This article is from the Australian Property Journal archive
VICTORIA’S Andrews government is considering limiting rent increases to once every two years and capping rent increases, with “everything is on the table” to address the state’s housing crisis.
Changes being considered by the Andrews government include the rent increase limited, imposing caps on rental increases and taxes on hotel stays and short-term rentals such as Airbnb.
This would be an expansion of the Victorian government’s previously introduced 12-month freeze on rent increases for rental agreements commencing on or after June 2019.
The shake-up follows an ongoing crisis in Victoria’s private rental market, with more people pushed out of the buyers’ market, into rental stress and at risk of or facing homelessness.
In the month to 4 July, Melbourne’s rents were up 0.2% for the month and 19.9% for the year to $582.50 per week, according to SQM Research.
Victoria also holds the mantle of the lowest social housing stock in the country, with social and public housing accounting for just 2.9% of the state’s residential property.
Premier Daniel Andrews is also looking to cut back Melbourne’s urban sprawl, instead looking to introduce greater density in the city’s middle suburbs.
“Too many Victorians are under rental stress and too many are having to go and live a long way away from where they work,” said Andrews.
“It doesn’t make sense to keep on building suburb after suburb. We need to create more housing with the best design standards where people want to live.”
The proposed changes have been criticised by industry bodies, including the Real Estate Institute of Victoria.
“This decision to cap rents, if they proceed with it, will cause untold damage to an already fragile rental market in Victoria – already under duress from land tax increases, interest rates rises and increasing regulation,” said Quentin Kilian, CEO at REIV.
“If rent is capped and cannot move with the market, investors are unable to respond to cost movements such as increasing interest rates, maintenance etc. They are very likely to take their hard-earned savings elsewhere, which is what we are already seeing as a response to the increases in Land Tax.”
