A two-year rent freeze could be the final straw in a Victorian landlord exodus that would lead to the sale of more than 212,000 investment properties, experts warn.
Premier Daniel Andrews revealed at the weekend that barring landlords from raising rents more than once every two years was among several housing and rental affordability measures being considered by the government. Others include a $5 tax on short-term stays – mainly affecting Airbnb – to help raise funds for social or affordable housing to ease the accommodation crisis.
While the property sector has widely welcomed such an initiative, First National Real Estate chief executive Ray Ellis said he feared a 30 per cent reduction in rental supply – “at a minimum” – if landlords had rent rises limited to two-yearly intervals amid rising land tax costs and interest rates.
Latest Residential Tenancies Bond Authority figures show it held bonds for 706,892 homes in Victoria at the end of the 2021-22 financial year. If 30 per cent were sold, it would equate to 212,067 homes.
PropTrack figures show more than 230 of the homes taken to auction (34.5 per cent) in the state last week were former rentals.
It was well above the 29 per cent national average for investment homes being sold, though figures show the number of homes being listed for rent for the first time each month currently outweighs the number being sold.
PropTrack economist Angus Moore said international examples showed rent controls could result in home maintenance suffering and landlords exiting the market.
He said there was also a possibility that landlords would compensate for fewer opportunities to raise rents with sharper increases when they could.
“Creating more supply is fundamentally the only way to solve this problem long term and in a sustainable way,” Mr Moore said.
Mr Ellis, a member of the International Real Estate Federation, also recently reviewed global rental interventions, including in Paris and Berlin, from within the past decade. This revealed there were fewer rental homes available.
The Australian Housing and Urban Research Institute last month published a rent freeze review that found while good in the short term, rent control had made life worse for tenants in the US in the longer term.
But Tenants Victoria chief executive Jennifer Beveridge said they had seen signs of some landlords “profiteering from the rental crisis” and that more regulation was needed to ensure fairness.
Real Estate Institute of Victoria chief executive Quentin Kilian said he supported less council involvement in planning decisions which could help streamline new housing construction.
However, he warned that locking landlords into rents for two-year timelines would make selling more appealing.
nathan.mawby@news.com.au