NSW Greens rent price caps won't work- and might make it harder to rent

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The key to cheaper housing is more supply, not rent controls.

The NSW Greens have demonstrated how differently they see the housing market to the Future Party. Today they have announced policy, including increased rights for renters (good) and rent price increase caps (really, really bad). We've had a generation of Greens councillors preventing redevelopment, which pushes up prices by limiting supply of new housing. Now they want to prevent rental price increases from rising above the rate of inflation.

The idea that the price of rental housing is bound to some range of consumer products is a fundamental misunderstanding of economics. They propose limits on rental increases, yet the price of owning will still be allowed to float. The inevitable results will be:

  • rental accommodation being sold to home owners in periods of tight supply, further tightening rental supply;
  • rises in rent of exactly CPI every year, to ensure landlords don't get legally locked into lower rents;
  • a massive increase in rents across the state in the period just prior to this legislation being passed;
  • only established renters being able to rent. Tight supply will lead to no new properties coming on the market, and people who are currently in housing never leaving;
  • deliberate ghettoing of properties (because it won't be worth maintaining properties to get higher rents);
  • renters offering alternative methods of payment to make up the shortfall. This could include under the table payments, or paying 6-12 months in advance, further locking out the young and the poor.

The Future Party has a plan to increase housing supply greatly, which will shift the market from renters fighting for properties, to landlords fighting for tenants. This is the only way to ensure that renters are given a fair price and are treated well.

In essence we need an alternative to the big incompetent parties, but the Greens are not that alternative. If you want to help us in a campaign to get elected in NSW, email volunteers.manager@futureparty.org.au. We need every little bit of help we can get.

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Showing 1 reaction

  • commented 2015-06-11 14:43:57 +1000
    Housing and renting unaffordability is a multifaceted problem — I wonder if tackling supply will do much good unless there are prohibitions on foreign investment in the residential market. If 1,000,000 new homes/units are built in the next year, and 80% of them are purchased by cashed up foreign investors who can afford to pay twice what a Sydney-sider could, then we’re back to square one. The Federal and state governments are ambivalent in their approach because of the revenue that these inflated sale-prices bring.

    Here’s an idea: how about basic Govt housing being provided to all Australian citizens if they want it (similar to Singapore) — it would be simple, affordable, and if you wanted to trade up and build your own, you sell it back to the government and then build your own more luxurious home. What are the likely problems with that? (Allowance also provided for those who’d rather rent at a nominal amount) At the core of the housing problem is the fact that housing is now regarded as an investment item, rather than a fundamental necessity. Investors’ rights are more important than ordinary Australians’.