Greens Target Brisbane LGA Rent Freeze

November 8, 2023 Edward Dever

To date, The Greens have tried and failed twice to implement a rent freeze in Queensland and once at the Federal level. In this latest attempt, 2024 Greens Lord Mayoral candidate Jonathan Sriranganathan plans to implement a two-year rent freeze on residential properties in the Brisbane local government area, backdated to January 2023. This assumes The Greens control Brisbane City Council after the election in March 2024.

To implement their plan, The Greens propose to control rents via penalty rates applied to any investor who raises rents above January 2023 levels. Rental properties where rent has increased would be "reclassified into the new ‘Uncapped rental home’ rating category."

The penalty is an additional 650% of the current rates bill so the total rates bill would be 750% higher following The Greens' market intervention. Using The Greens' example of a unit rented for $750 per week with a rates bill of $1,500 per year, any rent increase would result in an extra rates bill of $9,750, with a total rates bill of $11,250.

Any landlord who has increased rent with the tenant's agreement between January 2023 and the Council election in March 2024 would be penalised, whether that rent increase was less than 1% or 30%.

The Greens' plan is to apply the rent freeze to the property rather than the tenancy and to use median suburb rents for any new build or substantial renovation.

Penalty rates are claimed to be revenue neutral as the Greens contend that landlords will not put up rents. However this ignores the fact that many landlords will have raised rents over the 15 month period prior to the 2024 Council election.

Landlords in Brisbane (and elsewhere in Queensland) are currently subject to an effective 12 month rent freeze following the State Government's amendments to the Residential Tenancies and Rooming Accommodation Act preventing landlords from increasing the rent within a 12 month period.

Rent controls in other jurisdictions (such as Ireland and San Francisco) have resulted in reduced residential rental supply as landlords change use to avoid the controls or sell out of the market. It also acts as a disincentive for new investment builds. (Note that The Greens plan to increase rates for Airbnb-style properties by 1,000%.)

Any developer who views The Greens as potentially controlling Brisbane City Council post-March 2024 is likely to look more favourable at projects outside the Brisbane LGA (e.g. Redcliffe, Logan, Ipswich) rather than risk the imposition of a two-year rent freeze on their projects.

Similar to the Queensland government's proposed (then scrapped) land tax changes, the prospect of a rent freeze throughout Brisbane is likely to alter investors' decisions well ahead of any actual imposition of a freeze.

Lord Mayoral candidate Jonathan Sriranganathan proposes two-year rent freeze in Brisbane

Freeze Rents in Brisbane: No more unlimited rent increases

November 2023

The content of this publication is intended to provide a general overview on matters which may be of interest. It is not intended to be comprehensive. It does not constitute advice in relation to particular circumstances nor does it constitute the provision of legal services, legal advice or financial product advice.

Rent Freeze Proposal Gets Frozen Out At National Cabinet

August 24, 2023 Edward Dever

Landlords could be forgiven for feeling a little confused, particularly those with investment properties in different States.

Last week, National Cabinet ruled out imposing any form of rent freeze as demanded by The Greens.

The Greens proposal involves a nationwide two year rent freeze followed by a maximum 2% increase every two years thereafter with no end date.

Then it gets a little confusing.

For example, in Queensland, the Greens Residential Tenancies and Rooming Accommodation (Rent Freeze) Amendment Bill provides for rents to be frozen as at 1 August 2022. Qld Parliament's Community Support and Services Committee has recommended against passing the Bill.

The Greens NSW Rent Freeze Bill specifies 30 June 2023 as the relevant date. The NSW Bill is silent on what happens after the initial two year rent freeze.

The Greens Federal Freeze on Rent and Rate Increases Bill stipulates that rents will be frozen as at 1 January 2023.

Instead of a nationwide rent freeze or rent caps, National Cabinet prefers a nationally consistent policy on renters’ rights including reasonable grounds for eviction, minimum rental standards, and limiting rent rises to once every 12 months.

Many of these outcomes have already been implemented in Queensland. New minimum housing standards rules come into effect in Queensland for new tenancies on 1 September 2023.

Meanwhile, The Greens are softening their stance, with their chief spokesperson on the issue moving away from a strict rent freeze to some form of rent cap.

Even The Greens-promoted polling from The Australia Institute shows only minority support for a rent freeze among voters from all parties, including The Greens.

Some landlords may take comfort from the statements following National Cabinet, thinking the rent freeze saga is at an end.

Others may continue to raise rents disproportionately on the basis that, while the issue may be dead, it is not buried and some form of rent freeze may still be forthcoming.

Meanwhile, The Greens will continue to campaign on the issue of rents and the Prime Minister is no closer to passing his housing bill.

Stories of rogue agents and massive rent increases at the current hearings of the Federal housing inquiry will keep the issue in the headlines.

From public holidays to rental freeze and housing supply, National Cabinet showed there are limits to Anthony Albanese's power

August 2023

Pressure Builds For Further Residential Rental Reform

August 10, 2023 Edward Dever

National Cabinet meets in Brisbane on 16 August and one of the key topics will be residential rental reform.

The Greens continue to block the passage of the Government's housing reform package in the Senate and use social media and other media to demand a two year rent freeze throughout Australia.

As recently as 9 August, the Prime Minister explained that "the Commonwealth does not control rents" and "does not have the capacity, either, to abolish the private rental market." In his view, "the key to fixing up these issues is supply".

ABC News is of the view that, National Cabinet, as a whole, won't be agreeing to an Australia-wide rent freeze or cap with NSW Premier Chris Minns, for one, already ruling that out.

However, it seems possible that at least one State, perhaps Victoria, may embark on a rent freeze experiment. (In 2021, Qld Parliament rejected the Greens 2021 Rent Freeze Bill. Qld Parliament's Community Support and Services Committee has recommended against passing the Greens 2022 Rent Freeze Bill.)

Overseas experience in places such as Ireland and USA suggests rent controls distort residential rental housing supply as investors take steps to avoid rent control measures or exit the sector. Rent controls also act as a disincentive to new investment housing builds.

It is worth noting that ACT currently has a form of rent cap in place. Landlords are restricted to an increase equal to 110% of the percentage increase in CPI for rents. Approval can be sought from ACAT for an increase above that limit.

The Greens often use the Covid period as an example of rent freezes being enacted in places like Victoria. However, they fail to mention the various rates and land tax concessions which accompanied these measures.

With property expenses such as rates, land tax, insurance, strata levies and interest rates all increasing, often well above CPI, it is hard to see how the imposition of a two-year rent freeze (plus rent increases limited to 2% every two years thereafter, as demanded by The Greens) will not simply exacerbate the rental crisis.

The Greens claim that their policy includes funding an increase in public housing but it is not clear whether there will be sufficient funding available to deal with the current deficit in public housing and the likely deficit created by a reduction in new private rental housing.

Separately, the Federal Senate Community Affairs References Committee invites submissions on the worsening rental crisis in Australia. The deadline for submissions is 1 September 2023.

Inquiry - The Worsening Rental Crisis In Australia

Renters are an increasingly influential voting block

August 2023

Potential Reform to Qld's Annual Rent Increase Frequency Limit

July 17, 2023 Edward Dever

In April 2023, the Queensland Government amended the Residential Tenancies and Rooming Accommodation Act 2008, with effect from 1 July 2023, to prevent landlords increasing rent more than once in each 12 month period. The reform was enacted with little industry consultation and bypassed Parliamentary Committee review.

One apparent consequence of this reform has been the eviction of tenants by some landlords so that rents can be increased with greater frequency. This is despite no fault evictions being heavily restricted under previous reform amendments in October 2022.

The Government now proposes that the rent increase restriction apply to the property rather than the tenancy agreement.

It is not clear how widespread the practice of no fault evictions to circumvent the rent increase restriction has become and whether it is limited to the period up to 1 July 2023, the reform's effective date. As the Qld government points out, in other States, the rent increase restriction generally applies to leases not the property. This does not appear to be a widespread issue in those States.

The deadline for feedback on the latest rent reform proposal is 11 August 2023.

Discussion Paper - Ensuring the annual rent increase frequency limit is effective

July 2023

Public Hearings Held On Greens' Queensland Rent Freeze Bill

December 22, 2022 Edward Dever

In 1987, renting a student house at Indooroopilly in Brisbane's western suburbs would set you back $125 per week. That worked out at $33 per week for each of the three larger bedrooms and $26 per week for the small one. Inexpensive housing. Comfortable surroundings with fresh paint and carpet, provided you ignored the termites slowly consuming the downstairs bedroom.

35 years later, the median asking rent for houses in Indooroopilly is $650 per week although that particular house is no longer there. Demolished long ago (along with numerous neighbours) to make way for a car dealership car park.

Public hearings on the Greens' rent freeze Bill were held in Brisbane on 5 December.

Under the proposed Bill, a two year rent freeze will be implemented with the maximum permitted rent being the relevant property's rent on 1 August 2022. Future rent increases (after the two year freeze) are limited to 2% every two years with no end date. There are no plans to implement any form of freeze on expenses such as rates, water rates, land tax etc.

Resolving the current rental crisis is a complex task. However it is not clear that broad-based rent control measures are the answer. Increasing the supply of both public and private rental housing is key. The entire housing stock in that street in Indooroopilly is now lost to commercial development. Rent control measures are likely to stifle private sector housing investment.

Examples elsewhere in the world highlight the housing supply issues associated with strict rent controls.

Ireland’s 2016 rent control measures are considered counterproductive and ineffective and have resulted in a serious lack of supply of residential rental properties available for rent with landlords leaving the market because they are not permitted to charge market rent for their properties.

St Paul, Minnesota is introducing rent control measures from 2023. Ahead of its implementation, the number of building permits issued in St Paul from January 2022 to July 2022 dropped 31.4% compared to the previous four-year average for building approvals.

San Francisco - a Stanford University study in 2017 relating to rent controls implemented in 1994 on small multi-family housing built prior to 1980 found that rent controls reduced residential rental housing supply by 15%.

Qld Parliament rejected the Greens' last attempt to introduce rent control measures in Qld. The Committee is due to table its report on the Bill in February 2023.

Residential Tenancies and Rooming Accommodation (Rent Freeze) Amendment Bill 2022 - Public hearing(s): Monday, 5 December 2022 - Brisbane

December 2022

Will Qld's 2023 Land Tax Changes Drive Away Interstate Investors?

September 7, 2022 Edward Dever

Only time will tell. However, it seems reasonable that a residential property investor with multiple interstate properties and only one or two Queensland-based properties will sell them to avoid the reach of the Qld Revenue Office. (Equally, an investor with predominantly Qld-based properties may sell off an interstate property to avoid a land tax hike.)

If Qld properties are retained, investors are likely to want to increase rents to try to recover some or all of the additional Qld land tax.

Either way, it is likely to exacerbate the already difficult rental climate in Qld. (Not forgetting the Greens plans for nationwide residential rent controls.)

Under the 2023 Qld land tax changes, Qld land tax will be calculated based on:

1. the total of your taxable land located in Queensland. and 2. the statutory value of your interstate land.

Qld land tax is calculated based on the taxable value of Australian land which is then applied to the Qld portion of the land holdings.

The Qld Revenue Office's example has the fictional Lena's Qld land tax bill increasing from $1,950.00 to $8,422.37.

There is no credit given for land tax payable in another State.

It is surprising that it has taken this long for the issue to be picked up by the media and many investors will be unaware of these changes. However, for the moment, the Qld Government is holding firm. Also, once implemented in Qld, how long until other States follow suit?

Fears over land tax changes to include interstate investors’ holdings outside of Queensland

September 2022

Rent Control - Failed in Queensland, Try Canberra

August 29, 2022 Edward Dever

Federal Greens MP for Griffith Max Chandler-Mather has announced a proposal to freeze residential property rents for a two year period followed by a maximum 2% increase each two year period thereafter until wages catch up to rents.

The proposed national rent control measures are to be backdated to 1 August 2022. Any residential properties not rented at that time (including new builds) can only be rented at the suburb's median rent. Rent stays frozen even if a landlord renovates the property between tenancies.

The Greens propose that the Federal government force each State and Territory government to impose these rent control measures while at the same time ending negative gearing and CGT concessions for residential property and calling on the Reserve Bank to halt interest rate rises.

Missing from the proposal was any discussion of a corresponding freeze and subsequent caps on government charges such as council rates, water rates and land tax. No comments either on whether (somehow) a freeze should be enacted on insurance, strata levies and maintenance costs.

Also missing was any comment that a similar proposal was made in Qld in 2021 by Greens MP for South Brisbane Amy MacMahon as a Private Members Bill. One of the provisions of the Residential Tenancies and Rooming Accommodation (Tenants’ Rights) and Other Legislation Amendment Bill 2021 stated that rent increases be limited to CPI increases.

This proposal was rejected by the Qld Parliament and the Bill was discharged on 14 October 2021.

The Greens claim Victoria froze rents for six months during the Covid-19 pandemic and this justifies their rent freeze proposal.

However, the pandemic rent freeze in Victoria was accompanied by cost related measures such as deferrals and interest waivers on costs such as council rates and water rates. Similarly, Qld residential property investors were able to access discounts, deferrals and reductions on costs such as council rates and land tax. The Greens propose no such equivalent measures.

The Greens proposal seems to have a few hurdles. As PM Anthony Albanese said recently - "It's not clear to me short of nationalising property how that could be achieved and I haven't seen any proposal."

It is not clear whether the PM will seek to impose the Greens rent control measures on the State and Territory governments.

Update - Meanwhile, Greens MP for South Brisbane Amy MacMahon plans to resurrect her failed Bill, update it for the proposed more restrictive rent control measures and submit it to Qld Parliament for consideration.

Proposal for rent control put forward

Report No. 8, 57th Parliament - Residential Tenancies And Rooming Accommodation (Tenants' Rights) And Other Legislation Amendment Bill 2021

Greens Push To Freeze Qld Rents

August 2022