CBD renter Will Arnott will fight his proposed rent increase.Credit:Justin McManus
Arnott said he was in a better position than most. He said some CBD tenants were being asked to pay as much as $200 a week more,and landlords were using the tight rental market to jack up rents.
“Investment carries risk. They decided to invest in real estate,” he said. “They know that interest rates can go up and it’s not just free money.
“It’s kind of just greedy to be pushing prices up because they know they can get away with it.”
Arnott wants to see a rent cap introduced to prevent rapid increases displacing existing tenants.
The one-bedroom apartment at 502/106 A’Beckett Street,Melbourne,is for rent,with an asking price of $525 a week.Credit:Harcourts Melbourne City
Real Estate Institute of Victoria vice president Jacob Caine said snapping rents back to pre-pandemic levels was unnecessary,and that landlords should instead raise them gradually to maintain a good relationship with their tenants.
“The REIV hasn’t got a firm policy of what rent increases should look like. But they should be in line with market conditions,” he said. “It needs to be fair and it needs to be considered.
“[I ask:] what’s fair in the current climate,what are the costs of changeover for a renter and for an owner? There is a cost benefit to keeping a great renter in place.
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“[I tell landlords]:‘Why don’t we go somewhere where we can retain that renter? Why don’t we make the process gradual?’”
Caine said rent caps would exacerbate supply issues by discouraging new investors to enter the market and increase the supply of rentals.
Chief economist at investment bank Jarden,Carlos Cacho,said something needed to be done to resolve the housing crisis,but hedid not support rent caps.
“It’s an abominable situation and there are just no easy solutions,” he said. “In terms of supporting households through a period of rental stress,income support is a better solution than policies that could constrain supply in the medium to long term.”
Cacho said constrained supply and high demand were the biggest drivers of the crisis.
“It’s a perfect storm of factors that have led to it,” he said. “One of the factors that has been under-appreciated is that during COVID,we saw a shrinking in household size which increased housing demand by 120,000.”
The one-bedroom apartment at 402/118 Russell Street,Melbourne,is for rent for $750 a week.Credit:Dingle Partners
International migration had also been higher than expected,which had worsened the situation,Cacho said.
“Combine those two things together,you have an increase in underlying housing demand around 300,000,” he said. “Construction has faced material delays,and although we’ve seen a boom in housing activity,we haven’t seen a rise in completions.
“It looks like we’ve had over the last two years basically no additional rental stock coming onto the market based on that data.”