wp-json\/wp\/v2\/comments?post=21485"}],"version-history":[{"count":1,"href":"http:\/\/www.16news.com.au\/index.php\/wp-json\/wp\/v2\/posts\/21485\/revisions"}],"predecessor-version":[{"id":21486,"href":"http:\/\/www.16news.com.au\/index.php\/wp-json\/wp\/v2\/posts\/21485\/revisions\/21486"}],"wp:attachment":[{"href":"http:\/\/www.16news.com.au\/index.php\/wp-json\/wp\/v2\/media?parent=21485"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/www.16news.com.au\/index.php\/wp-json\/wp\/v2\/categories?post=21485"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/www.16news.com.au\/index.php\/wp-json\/wp\/v2\/tags?post=21485"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}