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.

Historical Flaws in Malaysia's Torrens System?

October 24, 2023 Edward Dever

There are plenty of issues in Australia with poorly completed strata residential apartments. Owners are left saddled with huge defect repair bills after the developer has been liquidated or otherwise managed to avoid liability.

But imagine losing access to your apartment because the developer retained ownership of the common property and subsequently sold it to a third party.

That is the case in Malaysia with the saga of Sea Park Apartments where, due to the laws at the time, the developer was able to separately strata title six blocks of apartments while retaining ownership of the common area land, including the car parks and essential services such as sewerage and fire hydrants.

Crucial building plans which may have assisted apartment owners in their court battle mysteriously disappeared from the local Council and the Land Office.

The Sea Park Apartments saga has gone on for almost 20 years. In hindsight, the strata owners probably should have closed the transaction at the time the developer offered to sell the common areas to them in order to make the best of a bad situation. However, as the strata owners always thought they collectively owned the common areas (and only received their freehold titles a few years prior to the offer), one could understand any reluctance. Apparently, the main issue was the vehicle to be used for common property ownership.

For residents who live there, some for over 40 years, there seems no end in sight for this dispute.

The Apartments With No Entrance

October 2023

Ineffective Strata Minority Cram Down Rule Creates Problems

October 4, 2023 Edward Dever

The Queensland Government may wish to cast an eye towards NSW before finalising amendments to its strata legislation which will permit 75% of owners to terminate uneconomic community title schemes.

On 24 August 2023, the Body Corporate and Community Management and Other Legislation Amendment Bill 2023 was introduced into the Queensland Parliament. The Bill was referred to the Legal Affairs and Safety Committee for detailed consideration. The closing date for written submissions was a mere nine days later on 2 September. The Qld Law Society raised concerns in their submission regarding the short timeframe.

Under the proposed Queensland amendments, minority unit owners may be forced to sell their units in circumstances where there are economic reasons for terminating the scheme supported by 75% of the scheme owners.

This reform was described as "deliver[ing] a key action of the 2022 Queensland Housing Summit by reforming the BCCM Act to allow for termination of uneconomic community titles schemes to facilitate renewal and redevelopment."

The Bill's Explanatory Notes specifically refer to "having regard to the New South Wales approach."

The only problem is that terminating schemes in NSW has not been that simple with only a handful of schemes apparently managing to negotiate a sale. Developers are now saying they "aren't interested in buying older buildings unless there’s 100 per cent agreement from owners to sell."

Designed to protect the elderly owner from unscrupulous developers, at least in one instance in NSW, the reverse seems to have occurred - protecting a rival developer from the building's elderly owners. The NSW amendments have not prevented strategic blocking attempts by competing developers.

The NSW Minister for Better Regulation and Fair Trading has vowed to fix the glitches. “The NSW government is committed to updating and reforming this system, including fixing the loopholes that have made it out of date."

Perhaps the Queensland Government will revisit its amendments before passing a Bill with baked-in glitches, at least based on the NSW experience.

The Legal Affairs and Safety Committee is due to hand down its Report on 6 October.

This law was meant to solve Sydney’s housing crisis. It’s left owners devastated

Legal Affairs And Safety Committee - Body Corporate and Community Management and Other Legislation Amendment Bill 2023

October 2023

Shadowy Chinese Firms That Own Chunks Of Cambodia

October 1, 2023 Edward Dever

Interesting BBC piece on exploitation of Cambodia's resources. The only thing that seems to have changed over the past 30 years is the nationality of those doing the exploiting.

In the mid to late 1990s, French and Malaysian investors attempted, often successfully, to take advantage of Cambodian government officials.

Almost 30 years later, it is Chinese investors although they now deal with a far more sophisticated government apparatus as indicated by the increasing wealth disparity between Cambodian government and business figures and the rest of the population.

Looking back at the land speculation deals dressed up as rice farming projects and the favourable airport concession arrangements, one ultimately unsuccessful deal stands out.

In late 1996 and early 1997, there was a grand plan to erect a sound and light show at Angkor Wat. This proposal would have seen management of the temple complex outsourced to a Malaysian conglomerate which would have had full authority over the area. Cambodians were to be excluded from their own temple other than on particular religious holidays. The Malaysian group was to have total control over the content of the sound and light show and would be entitled to make modifications to the temple complex as they erected their equipment and built fencing.

Equally concerning was the plan to build hotels right up to the front of Angkor Wat, a detrimental step that was unlikely to have ever been reversed.

The contract was a particularly one-sided affair with the Cambodians effectively ceding sovereignty over Angkor to a foreign corporation.

The deal reached an impasse and, in the second half of 1997, an economic tsunami hit Asia. A number of Asian economies fell like dominoes commencing with Thailand. Malaysia enacted currency and capital controls, effectively walling itself off from the rest of Asia.

The economic crisis severely impacted the Malaysian conglomerate and it went home to try to revive its finances. Its grand plans for Angkor Wat came to nothing. The economic crisis had saved what would arguably have been Angkor Wat's destruction.

Today, as tourists return post-Covid to gaze at the wonder of Angkor Wat, they should say a quick thank you to one of the silver linings of the Asian Economic Crisis.

The shadowy Chinese firms that own chunks of Cambodia

October 2023

Minimum Housing Standards Commence in Queensland

September 20, 2023 Edward Dever

From 1 September 2023, any new residential lease in Queensland or lease renewal is subject to the new minimum housing standards requirements. All remaining leases will be subject to the requirements from 1 September 2024.

Some of the requirements such as adequate plumbing and drainage, connected water supply and a functioning toilet seem obvious to most landlords.

However, these requirements, together with items such as functioning latches or locks on external doors and windows, effectively place an onus on the agent and owner to confirm compliance prior to any new lease or lease renewal.

There are already examples of agents advising owners they will not lease properties that, in their view, do not comply with the minimum housing standards.

Tenants have a variety of remedies where a residential rental property does not meet the minimum housing standards.

These include ending the tenancy within seven days of occupying the property, requesting emergency repairs, or applying to QCAT for a repair or termination order.

Minimum housing standards fact sheet – general tenancies

September 2023

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

Greens' Nationwide Rent Freeze Proposal - Update

June 29, 2023 Edward Dever

Federally, The Greens continue to push for a nationwide rent freeze as part of a deal to pass the Federal Government's housing Australia future fund package.

Their proposal involves the Federal Government providing additional funding to States which impose rent freezes on residential rental properties.

Broadly, as outlined in the Qld Bill, The Greens seek to impose a nationwide two-year rent freeze on residential property rents followed by maximum rent increases of 2% each two-year period thereafter.

Federally, The Greens have indicated they will compromise on these restrictions.

Qld Parliament's Community Support and Services Committee recommends that the Qld Bill not be passed.

In NSW, The Greens have now introduced a similar Bill. However, the NSW Premier has declared that rent freezes are off the table.

The Qld Bill freezes rents as at 1 August 2022 (which seems impractical). The NSW Bill targets 30 June 2023 as the rent freeze date.

Unlike the Qld Bill, the NSW Bill does not deal with the post-two year rent freeze period. The Greens plan to use the two year period to develop and implement "a radical, and much needed, reshaping of our rental and housing system."

UNSW has also released commentary on The Greens' rent freeze proposal.

Dr Peter Swan contends that the rental crisis would become “far worse for tenants and landlords” if the policy came into force.

“While it is true that tenants who are not evicted may gain temporarily, tenants as a whole lose as rental accommodation is withdrawn, fewer new places are provided, and maintenance of rent-controlled housing deteriorates."

The Greens often cherry pick facts. They claim that, during Covid, commercial rents in some States were frozen as justification for their proposal. But they fail to point out the rates and land tax assistance which was provided to commercial landlords during this period.

The Greens also highlight rent control examples in San Francisco and Ireland but fail to publicise the studies that show the impact these rent controls have had on rental housing supply.

A chief criticism is that the proposal fails to address how landlords will deal with cost increases during the rent freeze period. Many of these costs, such as insurance, are increasing well above CPI.

The Greens also fail to recognise the likely impact of a rent freeze - landlords would sell off properties (which may benefit some first home buyers in the short term) or switch property use to schemes like Airbnb to circumvent the rent freeze. The more significant impact would be a decrease in new investment home builds against an increasing population through natural birth and interstate and international migration. The Greens want more public housing but it is not clear that any increase in public housing would offset the deficit left by investors leaving the sector.

Qld Residential Tenancies and Rooming Accommodation (Rent Freeze) Amendment Bill 2022

NSW Residential Tenancies Amendment (Rent Freeze) Bill 2023

UNSW - Would you benefit from a rent freeze?

June 2023

Can Thailand Move Forward?

May 18, 2023 Edward Dever

The aptly named Move Forward Party has claimed victory in the recent Thai national elections.

But the biggest question is whether MFP and their coalition partners will be allowed to govern for a full term or will Thailand be subject to yet another military coup?

MFP's platform includes revision of the Lese Majeste laws often used as a political weapon to stifle dissent. It is not clear how quickly they will move on this reform and how it will be viewed in the corridors of power. The appointed members of the Senate under the most recent military-backed Constitution further complicate matters, including the appointment of MFP's nominee as Prime Minister.

Thailand has been the subject of many coups over the years. There's a running joke that, at some point, the Thai Navy should be allowed to mount a coup as the army takes the lead each time.

The most recent coups have been preceded by mass protests by rival groups wearing colours signifying support for their side of politics.

In 2006, yellow shirts protested the Thaksin Shinawatra government. The protests appeared to have run out of steam before Thaksin sold his stake in AIS mobile business to Singapore's Temasek Holdings after enacting a new law which increased the sector's foreign ownership limit from 25% to 49%. He also insisted no capital gains tax was payable on the approx. USD 1.88b sale proceeds. He was ousted in a coup in September 2006 and lives in exile in Dubai, periodically promising to return.

The shadow of Thaksin Shinawatra hung over the 2023 election with his daughter nominated as a Prime Ministerial candidate under the Pheu Thai banner.

In 2008, the yellow shirts blockaded Suvarnabhumi Airport, stranding many travellers. It was surreal travelling the empty highways at night to U-Tapao Airport near Pattaya which became the de facto international airport for rescue flights.

In 2010, the red shirts blockaded parts of central Bangkok. The military crackdown on 19 May saw the military use live fire to quell the protests. The dead included a Japanese journalist. Numerous buildings were set alight that day, including Central World shopping complex near the centre of the protests.

19 May was probably the only time a colleague will ring me early in the morning to let me know that she wanted to go to work that day but there was a tank outside her home.

2013 saw the yellow shirts back on the streets protesting the government led by Thaksin's sister, Yingluck. Once again, parts of central Bangkok were blocked. Protests continued in various forms until 22 May 2014 when another coup was launched. Yingluck also now lives in exile in Dubai.

The 2023 election result showed voters rejecting parties affiliated with the military, including those headed by the current PM and Deputy PM. The country wants to move forward but it is not clear whether the institutions of power will permit it.

MFP attention turns to Senate

May 2023