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Ahead of this week’s Jobs and Skills Summit, the Greens is urging the Albanese government to impose a nationwide rent freeze for two years, saying the rental affordability issue should be elevated to national cabinet.
And while, in theory, a rent freeze sounds like a good idea, I believe it’s a property market disaster waiting to happen.
If there’s a rent freeze for two years, property investors will sell off properties in their thousands. And when they’re sold, they’ll be bought by owner-occupiers and not used as rentals, so this begs the question, how will this help people who are already desperate for rentals?
This is not the answer; landlords have already endured rent freezes during the height of the pandemic and now they’re experiencing interest rate hikes, which are affecting their investment cash flow.
The real solution is to increase rental supply.
The government needs to fast-track a build-to-rent scheme, where apartment or mini-estate developments are created specifically to be rented.
Currently, there is a rental shortage crisis in every regional town and in every capital city. This is not a big city problem; this is a national problem, and it’s getting worse every week.
In my opinion, the government has not acted quickly enough to make sure there are incentives for buyers to invest in property.
This lack of rental supply speaks to very poor planning and governments taking way too long to respond and make this a priority. There has been way too much talk and not enough action around this issue.
Fixing rents for two years will create an absolute disaster, which will, in turn, create a social crisis and a massive government backlash when people quite simply have nowhere to live.
I believe that property investors are tired of being used as scapegoats; apart from the rental freeze during the pandemic, they are also experiencing massive increases in interest rates, which are affecting their cash flow over their investments.
State governments are now also initiating additional tenancy reforms, which is again taking something away from landlords in favour of tenants.
It’s a tough time to be a landlord, with potentially many property investors thinking of throwing in the towel — pretty soon, they will be fed up with political interference in what should be a free market.
Rent isn’t the only thing that’s rising in cost, so is the government planning to put a price freeze on groceries, fuel, and other commodities, too?
A rent freeze enforced now will create short-term gain and long-term pain for both investors and tenants — this is not the answer to our rental crisis; the only way to move forward is to create robust rental supply policies nationally and commit to planning ahead to create a stable, sustainable, and affordable rental market.
Garth Davis is the chief executive of Property Powerhouse.
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