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We need a rent freeze

Housing in Australia is in crisis. Australia is seeing the biggest rent increases in 14 years, putting millions of Australians into severe rental stress. We’ve got families sleeping in their cars, workers unable to afford a home near where they work, people being evicted from their homes because they can’t afford 20% rent increases and the governments just sitting on their hands when they have the capacity to intervene and stop the worst of this crisis. In the past 12 months rents in capital cities have grown seven times faster than wages.

Just as the Government coordinated a national response to the COVID19 health crisis, the Federal Government should intervene to coordinate an emergency nationwide response to the housing crisis that includes a rent freeze.

Under the Greens’ plan, the federal government would work with the states to freeze rent increases nationwide, by offering $1 billion per year in additional housing funding to states and territories who adopt rent controls within their own tenancy legislation. Participating states and territories who agree to implement an emergency freeze on rent increases for 2 years, followed by capping rent increases at 2% every 2 years, and a ban on no-grounds eviction, would be eligible to double their housing funding from the federal government. This additional funding could be used to boost public housing supply right away by buying up existing properties such the 24,000 affordable rental homes exiting the NRAS scheme over the next 3 years, or invested in new public housing construction.

With more and more people renting long term, we desperately need legislated protections against unfair, arbitrary evictions and skyrocketing rents.

How would a freeze on rent increases work?

What is a rent freeze?

A rent freeze, a strict price ceiling, is similar to a rent cap but works differently. While a rent cap is an ongoing policy whereby rents can increase by a certain amount and under certain conditions, a rent freeze is a temporary measure that stops rent rises for a set period.

How would a nationwide freeze on rent increases be implemented?

National Cabinet should coordinate a nationwide freeze on rent increases, with each state and territory to implement it via their respective Rental Tenancy Acts. The Federal Government regularly plays a coordinating role on issues like industrial relations or energy, which would usually be up to individual states. During COVID, the Morrison government coordinated a national eviction moratorium via the National Cabinet, and when the energy crisis hit Labor coordinated a national response, there’s no reason they can’t do the same to help renters struggling right now.

The Federal Government could incentivise states to implement rent controls by offering additional housing funding through the National Housing and Homelessness Agreement.

How could a  freeze on rent increases work at the state level?

Our suggested model for a freeze on rent increases is:

  • Rents will be frozen for all residential tenancies at the current weekly amount of rent (as at 1 January 2023), for a period of two years from the date of the bill being legislated. The reference date for rents would be slightly backdated (e.g. 1 January 2023) to avoid landlords raising rents in anticipation of the freeze taking effect.
  • The freeze on rent increases would apply to the property, not the specific tenant or lease, meaning there would be no incentive to evict tenants in order to raise the property's rent.
  • If the property is a new build, a new entry into the rental market or has been substantially renovated, then the landlord can only rent the property at or below the median rent for that postcode for that type and size of property.

What would the states do with the $1 billion/year in additional housing funding?

Existing National Housing and Homelessness Agreement funding contributes to the funding of states’ public and community housing systems, along with vital homelessness services.

Additional funding could be used to increase the stock of public and affordable housing right away, by buying up new homes off the plan (e.g. from stalled construction projects), acquiring vacant homes, or purchasing some of the 24,000 affordable rental (NRAS) homes that are set to be sold or returned to the private market as NRAS funding is cut over the next 3 years.

Why do we need a rent freeze?

Why is this necessary?

Australia is experiencing a rental and cost of living crisis and the government needs to act now. Too many Australians are one rent increase away from eviction or homelessness, and a two year rent freeze will give people the security they need to start getting on with their lives. 

Since mid-2020 rents have been spiking, growing many times faster than wages - freezing rents will give wages and incomes time to catch up. Even under the Greens plan to freeze rents for two years, and cap rent increases at 2% every 2 years, wage growth won’t make up for the impacts of recent rent growth until 2029.

How much have rents been rising?

Across the country, many areas have seen the steepest annual increases on record - 17.9% in capital cities, 20.9% in Brisbane, 19.6% in Sydney, 17.5% in Melbourne and 13.4% nationwide according to SQM Research. A similar study of rents by Domain found house rents in cities around Australia, with weekly rents jumping $70 in a year to $650 in Sydney, increasing by $75 to $520 in Brisbane, by $70 per week in Canberra and $50 per week in Adelaide. Unit rents are also increasing strongly, above 10% in most capital cities, and the number of potential renters per listing is hitting a historic high.

The same report found similarly steep rent surges in regional areas. For example in Queensland, Toowoomba house rents rose by more than 15% in the last year, while Bundaberg residents face rent rises of more than 22%. The five-year data paints an even grimmer picture, with rents in the Central Highlands rising by more than 50% and rents in Gladstone nearly doubling. Similar surges have been seen by renters in regional NSW (Cessnock rents rising 20% in a year and 41% in 5 years, Bega Valley renters facing hikes of 15.2% last year and 47.2% in the past 5 years) and regional Victoria (e.g. in the past 5 years: Alpine region 77.8%, Bass Coast 50%, Corangamite 49%).

Why a rent freeze and not a rent cap?

We are in the middle of a housing crisis. Australia has seen the biggest rent increases in 14 years, with capital city rents rising seven times faster than wages in the last 12 months. An emergency two-year rent freeze is needed to allow wages and incomes time to catch up to rents. Rent caps would be appropriate as an ongoing measure after the rent freeze period to ensure out of control rent rises do not return. 

How would a rent freeze affect the housing market?

Won't a rent freeze decrease housing production and supply?

Studies from the U.S. found that rent controls not only dramatically dropped rents, but in some cases dropped house prices as landlords decided to sell their investment properties. This could allow working families who would otherwise be stuck in the rental market to buy a home - as happened in the US during the 40s when widespread rent controls were applied leading to a substantial increase in the home ownership rate.

Rent controls also had no real impact on housing construction. One 2007 study of 76 New Jersey cities with rent stabilisation found that rent control had little to no statistically significant effect on new construction. When rent controls in Massachusetts were repealed, there was no increase in new construction, which suggests that rent controls were not suppressing new housing supply.

Combining a rent freeze with a levy on empty residential properties would also reduce incentives for investors to leave their properties vacant and reduce supply.

Won’t landlords just leave their properties empty if they can’t make as much from rent?

Alongside a rent freeze, the Greens would advocate for scrapping negative gearing and capital gain tax concessions, ensuring that it isn’t financially viable for investors to leave their houses empty rather than rent them out.

Won't landlords just sell their properties, decreasing the rental supply?

One of the problems in the current housing crisis is that many people who want to buy their first home are locked out by ever-increasing house prices and landlords hoarding properties.

If landlords no longer want to take part in a controlled rental market, they can sell their investment properties and allow someone else to buy a home.

Shouldn't the government just build more public homes?

Absolutely – the government should and could do both, which is why we've been pushing the government to commit to at least $5 billion per year of direct funding for building public, community and affordable housing through their Housing Australia Future Fund plan.

However building public homes won't happen overnight, so even if we got the government to commit to mass building public housing today, we'd still need to pursue solutions to the housing crisis in the interim. 

That's why we are calling for an emergency rent freeze, to immediately stop the rental affordability and eviction crisis. At the same time, we'll continue pushing for a mass build of public housing.

Will rent controls help stop gentrification?

Studies of rent levels and unit availability in New Jersey - the U.S. state with the most rent controls - found greater housing and neighbourhood stability in areas with controlled rent. Similarly, in San Francisco, renters in rent-controlled homes were 10 to 20 per cent more likely to stay in their homes long-term. Studies of controlled and uncontrolled rents in units in Boston found that having 10 to 12 per cent of rent-stabilized units in an area decreases the rents of non-controlled units by $33 to $44 (USD in 2017).

What evidence is available about how rent controls work?

Two great starting points for reading more about the effectiveness of rent controls are: 
Rent Matters: What are the Impacts of Rent Stabilization Measures?
Economists Hate Rent Control. Here’s Why They’re Wrong.

What if landlords cannot afford their mortgages if they can't increase the rent?

The Greens have already called on the RBA to pause interest rate rises given inflation is being caused by supply side shocks and massive corporate profits. This would give some relief to mortgage holders. Ultimately the housing system in Australia is designed to make massive profits for banks and property developers and the Greens believe whether you’re trying to pay off a mortgage or pay the rent, then you shouldn’t be screwed over just so a big bank can make massive profits. 

Inflation has been going up too. Shouldn't landlords be allowed to recuperate those losses?

The inflation we are living through is indeed hurting a lot of people. Everyday families are paying more for fuel, food, and groceries while wages have stagnated. According to the ABS, the Consumer Price Index rose by 7% over the last 12 months. While landlords are also facing inflationary pressures, the record rent increases across capital cities and regions of high rental pressure in the previous year have been nearly triple the CPI rise. This means landlords are pocketing the difference while working people have to pay more and more to keep a roof over their heads on top of skyrocketing grocery and fuel bills.

If a landlord feels that their rent return is not keeping up with inflation, they can sell their property and allow an everyday family to finally afford to buy a home.

Are there any downsides for renters?

A rent freeze won’t help me deal with the fact my rental property is unlivable, what will the Greens do about that? 

We know that many landlords are already ignoring repairs, despite reaping record profits from their investment properties.

Alongside the rent freeze, the Greens are calling for the government to establish a National Standard of Renters’ Rights, to strengthen efficiency, accessibility and environmental standards for rental homes, allow tenants to make minor changes without permission, and prohibit no-grounds evictions.

What's to stop my landlord from evicting me?

Alongside a rent freeze the Greens will call for an end to no-grounds eviction nationwide.

Additionally, since we are backdating the rent freeze to 1 August 2022, and tying it to the property rather than the tenant, landlords will have no financial incentives to evict tenants and then advertise the property at a higher rent. We know that currently, under unregulated rent rises, many landlords are kicking tenants out so that they can get new tenants in for a higher rent. This greedy and opportunistic behaviour from landlords has been a significant driver of the homelessness crisis we see daily in the news.

And since landlords will only be allowed to charge the median rent for their postcode, landlords will have no financial incentive to renovate a property just to charge higher rents.

What would stop a landlord from increasing my rent by hundreds of dollars at the end of the two years?

At the end of the rent freeze period, rents will be capped such that they can only increase by a maximum of 2% every two years. This will give wages and incomes a chance to catch up to rents, and governments the time to pursue long-term solutions to the housing affordability crisis - such as building public and affordable housing, scrapping tax concessions for property investors and introducing longer leases and stronger protections for renters.

History of rent freezes

Has Australia ever had a rent freeze?

In Australia, we have a history of rent freezes during inflation. During the pandemic, governments in Victoria, Tasmania, SA and WA all froze rent increases. Recently, Cherbourg implemented a rent freeze to deal with a mass influx of former residents returning home searching for affordable and culturally-appropriate housing. Curtin's wartime cabinet strengthened rent control in 1941, fixing rents at 1940 levels to help deal with inflation caused by wartime shortages.

Have other countries used rent controls?

Rent-freezes have a long history of use in times of rampant inflation. Currently, it's a popular method in several cities across the world. In London, Sadiq Khan has called on ministers to grant him powers to freeze private rents for two years. In Scotland rent increases were recently frozen, and are now capped. Until earlier this year, in British Columbia, their rolling rent freezes since 2020 meant landlords could not raise the rent by more than 1.5 per cent. In New York, the city government already has the power to freeze rent rises, and elderly residents can apply for a rent freeze anytime. Many countries in Europe, including Germany, France, the Netherlands, Belgium, Sweden and Spain, limit how much rents can be incresed by.