I will be the first to admit I have had some bad ideas. Definitely a few decisions in my twenties I could have happily skipped, though social media is of course there to remind me every year should I ever forget. When it comes to really bad ideas though, the idea of a blanket rent-freeze policy for residential properties across Australia, as recently proposed by one political party, well that one is up there.
Undoubtedly well-intended, the proposed policy would see rents frozen for the next two years, ostensibly to allow wages to catch up to the higher price of housing. This freeze would then be followed up by a subsequent rental increase cap of two percent every two years.
There is no question that the lack of availability in the rental market, seemingly nationwide, has seen rents increase significantly in the past two years. Higher rents among higher cost of living has also seen an affordability crunch which has pushed some people out of secure and appropriate housing and into some pretty dire situations. In this context, if you squint a little, you can almost see the idea of limiting rental price growth as being the way to getting things more affordable.
Unfortunately, however, that takes a pretty simplified view of the problem and is pretty much guaranteed to alienate the exact people you need to get through this crisis – private landlords. Because it is the private sector that provides the majority of housing and it will be the private sector that will need to provide the majority of new housing needed – supply to meet that rampant demand for safety, security and a roof over your head.
Australia needs more housing full stop. Both affordable and otherwise. When relying on private investment we need to keep stock of the fact that it is just that – an investment. And it needs to provide a competitive return compared to shares or any other investment product. If the income is artificially capped, against a backdrop of rising outgoings (for example, higher rates for investors slated in many Council areas and rising interest rates), then existing owners are going to rethink their strategy, and those all-important new investors, that would otherwise be building the new homes we need, are also going to look at alternative options. If affordability is the goal, then there have been successful government programs to subsidise rent or provide incentive to landlords to do so.
Tom Quaid is the REIQ Zone Chair for Cairns