The state government has passed new tenancy rules restricting rents to one increase per year.
On the surface this makes sense, there is a supply versus demand issue and that competition is pushing up prices.
Rental prices under $650 per week are the most competitive and the intention is to protect tenants.
But in a practical sense I have sReal Estate Tipseen and heard some feedback that may work against the intention.
The first is that many owners had been only moderately increasing rents at six month intervals to stop big increments for tenants.
To further assist tenants, some owners have leases with ratchet clauses in place.
This is designed to soften the blow of a big rent increase.
It allows the tenants to start their lease at a lower increase and move up after six months to a price more in-line with the market value. These leases will not be enforceable after July 1 2023.
We now have owners who are leaning toward giving their tenants notice to vacate who are currently ending a six-month lease. This allows them to go to the open market to get the current value. This only compounds the issue. These tenants will be facing the unenviable task of having to find a new property and pay market rent somewhere else anyway.
Before people get all ‘greedy landlord’, think about the increases to landlords – five interest rate rises in the last six months.
It’s a hard problem, but rather than capping the price, fixing the supply issue seems like a much better target to aim for.