Spare a thought for landlords: Industry condemns ‘thought bubble’ rent freezes

Landlords were facing tougher financial times than renters with costs escalating well above increases many had applied to rents, according to the real estate industry.

Aug 10, 2023, updated Aug 10, 2023
Real Estate Institute of Queensland (REIQ) CEO Antonia Mercorella.(AAP Image/Darren England)

Real Estate Institute of Queensland (REIQ) CEO Antonia Mercorella.(AAP Image/Darren England)

The industry is facing pressure from The Greens who want a two-year rent freeze and have blocked the approval of a $10 billion housing fund until they get it. The industry said the rent freeze idea was a thought bubble.

The comments come ahead of a meeting in Brisbane next week of the national cabinet in which Prime Minister Anthony Albanese was expected to pressure the states to release more land for housing and to speed up approvals.

It was also anticipated that the states would agree on a national standard of renters’ rights.

The real estate industry has some support in its criticism of rental freezes. Ameeta Jain, a senior lecturer in finance at Deakin University, wrote in The Conversation that there was evidence suggesting that rent freezes worsened inequality and reduced availability.

“The reasons for the property supply shortage are longstanding, and many of the causes were worsened by the COVID pandemic. These included material supply delays, increased costs and changes in preferred housing types. Government policies relating to the release of land and drawn-out approval processes for new builds have added to the supply problem,” Jain said.

Prime Minister Anthony Albanese is expected to use the meeting with state leaders in Brisbane to negotiate new commitments on housing and planning reforms to boost supply and a plan for renters rights.

The Community Housing Industry Association has also warned that 25,000 vulnerable people were missing out on housing ­because of the Greens’ decision to block the housing fund.

Real Estate Industry Association of Queensland chief executive Antonia Mercorella said the states had to consider the strain on both sides of the ledger and consider the broader economic impact of rent freezes.

“We understand community concern about rents rising at a much faster oace than we have historically experienced,” Mercorella said.

“In the decade prior to the pandemic, when we had healthier levels of supply, we all grew accustomed to gradual increases in rent, with the data showing periods of stagnant rates.”

According to SQM Research, rents in Brisbane had increased 15 per cent in the past year.

“The REIQ would caution governments against introducing rash restrictions in reaction to the highly extraordinary set of circumstances we’re experiencing post-pandemic,” Mercorella said.

“The issue is underpinned by gross undersupply, so it’s counterproductive and dangerous to restrict the rights of those providing the vast majority of rental supply.

“A two-year cap on rent increases would significantly limit property owner’s ability to recoup rising holding costs and potentially makes keeping the property unsustainable.

“Many assume that because rents are going up, investors are “exploiting” the market, but the reality is property ownership costs are growing at a much faster pace than rents.



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