Anyone who’s been paying attention knows rents have shot up in Brisbane in recent years – particularly in inner-city suburbs like West End. Lower-income residents and students have been priced out of the area in droves – a vibrant, innovative community is fracturing and dispersing.
These renters are the people who give inner-city communities their special character, putting hours of unpaid work into building and maintaining community relationships, producing creative works and cultural capital that add significantly to the appeal of the inner-city. But when your landlord ups the rent by $100 a week at short notice, that community garden you planted and your years volunteering at the soup kitchen don’t count for squat.
Recent reports suggest the rental market might be cooling. But this is likely to be a temporary phenomenon. Rents will start climbing again once all the younger uni students who postponed moving out of home get sick of living with mum and dad.
Rising rents are less of a problem when wages and welfare payments rise to match, but when rents increase rapidly (well in excess of inflation) over a short space of time, the shock tears neighbourhoods apart… Uni students have to move back to the outer burbs. Homelessness increases. Families are up-rooted. Kids have to tell their friends that they won’t be coming back to school next week.
Similar problems exist in the commercial sector. Independent small businesses like fruit shops, bakeries and hardware stores struggle to remain viable when commercial leases rise rapidly. Next time your favourite local business closes down, ask them what pushed them over the edge. Odds are it was a sudden rent increase; customer willingness to pay higher prices for basic goods doesn’t usually keep pace with property prices.
Housing unaffordability is a complex problem, though perhaps not as complex as some politicians like to make out. If we scrapped negative gearing and the capital gains tax exemption, the added revenue could be invested into more public housing. Brisbane City Council could require property developers to allocate a certain percentage (e.g. 15%) of their new apartment towers as affordable housing. But such changes will take time to yield results on the ground.
In the short-term, rent controls are one of the most effective policy levers available to minimise the harm caused by property investment bubbles and sudden rent spikes. Different forms of rent control have proved effective in many cities around the world (including Berlin, New York and Toronto) and take many forms. Commonly, a rule is passed at the city council level mandating that rents can’t rise by more than a certain percentage each time the lease is renegotiated. This maximum percentage increase can be set at a fixed rate, or linked to some other indicator, such as CPI. Different caps can apply to residential and commercial tenancies.
Alongside rent controls, we need to consider stronger protections against tenant discrimination, and changes to minimum lease periods. In Brisbane, the social and economic cost of renters continually moving house is immense. Landlords shouldn’t be able to offer leases less than eighteen months long unless tenants request it.
These changes would provide renters greater certainty, and would help prompt a cultural shift where renters take greater care of their homes because they know they’ll be there for the long-term. Greater certainty can also mean tenants invest more time and energy getting to know their neighbours and volunteering in the community, thereby improving everyone’s quality of life. It would mean students don’t have to skip lectures and work extra shifts just to pay the rent. And if a few property investor landlords decide they don’t want to own rent-controlled properties, that means more homes on the market for owner-occupier families.
Rent controls certainly aren’t a panacea. They won’t stop real estate agents discriminating against Aboriginal tenants and student tenants, or prevent chain stores using anti-competitive practices to force out independent local businesses. But they do help mitigate the negative impacts of gentrification, where the people who work hard to make an area more liveable become victims of their own success.
It’s hard to accurately predict how rents will change in Brissie over the next few years. Recent evidence from cities like Dublin suggests that an over-supply of low-quality apartment stock doesn’t necessarily result in lower rents. But what’s pretty certain is that at some point in the future, whether in Woolloongabba or Wacol, rents will rise steeply, and unless we have rent controls in place, the same old cycle of upheaval and displacement will repeat itself.