National Cabinet Discuss Potential Rent Freezing

National Cabinet met in Brisbane last week and, despite significant political pressure from the federal Greens, emphatically ruled out imposing a rent freeze and/or rental cap system in the states and territories. I note that the federal government has no jurisdiction to legislate changes to residential tenancy laws, that rests with the states and territories.

However, it is the first time that a Prime Minister has worked with the states and territories in implementing a nationally coordination plan in the interests of renters’ rights.

On the whole, the nine-point plan that popped out of the National Cabinet meeting strikes a fairly reasonable balance between the rights of tenants and the suppliers of their homes, investors. Importantly, the plan gives the states and territories relative autonomy to tweak their legislative framework to align with the plan but account for their unique markets.

The language used in the plan provides a degree of flexibility. For example, the first point of the plan states, “Develop a nationally consistent policy to implement a requirement for genuine reasonable grounds for eviction, having consideration to the current actions of some jurisdictions.” This gives the states plenty of scope. For instance, in Victoria if a tenant wishes to renew a fixed-term lease, the landlord must agree to it unless they wish to move in themselves, sell the property or substantially renovate it. Whereas the WA government has just finalised their review of residential tenancy laws and sensibly retained ‘no-grounds’ completions at the end of a fixed term lease whereby the landlord is not obliged to renew a lease for an existing tenant.

Other points in the plan cover the opportunity for tenants to appeal against retaliatory evictions, seek to outlaw rent bidding and protect tenants in situations of domestic or family violence, most of which are legal protections already in place across Australia.

Point 3 in the plan seeks to limit rent increases to annually which seems fair enough and is law in most states already. Queensland and WA are the only two states yet to make this change.

The remaining points cover limiting break-lease fees for fixed term leases (which will simply give rise to fewer fixed-term leases being offered), designing rental applications to protect renters’ personal information, the phasing in of minimum quality standards for rented homes and better regulation of short-stay accommodation.

Now that we have a nationally agreed framework for regulating rental homes, the impact on supply of rental properties is yet to fully play out. Amongst the Greens’ hysterical demands for rent freezes / caps, investors have been busily selling out their assets at the rate of 3:1 – for every three rented houses sold, only one remains a rental.

Mortgage costs over the past twelve months have risen at three-times the rate that rents have gone up. Land taxes in some states have doubled. Insurance premiums, council rates and strata levies have all risen too. So, despite this neat, nationally coordinated plan to look after tenants, a crucial piece is missing; who is going to provide all the houses that tenants call home?