Opinion: Rental caps could worsen the housing crisis

Love it or hate it, Australia’s rental market is driven by supply and demand. So the latest idea that’s being thrown around, that rents should be capped, might sound like a panacea to the crisis many are experiencing, but it would actually exacerbate the situation. The reality is, the only thing rent controls would dampen is supply, the very thing we need to reverse this grim situation.

Monthly rents are exploding across Australia and the national vacancy rate is at an all-time low. Landlords are in the firing line for raising prices, but the issue is, without investors, the quantity and the quality of housing dries up.

I lived in Paris as a renter for over a decade – a city where rents are somewhat proudly capped and controlled. France has a long history of laws that favour tenants. So much so that home ownership is a notion that many French don’t even entertain.

Extraordinarily long leases, no evictions if tenants cease paying rent in the winter or if they are pregnant, regulated utilities, pets welcome, creative licence for tenants to treat the home like it is their own – paint the walls, hang up pictures, configure your own kitchen – and, of course, controlled rents. It’s good and it’s bad; a tenants’ paradise and a tough place to be a landlord. 

With rent controls reducing housing supply, the further knock-on effect is that landlords are even more selective in who they approve as tenants. It’s a not-so-little secret that French nationals and EU citizens are unashamedly prioritised over immigrants or students.

In highly competitive arrondissements (Parisian neighbourhoods), leases are much more readily awarded to renters who are considered “BCBG” (an elitist expression referring to people who are “bon chic, bon genre”, or “good style, good class”). Beneath the surface, France is not so egalitarian, after all.

To stem the bleeding of this current crisis in Australia, we need to triage. Ensure those who need social and affordable housing are able to access it –  it is appalling that vulnerable people are having to compete in the private rental market.

Next, boost rental assistance allowances to ensure they are in line with the pace of rent rises. No ifs, no buts. And then, let’s get creative with finding and repurposing housing to help with supply.

Housing is not a privilege, it’s a right and we need to assist everyone who is contributing to it.