Sydney renter hit by 35% hike as housing crisis sparks calls to cap increases
Millie Bannister was already anxious about how much the rental market had skyrocketed in Sydney when she received a letter from her landlord saying they wanted to increase her rent by 35%.
“Last time, it only increased by $60, but now it’s going to increase by $270 a week, which is a 35% increase, and around $12,000 per year. For me and my roommate, two people in their mid-20s, it is not [easy] to wrangle with.”
The 26-year-old heads up the mental health charity Allknd, and says the rent increase will change her life and her aspirations, amid calls for the state government to consider regulating rent caps.
Related: From interest rates to the ‘race for space’: what is fuelling Australia’s rental nightmare?
“It’s extremely deflating and disappointing and almost heartbreaking as well,” she said. “A 35% increase I just don’t believe is attainable for the average person, because who is budgeting to have an extra $12,000 to spend on something that they already have?
“Because that extra $12,000 a year that we’re paying could have gone to purchasing a property. And now that is completely cut out of the budget.”
There is a a surging rental crisis in Sydney, where renters have faced an 11% increase in the past year, according to data from CoreLogic.
Sign up for Guardian Australia’s free morning and afternoon email newsletters for your daily news roundup
And with vacancy rates across the country averaging just 1.2% across all capital cities, it has left many extremely anxious about the prospect of trying to find appropriate housing.
“We feel exploited,” Bannister said. “Because we know that they’ll jack it up to above market value and that we have no negotiating power.”
Leo Patterson Ross, the chief executive at the Tenants’ Union of New South Wales, said it was a “nasty” time for renters, and that it was time for some form of rental control to alleviate the pressure on the market.
“So even if it’s only short term, stepping in and addressing the price, at least as a short-term response, would make the most difference.
“Rent caps, both during a tenancy but also between tenancies, is definitely something that we should be talking about as serious policy proposal.”
A repeated argument against rent caps is that it would disincentivise landlords from providing rental supply, or from maintaining their rental properties, but Ross said that wasn’t happening anyway.
“We currently don’t have enough supply anyway, so the market isn’t delivering. And we know that many renters are living with unaddressed repairs and maintenance needs, so we already have that downside.
“We already know the construction industry is not keeping up with demand. The materials are not there and maybe the workers aren’t there.”
Ross and the Tenants’ Union are proposing a rent cap that is pegged to the CPI, which would mean rents could be increased, but not beyond the reasonable means of renters.
A similar system has been implemented in different OECD countries around the world, including in Norway and Turkey, where regulated rents apply across the entire rental sector.
In the Netherlands, rent control is applied to dwellings listed below a specific rental price and in Germany regulations apply to rental dwellings in areas where there is pressure on the housing market, where rent is capped at 10% above the average rate for the area.
“Governments around the world have two big levers they can pull, either participate in the market, or they can regulate,” Ross said.
“In Europe, particularly, they tend to do both. In other places, they tend to do one or the other. And in Australia, generally, we haven’t really done either.”
Related: The Reserve Bank of Australia should hold off on raising rates again next month. Here’s why | Greg Jericho
Dr Chris Martin, the senior research fellow at the University of NSW City Futures Research Centre, said while demand and supply had often been repeated as reasons for the skyrocketing rent, there was often a simpler explanation: landlords were choosing to increase rent.
“Instead of just talking about demand, which we so often do, I think we’ve also got to put landlords in the frame,” he said. “When we say rents are rising, it’s in a passive voice, because landlords increase rent.”
Martin said landlords had largely been let “off the hook” and that it was important that discussions around rent increases are framed by the role landlords play.
“We just need identify that property investors aren’t at all a group who do something useful, productive and valuable. That’s the next thing that we need to have a crack at. And I think increasingly people are coming around to that.
“For so many people, they are standing in the way between them and housing. They’re not actually doing anything terribly useful and our housing policies shouldn’t be so accommodating to them.”