Victorian Treasurer Tim Pallas has let slip that the State Government is considering rent caps, just days after it hit investors with new taxes set to cost thousands of dollars a year.
In a move that’s angered real estate industry experts, Mr Pallas said at a post-Budget Victorian Chamber of Commerce and Industry lunch that the government had ruled out a rent freeze, but would consider a rent cap or other intervention to ease renter’s pain.
“There has to be a point at which the community says this has gone beyond reason,” he said.
“I’m not suggesting that we won’t intervene in the way the housing market operates … it’s a question of what interventions are the most appropriate.”
But Real Estate Institute of Victoria (REIV) Chief Executive Officer Quentin Kilian said introducing rent caps would be the wrong move.
“The government is doing everything they can to undermine the ecosystem of the rental market,” he told the Herald Sun.
“We would be urging them in the strongest terms not to consider that kind of interference or distortion to the private rental market.”
But Victorian Council of Social Services CEO Emma King said fair rent controls would provide certainty for tenants.
“This is already happening elsewhere. In the ACT, landlords can only raise the rent by 10 per cent more than consumer price index (CPI) each year. This cap provides extra security and certainty for the tenant,” she said.
The news comes after this week’s Victorian Budget sparked outrage and fears landlords would leave the sector after the Andrews’ Government hit investors with new taxes as part outfits COVID Dept Repayment Plan.
About 860,000 Victorians with a second home or business will fork out $4.7 billion over then next four years under the levy.
Investors will pay $500 annual tax for properties with a land value between $50,000 and $100,000 and $975 if their additional landholding is valued between $100,000 and $300,000.
Landholdings worth more than $300,000 will see land tax payments rise by $975 plus 0.1 percentage point of the value of the land over $300,000.
Property Investors Council of Australia Chair Ben Kingsley said the policies would result in hardworking Victorians paying for the government’s incompetence for decades.
“This is what happens when you have so much debt as well as continued economic mismanagement and self-serving governance,” he said.
“Victorians will be paying for the government’s incompetence for not just years, but for decades.
“It’s a classic case of which policy is going to cause the least amount of political damage, so, they go after the aspiring and hardworking Australian, but aspiration in Victoria is officially dead under the Labor Government.”
RMIT University Senior Lecturer in Accounting Dr Venkat Narayanan also weighed into the debate today, saying any increases in taxes for low-to-middle income earners was “not appropriate” during a cost-of-living crisis.
“There are many opportunities, using tax, to repay state debt without impacting the most vulnerable,” Dr Narayanan said.
“To some extent it does make sense to tax owners of properties as they are not the most vulnerable group.
“However, the increase in land tax will drive up rents, eventually affecting low-income earners.”
Still, Dr Narayanan said targeting property taxes above a certain level may have been a better option.
“For instance, properties over $1.5 million are unlikely to be let out to lower-income renters,” Dr Narayanan said.
“Therefore, those groups could cope without having to pass on the cost to their renters or even if they do this increase, it may be more easily absorbed by renters.”
The Council to Homeless Persons has also lamented that the Victorian Budget doesn’t provide enough help for the state’s most vulnerable.
The council said Victorian homelessness services were still placing more than 4000 individuals and families in hotels and crisis accommodation every month so they are not sleeping in cars, on the street or other unsafe locations.
Council to Homeless Persons CEO Deborah Di Natale said the council was disappointed there was no capital commitment beyond the Big Housing Build and that Homelessness to a Home was not enough to relieve pressure on frontline services.
“The state government should commit to building at least 6000 social housing properties each year for a decade,” she said.
“The Big Housing Build is proof this government acknowledges the massive need for more social housing, but with 57,000 households on the waiting list, that initiative simply cannot be a one-off.
“As a state we’re investing in over 55,000 nights of short term accommodation each month.
“This is nowhere near enough to meet demand and does nothing to end someone’s homelessness. That’s were the combination of housing and support through H2H was remarkable.”