Wednesday, 1 November 2023

Residential Tenancies Amendment (Rent Freeze and Caps) Bill 2023

Second reading

Debate resumed on motion of Aiv Puglielli:

That the bill be now read a second time.

Renee HEATH (Eastern Victoria) (16:58): I rise to speak in opposition to the Greens bill for rent freezes and price caps. According to research and multiple case studies, this bill would quickly achieve three things: rental providers would leave the space; (2) this would cause a reduction in rental stock; and (3) it would lead to poorer quality in the rental stock. This bill establishes rent freezes on all rents for two years, creates a significant amount of bureaucratic red tape to all but prohibit rent increases for more than 2 per cent every two years and prohibits all initial leases being set at anything more than 10 per cent above the median rent.

I have found the Greens’ depiction of rental providers as wealthy property barons both non-factual and unfair. Their attempt to create a narrative that every rental provider is somehow a greedy capitalist is misleading and unhelpful. Analysis from PowerHousing Australia suggests just over 70 per cent of investment property owners have one property, and this cohort has the largest number of people earning under $80,000 of taxable income. Despite the narrative, the majority of these landowners are on low to middle incomes. I am thankful for them because they fill a huge need for renters in a market, and it is a void we desperately need filled.

This anti-assets crusade from the Greens is simply a war on aspirational Australians who have worked hard, saved, probably given up a lot of luxuries and perhaps bought their first property, lived in it and maybe purchased another one for somebody else to benefit from. Rental providers are not villains. They are playing a significant role in the community and the economy by providing rental stock, something we need much more of, and this bill would certainly make that vision a pipedream.

During recent public hearings we heard from a number of rental providers. Many of them were mum-and-dad investors. They did not live in mansions. They were not covered head to toe in Gucci. We also heard from Jess, who is a local real estate agent from my electorate in a place called Moe, who said since 2020, 291 rental providers had left the market due to escalating costs. Property and land taxes in the state are on the rise, and real estate agents have confirmed that the last two taxes that were introduced by this Allan government have been the straw that has broken the camel’s back for many. If we move away from ideology for just a second and focus purely on practicality, how can you raise taxes, implement price caps and expect to keep rental providers in the market while maintaining a proper standard? You cannot.

Cath Evans, who is the CEO of the Property Council, said:

… if we moved to a rent-capping environment, that would be a huge disincentive for investment into that asset class. We also want to encourage large institutions like superannuation funds to enter our residential market here as well, and they need certainty for their members about their return on investment. So rental capping would be a complete disincentive for us to attract investment capital into Victoria.

Here are a few things that the experts have said – rental caps worsen inequality. Brendan Coates from the Grattan Institute said:

Those that have a rental property that is a rent-controlled apartment, for example – this is widespread in places like New York – do very well, but no-one else can get into the area, so you end up with a two-tier rental market. I think that is something we should really … avoid.

In ‘Rent freezes could leave more homeless’, an op-ed in the Age, Brendan Coates and Joey Moloney from the Grattan Institute said:

Ultimately, if we freeze rents, more Australians could become homeless …

Another one is rental caps have severe unintended consequences. The Urban Development Institute of Australia said:

… the, although perhaps very obvious, unintended consequence – that all it would do would be to reduce supply across the market. The incentive for someone to invest as a landlord into making that property available on the rental market, that incentive would be reduced.

It also said:

I think you would probably quite frankly see a lot of properties move into … short-stay accommodation … rather than …

permanently renting it to people. That again is an unintended consequence on rental affordability.

The next one is that rental caps have been repeatedly debunked as a viable long-term solution to getting people into the housing market. Quentin Kilian from the Real Estate Institute of Victoria said:

We would certainly urge in the strongest terms not to bring in any form of intervention in the form of a rent cap or a rent freeze. There is ample evidence around the world that interventions of that nature do not assist the market; in actual fact they probably again discourage or dissuade investment into the market.

So there are a lot of things here that are just red flags to me. We need to get more people into the property market. We need to do this in order to reduce homelessness, which is affecting many.

During recent public hearings we heard from a number of rental providers. Many of them were mum-and-dad investors. We heard from Jess, like I said, from Moe, and the fact is that we need to take this advice on board and realise that the people that are providing this market often are not people that have just disposable income. They are people that are making sacrifices, and from their sacrifice someone else can benefit.

Government overreach will only leave rental providers even more hamstrung, leading to our mum-and-dad investors having no choice but to sell up, perhaps even to developers who have far less restrictions on needing to lease that property quickly. It is clear that rental caps and rental freezes end up restricting supply, and there are so many examples of this. In Dublin 2 per cent rental caps saw average rents on new tenancies increase by 14 per cent in 2022. A 2019 study in New York found that rental controls in San Francisco reduced supply by 15 per cent. And the Greens federal counterparts were left humiliated when they repeated a New Jersey example and it was found to be false. So the imposition of rent caps will likely result in many investors choosing to sell their property and not invest in the market, and that will lead to fewer available rentals.

It has been proven internationally, and this is a quote from the Real Estate Institute of Victoria, that ‘rent caps have an enormous impact on rental supply, diminishing it substantially’. So this bill will create just a complete bureaucratic mess. The bill provides an option for rental providers to apply for exemptions from the Director of Consumer Affairs Victoria for a lot of these arbitrary measures. The bureaucratic mess and the backlog that this would cause would be outrageous, and we would see so many rental providers, people that are trying to provide an essential service in Australia, waiting months for their exemption requests to be heard. The bureaucratic nightmare will only lead to more and more shrinking of the supply in the market.

So it is pretty clear I do not agree with this bill. It seems ideological and not at all practical or well researched, and I oppose this bill.

Samantha RATNAM (Northern Metropolitan) (17:07): I am so pleased to rise to speak in support of the Residential Tenancies Amendment (Rent Freeze and Caps) Bill 2023. My colleagues Mr Puglielli and Dr Mansfield have already highlighted in great detail the dire situation that many renters in Victoria are facing. I do not need to repeat the statistics but do want to share some stories that renters have told us. A mother told us her son’s story about renting near Melbourne Uni as a student:

His rent last November went from $190/wk to $350/wk. We complained to CAV and they negotiated $300/wk but then four months later my son was served an (invalid – no cause given) eviction notice which felt retaliatory. The management of the block my son has been in pressured my son and no doubt all students there to sign fixed term leases. My son has twice been locked out on the street because as someone on a periodic lease he has been told he has to get his key fob manually activated each month, only those who sign a new lease can have their fob guaranteed to work for the period of the tenancy.

Another renter said:

Paying half of salary as rent. Its hard and shameful sometimes. No savings, no new clothes.

Another:

I have been renting privately for over 20 years. With the rental costs increasing at the rate they are, I feel trapped and am losing hope of ever being able to save enough for a deposit on my own home, despite working full time. Our small rented flat is overcrowded. I sleep on the loungeroom floor so that my children can have a bedroom. If I moved to a bigger place, the rent would be so much more that I would not be able to save.

These are just a few of countless stories we continue to hear daily from people who are completely distressed by unlimited and out-of-control rent rises that are gripping Victorian renters right now. Many in this chamber have asked why the Greens are bringing up this issue. Well, it is because of them and on behalf of them, and we are not going to relent until we get real reform on out-of-control rent rises. Renters have been suffering for a long while. And if you remember what happened over the last 12 months and in the election, this government had no policies and nothing to offer renters when they went to the 2022 election. There was nothing in the budget for renters, and since then the crisis has only got worse. Labor is continuing to refuse to do anything to stop unlimited rent rises. With a tight rental market, renters are scared. What rent control also does is help rebalance the power relations. If renters are not scared of rent hikes being used to force them out, they have a better chance of ensuring maintenance is done and their homes are livable and being able to exercise their rights.

We heard a lot today, especially using anecdotal examples, about how rent caps will not work – Labor and the opposition singing from the same property industry song sheet – but less on when and how they do actually work, like right here in Australia and Victoria, where we had a rent freeze during COVID. The Labor–Greens coalition in the ACT has successfully implemented modest caps on rent increases. These measures have been accepted by the Real Estate Institute of the Australian Capital Territory, and the president conceded:

Rental caps were fine … because it provides some structure and keeps cowboys out of the market.

There are also rent control measures working in Germany, Ireland, Scotland and Denmark as well as hundreds of cities across the US. Rent caps work not just to keep housing affordable but also to keep communities together and to keep workers close to their jobs and community services. The government’s own housing statement acknowledges rent controls work in the short term. Well, we are in a crisis. Rents are still going up at ludicrous rates. This is why our bill calls for a two-year rent freeze, and that is why we are calling for urgent action now.

The government’s response of putting faith in the private property market to build more homes while abandoning public housing is misguided at best and likely more disastrous than ever, but even then it will take more years for this plan to come into effect to affect rents, so this story the government keeps trying to convince us of, that supply is the only answer, does not address and acknowledge the reality that we need action now. Renters are facing distress right now. That supply will not come into effect for years on end, so what do you say to the renters right now who are being forced out of their homes because of unlimited rent increases? Of course we know that rent control measures work best when there is also a strong commitment to public housing, and that is why the Greens will push for more public housing.

The driving rationale behind the opposition to rent control is wealth accumulation of those owning property. Australia has geared its property industry around creating the greatest wealth for those who already own property, leaving those who do not as second-class citizens. We only start to genuinely tackle our housing crisis when we are prepared to lower housing prices, including rents. The opposition to the bill we have heard in this chamber today tells us clearly which side the government and opposition are on, and it is not on the side of renters.

Pressure works. It has worked before and it will work again. On 11 November there will be a rally for renters in Fitzroy at the corner of Smith and Gertrude streets at 1 pm, and after hearing many in the chamber today and hearing how disconnected so many of you are with the reality for Victorian renters right now, I urge you and encourage you to attend, because you will hear directly from them about the distress they are experiencing.

We have also heard some really hard to believe arguments purported by both the government and the opposition today. I do not have time to respond to all of them, but I will just make a start before I will have to wrap up. We have heard the government talking about boosting supply, but that supply is going to take years to come into the market. Renters are distressed right now, and we must provide them urgent relief. We have heard the examples of New York and San Francisco being used and the rates of homelessness in those cities, but just think about this for a moment: how much worse would their housing crises be if they did not have some form of rent controls? You use individual factors to explain why rent controls will not work in places like Victoria and why they are not comparable, but you would not use those individual factors in those jurisdictions to explain what might be driving higher rates of homelessness in those jurisdictions, and you cannot have it both ways. Take homelessness, for example: it is commonplace for places and cities where there are better support services for those experiencing homelessness to actually have more people experiencing homelessness in their cities, and that is because people go to those cities to access those services. Why would you go to Texas, where there are not enough homelessness services, when you could go to San Francisco in the hope that you will be able to access a service and access a rent-controlled apartment? You must look at the factors that are driving rates of homelessness and look at help-seeking behaviour that often distorts the reality of what is happening in a jurisdiction. So I would urge everyone to think very carefully about the anecdotal data and examples that you pluck out to justify your unjustifiable position to deny proper relief for renters in distress right now.

We have heard the Liberal political party talk about the property industry and all the people that they have consulted from the property class, the wealthy asset owners, but where were you talking about renters experiencing distress?

Business interrupted pursuant to sessional orders.