With the rental crisis an ongoing issue, the Real Estate Institute of Queensland (REIQ) says calls from tenants’ advocates for rent control in Queensland is a short-sighted solution to a complex problem.
REIQ CEO Antonia Mercorella said rent control would not be a panacea for the rental crisis and would likely have the opposite effect and instead exacerbate challenging rental conditions.
“We are acutely aware of the devastating impacts of the rental crisis and against that backdrop, it’s understandable that some tenants’ advocates are proposing rent control as a solution - but rent control is not the panacea that many argue it to be,” she said. “It’s clear Queensland does not have sufficient rental housing supply to meet the ever-increasing demand for rental properties and, as a result, we are living in the tightest rental market in the history of our state. These tight conditions make for an incredibly challenging environment for renters. However, rent control is a short-sighted solution to a complex problem and could in fact significantly deter property investment and reduce rental supply at a time when we’re already in a rental crisis.”
Ms Mercorella said everyone was feeling the pressure of inflation and increasing costs.
“It’s unsustainable to assume property investors will keep meeting free-market driven cost increases such as mortgage repayments, rates, repairs and maintenance, and insurance, while artificially capped rents create a hard limit on their return to cover such expenses,” she said. “Given regular Mum and Dad property investors provide the vast majority of housing for our state’s rental community, with the Government’s social housing supply program accounting for under four per cent, it needs to be recognised that the contribution of property investors to housing Queenslanders is vital. If even a small percentage of investors were to sell their properties or withdraw them from the permanent rental market, this would have a material impact on the Queensland rental sector.”
Ms Mercorella stressed the importance of ensuring our state has fair and balanced rental legislation.
“We are in extraordinary times and we need to be careful about creating a regulatory framework designed to respond to some fairly exceptional circumstances,” she said. “Rental legislation needs to work in all markets and it needs to be fair and balanced because on one hand, renters need to be afforded statutory protections and on the other, if restrictions on what property owners can and can’t do become too onerous, there will be a proportion of property owners who simply choose to walk away. This delicate balancing act is a tricky one to get right, but it’s important that the regulatory framework is fairly balanced and isn’t too tipped in the favour of one party.”
Ms Mercorella said last year the State Government introduced rental reforms to give greater rights and protection to tenants.
“There are already statutory constraints that relate to rent in Queensland that limit how frequently you can increase rent and provide rules around the way rent increases are implemented,” she said. “There’s also important statutory safeguards in place to enable tenants to dispute excessive rent increases with QCAT.”
She said the rental crisis ultimately came back to supply.
“This is not a problem that has emerged overnight and while COVID has had a role to play, the number of dwellings being built in Queensland has diminished considerably over the last five years and our future pipeline is also likely to fall short of demand,” she said. “Until we are able to achieve a greater balance between the demand for rental housing and supply, and introduce greater diversity of housing, we won’t be able to fix this critical problem we are facing.
What’s needed is a concerted effort from all levels of government to create the right environment to sustain existing established rental stock and to build new housing each year that matches targets based on detailed population forecasts.”