Could rent limits be the answer to the rental crisis?


The Queensland government is considering introducing a limit on rent increases amid soaring housing stress across the state.

It follows calls by housing advocates for something to be done about a growing number of tenants forced out of their homes due to price hikes.

Across Queensland rents have been rising, with the latest CoreLogic data showing Brisbane rents growing at a faster annual pace than the other capital cities over the last 12 months at 13.4%.

qld considering introducing caps on rent increases

Queensland premier Annastacia Palaszczuk says a new report showed the extent of the crisis showed the extent of the housing crisis.

According to the report, median rents rose 80% in the central Queensland city of Gladstone, 51% in Noosa and 33% on the Gold Coast over the past five years.

During that time, the proportion of private rentals considered affordable for low-income households halved from 26% to 13%.

"I understand that this is a big issue for families, they are constantly being faced with huge increases in rent," says Palaszczuk.

"We're looking very seriously at how a rental cap can be put in place."

The chief executive of the Queensland Council of Social Service Aimee McVeigh, who commissioned the report, says the government needs to act immediately.

"It's vital that a limit on rental increases is considered, given the extraordinary pressure Queenslanders are currently under. More and more Queenslanders are being forced out of their homes, as a result of skyrocketing rents," McVeigh says.

Tenant Queensland's chief executive Penny Carr says that the proposals put forward aren't radical and are already in place in ACT.

In the ACT, landlords must calculate changes in the CPI between rental leases and can then add up to 10% of that number to come with a prescribed amount.

"It's a very moderate proposal that allows rents to be increased over time, but it smooths them out to prevent shock," she says.

Carr says landlords already enjoy a similar mechanism when it comes to land tax so why not apply a similar theory to renters.

"What this proposal does is makes rent more stable for people and puts a step in to determine what is a justified increase and if the landlord wants to go above that they can go in front of a tribunal," she says.

Carr is backed by the chief executive officer of the Tenant's Union of NSW Leo Patterson Ross who says he hears about rent struggles from many people across the state.

"The introduction of fairer limits on rent increases as well as a more effective way to challenge rent increases is needed to help ease this immense pressure," he says.

Ross says he encourages all governments to look at what can be done to address the nationwide problem.

"Solutions needs to be both long and short term, so if legislated rent caps were to be introduced in NSW it should be done alongside clear targets for the development of genuinely affordable housing and ensuring supply meets population needs," he says.

However, the proposal was dismissed by the chief executive of the Real Estate Institute of Queensland, Antonia Mercorella, saying it was dangerous to put rent controls on the table.

"In the middle of a housing crisis caused by lack of housing supply, it's beyond belief that the Government is now proposing a measure which innately discourages further supply," says Mercorella.

"No one denies that there is an immense amount of pressure for the most vulnerable in our community, but rent control or freezes are not the answer."

Financial and housing market expert Pete Wargent from BuyersBuyers says that rent caps are a band-aid solution to the rental problem.

"As a short-term fix it could work to some extent but over time it will reduce investors in the state which could impact supply," he says.

There's been no end of changes for property investors over the last five years, including the scrapped land tax changes and Wargent says it does make it difficult for investors to decide.

"Every state and territory have different rules and introducing a cap like this does put the state at a comparative disadvantage," he says.

Ray White's chief economist Nerida Conisbee agrees, saying that rent control is a short-term solution that leads to long-term pain.

"Capping the return on housing makes it less attractive as an investment option and would lead to other investments becoming more attractive.

"Fewer rental properties that are more rundown is the outcome and this flows through to desirability of suburbs where rent control is in place," says Conisbee.

It's not the first time the issue has been raised in Queensland, with a bill introduced to the parliament last year calling for rents to be frozen for two years.

The bill, which did not pass through the house, was introduced by Greens MP Amy MacMahon who says she welcomes the news from the Palaszczuk government.

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Eliot Hastie was a senior journalist at Money magazine in early 2023. He was previously a producer and presenter at ausbiz where he covered startups, small caps, cryptocurrency and every other investible opportunity for Australians. Eliot has a Bachelor of Arts (Honours) in Journalism from the University of Westminster. He tweets at @Hastie93.
Mel Ploe
March 22, 2023 5.14pm

Governments over the decades have relinquished their responsibility in building and providing social low cost housing

this is a dangerous precedent in a free market country

This short sighted policy will encourage home owners to sell in a high real estate market causing a worse rental market

Governments should be releasing land and building small sustainable social and subsidised

-1 to 2 bedrooms, apartment style, communal gardens/facilities etc

investors cannot afford for governments to mandate rental caps while expenses are not guaranteed to reduce as well

Harry Wright
March 22, 2023 5.43pm

Welcome to the free market everyone ! This means prices go up and down as determined by market forces - NOT governments - so learn to mind your own business and STAY OUT OF OUR LIVES !! You will NOT cap rental increases or freeze rents and you will NOT be allowed to grow a state of communism where you think of landlords as the "rich" and "evil" and everyone else as "good". The vast majority of land-lords are incredibly hardworking ordinary people and will NOT be subject to caps on income.

Will the government also freeze or limit price increases for petrol, to big businesses like supermarkets and utilities - all of whom are far more responsible for ripping us off via un-necessary price increases well beyond their actual costs ? Didn't think so - cause its so much harder to stand up to them isn't it ?

The QLD government loves to take all it can from special interest and curiously well-funded minority groups resulting in unacceptable interference. It IS corruption whether you admit it or not.

So legislate all you want - it doesn't mean we'll abide by your ridiculous interfering "laws" and all you're doing is pushing us towards the inevitable - the permanent removal of the state government and / or secession if that's what it takes to keep the state government out of peoples lives.

We are sick to death of people whining about everything - expecting other people to pay for their "disadvantage" especially when times get tough. Learn to manage your own money better or move to Cuba, China or Russia. Oh wait - none of them are really communist anymore either !

Harold Green
July 20, 2023 8.01am

You, my friend, have an incredibly small world view.

Not only should rent be capped, but property prices should be as well. It's sad to think that your perspective on this is entirely focused on your income, investments, money. It's greed speaking here. Think on that, please.

Houses are not simply "investments". In fact, the idea of investing in houses for financial return is pretty awful. You should be buying a house to live in, not to profit from, and they should be affordable.

You should not be buying properties simply so you can charge as much rent as you can for them, sell them for much more later and guarantee a "good return on investment".

Why? Because people need homes to live in. It's a fundamental, basic human need. It takes all sorts to make a world, and not everyone is wasting their lives investing and so on. People that are not rich still need a house in which to live - that they can afford. They're not just pawns in a game for you to play with and profit off. Some mature empathy and understanding would go a long way here you childish, entitled, greedy little man.

This is one of the reasons Australia has such ugly architechre. Homes aren't being created from a place of care and inspiration, but simply being built quickly as investments. Profit should not be the motivator here, making a nice house to live in should. If Europe was the same, it'd also look like a cheap, uninspired shithole.

Most of our problems come from man's inner demons. This one rearing it's ugly head is greed. I actually think you should take some time to think on this, try to better yourself as a person if you can. Smoking some herb might help. Look in the spiritual mirror brother, time to grow.

Ploe Mel
March 22, 2023 5.46pm

NSW Governments answer to the housing rental crisis:-

His landlord is the New South Wales government. And it's selling the estate to developers

Today on ABC news!

governments have a lot to answer for

Private investors should not bare the brunt for their incompetence and short sighted agendas and policies

Sharon Robinson
March 25, 2023 8.53am

It is sad times for everyone, tenants need to appreciate the landlord suffers every time a rate rise happens and hurts them financially as well. People will stop buying investment properties if the government changes the rules and the rental market will have even more issues. People may need to look at stop smoking, drinking and reducing the cost to their households. Governments have never stopped companies like Woolworths or Coles putting up their prices as they cannot sustain loss so why should a landlord be any different.

Greg Byrne
March 30, 2023 2.28pm

All good and valid comments made by others. Just to focus on one aspect as a landlord of two houses for the last 8-10 years. Investment properties were once a good investment vehicle , which provided forced savings with continual costs in the hopes that one day you make a profit of which there is no guarantees. Over the years governments have eroded deductions and entered more legislation and costs to the landlord to the point now that I really don't see the benefits of owning an investment property in the future and I have advised my son's to avoid also. Media and government bang on about negative gearing like its some pot of gold when in reality its not. Within a few short years of ownership it recedes back to positive gearing in which the governments reaps in the tax to it's coffers, but nobody mentions that. And the fact that most investors don't earn enough money to have negative gearing working for you in the first place. New caps and what ever is just another nail in the coffin for investors who have fled the Australian rental market by around a third in the last few years. We are making the same mistakes as Ireland and too stupid to see it. If you really want to improve the rental affordability, a big start is making it just a bit attractive to gamble on a rental property investment. Personally, I can't wait to sell mine and get out of all the hassle. And no, I won't make a fortune from it, but I do feel sad for my current tenant's and what will happen to them. I don't see an investor buying the houses, I wouldn't because the numbers don't add up, and any investment adviser or bank manager worth his or her salt will say the same.