The cost of renting a room or a house in Australia has been skyrocketing. Around a third of Aussies rent, with fewer of us owning our own homes year after year, and the increasing costs of doing so is a major contributor to the cost of living crisis. This is why the Greens have been pushing for a nationwide rent freeze.
In fact, they’ve been so insistent on it that they’ve managed to stop Labor from passing their $10 billion Housing Australia future fund until the next Parliamentary session. This was even after Labor offered the Greens an extra $2 billion in spending on social and affordable housing. Pausing rent hikes is something Labor has previously said it won’t budge on.
“Unlimited rent increases should be illegal,” Greens Leader Adam Bandt said in a press release.
“The pressure is now on the Prime Minister and the Labor Premiers to act on a rent freeze and limit rent increases. This is a test for Labor. It’s wall-to-wall Labor across the mainland, so rent rises are their responsibility.
Unlimited rent increases should be illegal. This should not be a controversial statement.
When National Cabinet meets again, they need to freeze rent increases for two years.
After that, they should limit rent increases to 2% every 24 months.
— Adam Bandt (@AdamBandt) June 17, 2023
Rents in Australian capital cities have increased six times faster than wages over the past 12 months. The Reserve Bank, whose interest rate hikes have a flow-on effect in jacking up rents, has said they expect rents will increase by an average of 10% by the end of the year.
In response to the non-action in Parliament, the Victorian government has said that it will consider introducing rent caps if the Greens lend their support to the state budget.
It’s part of a range of measures, including boosting housing supply, taxing Airbnb owners, and those who leave homes sitting empty, that the Greens are proposing to deal with the housing issue in Victoria.
Talks are still underway, but Victorian Greens Leader Samantha Ratnam has said the party will continue to push the government to ease the burden on renters as a priority.
Rental affordability in Australia is the lowest it has been in nearly a decade, with a recent report by Savvy finding that 42% of low-income earners in the country are experiencing rental stress.
That the housing market is one vicious joke right now isn’t anything new, but whether the Greens’ hoped-for policy will actually fix the issue is another matter.
So, here’s what you need to know about a rent freeze in Australia as the government implodes over this vital issue.
What Is a Rent Cap, and What Is a Rent Freeze?
A rent cap or a rent freeze is a limitation on how much landlords can increase rent over a determined period of time.
Currently, there are few restrictions to stop landlords from increasing rents, although it varies from place to place in Australia.
A rent cap would be a percentage cap that would stop landlords from increasing rent above a certain figure. A rent freeze would be a total block on increases in the price of rent, a more extreme version of the former.
I know the easy answer for people is a rent freeze, but it's not the fantastic thing it's pushed to be. Short term, it's fine for renters, but when it expires, rents go up astronomically. A cap on the % of rent rise and limited to 12 months is smarter. #auspol.
— Random_Sarah 🖕🏼 (@random_pest) June 19, 2023
The ideas are not new and, indeed, have been employed in other parts of the world. Germany has had some form of rental control since the 1920s while Ireland, Scotland, Spain, and Canada impose rent caps in tight rental market regions.
Queensland had been toying with the idea but ultimately decided against introducing rent caps in April, despite the fact the changes they did implement were reported as such.
While they sound like a good idea on the surface, if you’re the one paying rent, economists say that they could have knock-on effects.
Joey Maloney from the Grattan Institute told the ABC in May that rent caps would make people reluctant to move house.
“If no-one else is moving, there’s not a flow of new housing for you to move into. So it increases the risk of homelessness,” he said.
Landlords, when asked, are obviously against the idea since, as some had argued, they need to turn a profit in order to undertake things like repairs in their rentals.
How Much Rent Increase is Legal in Australia?
Bizarrely, or possibly unsurprisingly, there are no laws to say how much a landlord can put up their rents by, save for in the ACT.
The bush capital is the only place where landlords are limited on how much they can increase their rent. ACT law states that a landlord cannot increase rent beyond 1.1 times the consumer price index rate of inflation.
This means that the renal cap in the ACT fluctuates depending on how inflation is doing. In April, CPI inflation was tracked at 6.8%, meaning a landlord would be within their rights to increase rent by 7.48%.
Outside of the ACT, there are no laws that forbid a landlord from jacking up the rent by $1000 a week or more. However, the effects of supply and demand come into play here, with tenants unlikely to pay such increases. Still, in the current rental market, it’s not uncommon to hear of landlords increasing their rents by above $100 per week. Some have even been caught out dishing massive rental increases in the hopes of pushing tenants out to attract higher paying ones.
Even with the laws in the ACT, rental caps there do not appear to have had a major effect on the price of renting. Australian Bureau of Statistics figures show that the ACT has the highest median weekly rent of any jurisdiction, at $560.
How Often Can Landlords Increase Rent in Australia?
Landlords are typically only allowed to increase the rent during your tenancy by agreement or if a rental increase option is written into a lease. Each state and territory has different rules about the frequency of rental increases.
In NSW, those on periodic leases can only see their rent increased once every 12 months. Landlords must give 60 days written notice of the increase. On fixed-term agreements shorter than two years, rent increases have to be incorporated into the lease and agreed upon beforehand.
In Victoria, the rules are similar. Periodic tendencies can only see their rents rise once every 12 months, with 60 days prior warning in advance. For fixed-term leases shorter than five years, rent increases have to be agreed upon in advance and can only happen once every six months. For those on fixed-term for more than five years, rent can only be increased every 12 months.
Queensland recently changed its laws so that people on periodic leases can only have their rent increased every six months, with 60 days prior warning. For fixed-term tendencies, rent cannot be increased unless it was stated in advance.
In WA, SA, and the ACT, rent on periodic tenancies can be increased every six months with 60 days warning. Rent can’t be increased on fixed-term agreements unless previously stated.
In Tasmania, landlords typically cannot increase rent during a tenancy. They are only allowed to do so if both the tenant and landlord agree to it and it is stated in the lease. If so, they can increase the rent once every six months, giving 30 days notice.
Outside of these rules, tenants have very few protections when it comes to rental increases. There is no agreed-upon figure for what constitutes a “reasonable” rental increase and, for the most part, landlords will point to market rates and inflation when justifying a rent increase.
Tenants can however file a review or dispute with their local housing authority, fair trading body, or consumer rights group if they think a rental increase is unfair.
“When interest rates come down, rents will stay high. Rents never go backward. If Labor doesn’t act now, they’re sleepwalking into a crisis that will see housing get less affordable, more people evicted and hundreds of thousands of people joining the housing waiting list,” Greens Housing and Homelessness Spokesperson, Max Chandler, has said about the recent stalemate over rent freezes.
“There are millions of renters staring down the barrel of eviction or financial stress if they cop one more massive rent increase, so just like Labor coordinated energy price caps they now must do the same and cap rents”.
Related: Meet the Parents Who’ve Planned to Bankroll Their Kids Into Property
Related:Â The 10 Aussie Suburbs Where House Rental Prices Have Gone Up the Most
Read more stories from The Latch and subscribe to our email newsletter.