Rent Control !

A spate of comments on the problems facing some people who rent the place they live in has dragged the issue of rent control into the political arena. In New South Wales the state opposition has promised to enact legislation to protect renter's rights - if it wins office.   This threat has sent the government into speculation mode on changes to the law to deliver a new " renter's rights " regime.

What seems to be at the crux of the problems facing renters is the ability of landlords to issue an eviction order without stating the reason  and both the short period of lease terms and the ability for rent increases to be imposed with frequency and without advance warning.

Labor is proposing to  extend the default length of leases from six to twelve months and limit rent increases to once a year.  It is also musing with a plan to impose five year tenancies in some circumstances, but with " consultation within the industry ".

This sounds suspiciously like " rent control " and we last had that at the start of the second world war.  In order to maintain stability for the dependents of troops defending the country their kin were deemed " protected tenants ", immune from eviction and with the rent set by a tribunal.  That quickly became too politically sensitive for change, and years after the war ended we still had people exercising their " rights " to live in premises for which they were paying rents that did not even cover the council rates.   This situation made those premises impossible to sell, and the unfortunate owners were obliged by law to replace any facilities forming part of those premises that failed.  Some owners were deemed " asset rich " but doomed to penury.

The founder and owner of development and rental giant - Meriton - has fired a shot across the bows of this proposal.  He is threatening to stop construction of new rental housing and to start selling existing properties if rent legislation makes the rental industry economically uncompetitive.  Harry  Triguboff's warning can not be ignored.  Like all other commercial ventures, providing dwellings for rental is a legitimate business that must make a profit to be viable.  If unreasonable legislation voids that profit and owners realise on their asset it will create a huge rental shortage - and drive rental prices soaring.

There certainly is room for improvement in the current rental law.  Those " no reason " eviction orders have long passed their useful purpose and should be discontinued.  A request for legitimate repairs should not be a reason for a forced eviction and rent increases need to be restricted to a sensible time spacing.  People delivering a " good " tenancy deserve protection and the certainty that their lives will not be interrupted.

But - all renters are not good tenants.  Some deliver an intolerable noise level that disturbs their neighbours.  Some hold wild parties and often have domestic discord.  Rubbish left around and the parking of cars often comes into dispute.   There is a real need for managing agents to have control and sometimes this can only result in tenant eviction.

The problem with any form of rent control is that the moment it becomes a political issue, unrealistic expectations come to the fore.  The side of politics not holding office can promise rewards they may not deliver should they form government and such promises become a pressure point in the public mind when reasonable legislation is being proposed.

The tenancy laws do need modification but that needs to be carefully evaluated to cover the needs of both parties.  Should a law change badly alter the balance between the rental public and the owners who provide the dwellings the outcome will benefit nobody.  A return to " rent control " could be a disaster !