Reluctant regulators? Rent regulation in Australia during the COVID-19 pandemic

Abstract

Rents in the Australian private rental sector (PRS) have long been determined by the market, but during the public health and economic crisis of the COVID-19 pandemic, state and territory governments implemented emergency measures to prevent evictions and regulate rents. This article reviews the rent measures implemented and their outcomes, using survey data and other quantitative evidence, and interviews with PRS stakeholders. We find the rent measures, which relied on negotiations between individual landlords and tenants, had a modest effect – just 8–16% of tenants got a rent variation – and tenants, landlords and agents struggled in unfamiliar roles. The emergency period holds lessons and prompts questions about future directions in policy-making for rental affordability and PRS relations.

KEYWORDS :

• Rent
• regulation
• Australia
• COVID-19

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1 The article draws on research conducted in 2020, and was drafted in March 2021, with some revisions following peer review made in July 2021. The article therefore does not discuss responses to the smaller outbreaks in several Australian cities in early 2021, nor the large-scale emergency in Sydney, and then other cities, from June 2021.

2 New South Wales, Queensland, South Australia, Tasmania, Victoria and Western Australia. The states are self-governing, subject to the federal government (also styled the Commonwealth, or the Australian Government) being paramount in certain matters per the Australian Constitution.

3 The Australian Capital Territory (ACT) and the Northern Territory. The territories are self-governing, much like the states, except the federal government is ultimately paramount in all matters with respect to the territories.

4 Most jurisdictions also allow rent increases during the fixed term, provided the tenancy agreement states the amount of the increase.

5 The onus of proof is mostly on the tenant. In Victoria, a tenant applies first to Consumer Affairs Victoria (Residential Tenancies Act 1997 (Vic) s 45), which prepares a report for the tribunal. In the ACT, if a rent increase exceeds the increase in the ACT Consumer Price Index (housing group) for the relevant period by more than 10 per cent, the landlord must apply to the tribunal and prove that it is not excessive, considering rents for comparable premises, outgoings and other factors; if it is not more than 10 per cent above the CPI, the tenant must apply and must prove that it is excessive (Residential Tenancies Act (ACT) 1997 s 68(4)).

6 Residential Tenancies Act 2010 (NSW) s 44(5)(a); Residential Tenancies and Rooming Accommodation Act 2008 (Qld) s 92(4)(a); Residential Tenancies Act 1995 (SA) s 56(2)(a); Residential Tenancy Act 1997 (Tas) s 23(2)(a); Residential Tenancies Act 1997 (Vic) s 47(3)(a); Residential Tenancies Act 1987 (WA) s 32(3)(a); Residential Tenancies Act 1997 (ACT) s 68(3)(g); Residential Tenancies Act 1999 (NT) s 42(3)(a).

7 In fact, New South Wales expressly proscribes consideration of the tenant’s income or their ability to afford the increased rent (Residential Tenancies Act 2010 (NSW) s 44(5)(h)).

8 The New South Wales controls had a long tail: there are still some tenancies subject to the controls, which are now incorporated as a schedule to the Residential Tenancies Act 2010 (NSW). Their number is unknown, but certainly tiny.

9 Twenty per cent is owned by a category combining households owning five or more rental properties, and non-household landlords (corporations and trusts) (Hulse et al., 2020).

10 Tasmania did not define a COVID-impacted group and instead had a broad moratorium. See Martin (2021) for a detailed discussion of the moratoriums.

11 Queensland ended its moratorium in September 2020; South Australia and the Northern Territory extended their moratoriums again past March 2021.

12 Victoria was the only jurisdiction to implement a scheme for registering variation agreements. The sample does not include variations determined by the conciliation service (or the tribunal); data about determined variations were not available.

13 Of the latter group, one-third (33%) moved out, while two-thirds continued in their tenancy – albeit at a rent with which they did ‘not agree’.

14 For example, the President of REINSW addressed tenants on social media advising ‘I need to be clear that any rent reduction that is agreed is not waived. It is just deferred and you still have an obligation to make those payments’. @REINSWnews (Twitter, 16 April 2020, 1.05 pm AEST) <https://twitter.com/REINSWnews/status/1250621411871211520>.

15 The agent was a Real Estate Institute committee member, but did not represent the Institute. Representatives of Real Estate Institutes in two jurisdictions were invited to participate, but declined.