The " Rent Control " Bogey !

The government is wisely introducing protection measures to stop landlords serving eviction notices on people forced out of work by this COVID-19 lockdown.  This not only applies to the eight million Australians who live in rented accommodation but will also protect rented business property forced to close because of the health risks.

The government has used its lawful powers to force shops and offices to close and will pay $1100 a fortnight to  compensate those out of work.  This protection is simply an interim measure until we see where the virus is going and how long the lockdown may last.  The government is not stepping in to pay rents but seeking to spread the loss of income from the lockdown over both the people renting and their property owners.

Rents are a significant measure of the economy and represent  $ 16.5 billion in Sydney alone. A lot of rental properties are owned by retired people who rely on the rent for their income and what could be termed a rent freeze will have a wide financial impact.   It may even drive down the inflation in house prices as buying to achieve a renting income becomes more risky.

This humanitarian  measure is clearly necessary, but many people will compare it with the rent control era of the second world war. Our troops serving overseas were paid just a fraction of their civilian income and rents for their dependents were frozen accordingly.  These " protected tenants " could not be evicted under any circumstances and as a result of legal judgements the low rents they paid continued for years after the war's end.

It reached the stage that the property owners were often receiving rent at a level insufficient to even pay the council rates, and they were legally responsible for maintaining the property value and replacing items like hot water services that failed with age.  It often required a substantial cash bribe to persuade a protected client to yield and vacate a rented property.

The government needs to be very careful that this rent protection does not gradually - by one court decision at a time - evolve into a similar " protected rental " shield that seriously impacts on the rental market.  The owners of rental property also have needs and in framing the necessary legislation it needs to have a clear time frame.  Otherwise - like that war time measure - it simply becomes too politically sensitive to gain the numbers to bring it back under control by the parliament.