The only thing rent control will cap is supply

Opinion Editorial published in the Herald Sun on 26 November 2022
By Quentin Kilian, CEO Real Estate Institute of Victoria

If Victoria is indeed on track for a minority Government and introduces the Greens’ policy to cap rent prices, it would create irreparable damage to the very people it’s seeking to protect.

Tampering with a rental market that’s already crippling under a myriad of pressures would create yet another reason for people to find alternative investments, further diminishing an already decreasing housing supply.
As we all experience the economic pinch from the rising cost of living, freezing rent might sound attractive - but it’s a short-term, unsustainable solution.

Yes, a rent cap could ease tenants’ anxieties about future rises, or help in immediate circumstances, but medium to longer term, it’ll only hinder renters’ ability to find housing. It can’t be forgotten that renters and rental providers exist in the same market.

We need to ensure any political party proposing a rent cap policy has considered the impact on residential property providers – the majority of whom are mum-and-dad investors with their own cost of living pressures. These everyday Victorians are looking for a long-term investment as they save for their own retirement, and often rely on rental income to cover the property’s mortgage.

Take away the viability of their investment and you attack the sector that’s supporting almost 90%¹ of renters.
A rent cap would be senseless economically and tip the scales too far. It would increase pressure on the rental market, deter investors from Victoria and remove more properties from the market - which only increases rents even further, in complete contradiction to the policy’s objective.

With an estimated 2.7 million Australians living in rentals, residential rental providers (RRPs) are an essential part of the rental ecosystem playing a critical role in the Australian economy – a role we cannot afford to lose.
A 2021 snapshot from the Commissioner of Rental Tenancies data¹ showed 89.7% of renters lease from RRPs, 71.8% of RRPs only have one investment property and 67% of rental properties are rented through a real estate agent.

The current legislation has adequate processes in place for rental increases with regulations around when, how much, and how often they can change.

Policies around the rental ecosystem and property sector more broadly, must be thought through in their totality and in collaboration with the sector. Property legislation must be formed for the future prosperity of all participants in the sector - not adopted for short term political gain.

[1]: Renting in Victoria, Snapshot 2021. Commissioner of Residential Tenancies


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