Further restrictions impeding landlords from upping rents, expected to be put forward by the Victorian Government, have been slammed by industry group Real Estate Institute of Victoria (REIV).
Mr Andrews recently confirmed that “everything is on the table” when it comes to the state government’s housing package, to be announced in the coming months.
It’s expected to include a cap on rent hikes and limit rent increases to once every two years.
Such a change could result in “untold damage to an already fragile rental market”, REIV CEO Quentin Kilian said.
“The result will be an increased and sizeable departure of rental providers, leading to much less rental stock available, much higher prices and more homelessness.”
Currently, Victorian landlords can increase rents once every 12 months and renters can challenge increases if they believe they are too high.
Further restrictions on property investors could see them exit the market in droves, which could be bad news for housing supply.
“[Victoria’s rental market is] already under duress from land tax increases, interest rates rises and increasing regulation,” Mr Killian said.
“What is needed is a measured approach, in consultation with industry, to incentivise sustained supply, not a knee jerk reaction that smacks of political opportunism.”
For now, Mr Andrews and the Victorian Government are keeping details of the package close to their chest.
“I think it will represent one of the biggest shakeups, in terms of delivering more housing and more housing choices and options, that our state has ever seen,” Mr Andrews said on Sunday.
“There’s nothing more important than getting more supply into our housing market,”
Renters in Victoria – and across the nation – have been struggling amid the current rental crisis.
The median cost of rent in Melbourne jumped close to 13% over the 12 months to June, according to CoreLogic data. The median renter was found to be forking out $551 a week.
It's no longer the cheapest capital city for renters - that crown goes to Adelaide.
The Victorian Greens and Tenants Victoria have welcomed the idea of rent caps.
“Finally the state government has realised they can’t keep ignoring renters and letting landlords hike up the rent by however much they like,” Victorian Greens renters’ rights spokesperson Gabrielle de Vietri said.
However, as SuburbTrends founder Kent Lardner recently told Savings.com.au, while rent controls are often contemplated with the “noble intention of safeguarding tenants and promoting stability in rental prices”, they generally have unintended consequences.
“Landlords and property owners, impacted by stringent rent control regulations, grapple with their ability to adapt rental prices to market conditions or recover escalating costs,” he said.
“This predicament acts as a deterrent for both existing landlords and potential investors, hindering the growth of the rental housing stock.”
Also expected to make it into the housing package is a new tax on short-stay accommodation, such as hotels and Airbnbs. That could reportedly come to around $5 a night.
Victorian opposition leader John Pesutto slammed Mr Andrews and deputy premier Jacinta Allan, saying they're “desperately looking to distract Victorians from the growing Commonwealth Games scandal.”
“Many Victorian renters are struggling and they deserve well-thought out reforms from the Andrews Government, not policy on the run and certainty not more new taxes,” he said.
A Canberra case study
Coinciding with the introduction of capping rent increases to inflation rates in the Australian Capital Territory, rental price growth in the capital has eased - so have vacancy rates.
This has led to SQM Research managing director Louis Christopher declaring an end to the rent crisis in the capital.
Canberra was the only capital city besides Hobart to see a decline in both house and unit asking rents in the 12 months to 12 July, declining 0.5% (now $768.50), and 1.6% ($556.51) respectively.
The vacancy rate is also 2.1% - the highest of all capitals, 0.8 points higher than the national average of 1.3%.
In terms of listings, vacancies more than doubled from 577 to 1,282 from June 2022 to June 2023.
Image by Simona Sergi on Unsplash
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