In recent months, there has been a lot of talk regarding a potential rent freeze to protect renters from out-of-control rent rises. While the Victorian Government has ruled a rent freeze out, saying the key to housing affordability is more supply, many questions have been raised about whether a rent freeze could work. Below, our real estate agents in Melbourne take a look at both sides of the debate.

The Arguments For

Increases Rental Housing Affordability

Implementing a rent freeze could help to stabilise rental costs by preventing frequent, substantial rent increases. When rental properties remain at a stable price, this leads to an improvement in overall housing affordability.

Prevents Overinflation of Property Rates

A rent freeze can act as a check against the overinflation of property rates. When rental prices surge unchecked, they can drive up property values and encourage speculation, making housing markets more volatile. By curbing excessive rent hikes, a rent freeze can maintain market stability and reduce the risk of property bubbles.

Protects Tenants from Rent Rises

Rent freezes offer protection to tenants against unaffordable rent increases, ensuring that tenants can remain in their homes without fear of being priced out due to a steep rise in rent. This improves housing security for tenants and provides a greater sense of stability.

The Arguments Against

Reduces the Availability & Quality of Rental Housing Stock

Implementing a rent freeze may discourage landlords from investing in property maintenance and upgrades. With limited profit margins, landlords may have less incentive to provide quality housing. A rent freeze could also deter potential property developers, reducing the overall supply of rentals.

Creates a Black Market in Rental Housing

A rent freeze could inadvertently drive rental transactions underground. If legal rent prices don’t align with market demands, some landlords and tenants might engage in off-the-books agreements. This would undermine the transparency of the rental market and could lead to tenant exploitation.

Discourages Investment in Rental Properties

Rent freezes may discourage individuals and businesses from investing in rental properties. The prospect of limited returns due to rent caps can stop property owners from expanding their portfolios, ultimately reducing the supply of rentals.

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