Rent controls are not a ‘zombie idea’

June 26, 2023
Landlords are the real zombies, constantly searching for more rent
Landlords' constant desire for higher rents is far more zombie-like than rent controls. Graphic: Green Left

As rents skyrocket across the country and many people are faced with forking out hundreds more each week, the 31% of households who rent are looking for solutions.

The Australian Greens, and particularly its housing spokesperson Max Chandler-Mather (who is among the few MPs who rent) want rent controls and a two-year rent freeze.

Victorian Labor is considering introducing rent controls and new taxes on AirBnBs and vacant properties. But federal Labor has refused to negotiate with the Greens on this.

Rent controls are common across Europe and parts of the United States, with some cities having them in place for decades. They have been deployed to stop inflationary or unaffordable rents.

Australia had rent controls during World War II which, in some states, lasted until the 1980s. As the inflated housing market has made long-term renting the only choice for most people, it is incumbent on all levels of government to come up with solutions.

Unsurprisingly, property developers are furious at the thought of even temporary rent freezes, as it would limit the “market” and their ability to make a profit from extorting renters.

Greens Senator Peter Whish-Wilson reported that a landlord who owns 58 properties visited his office to complain. “We have the right people worried,” Whish-Wilson remarked.

The Australian Financial Review (AFR), a mouthpiece for capitalists, has been warning against rent controls because it would “distort the market”. The solution, it argues, is simply “supply, supply, supply” — release more land to developers and rip up “red tape”, that is, construction regulations.

The AFR's Richard Holden argued in Why rent controls are a zombie idea” that it would “distort the market”. “They cause sellers to sell less and buyers to buy more than they otherwise would”. He pointed to Venezuela’s food shortages in the early 2000s as an example of the so-called counterproductive impact of a price ceiling.

He didn’t point to Venezuela’s housing policies, which are some of the most progressive in the world.

Holden said rent controls would leave landlords with less incentive to repair and upgrade properties (as if that is holding them back now).

There are countless stories of tenants being too scared to ask for repairs in case landlords jack up rents or threaten eviction.

AFR cites a 2019 American Economic Association (ACA) paper analysing the impact of rent controls in San Francisco in 1994, which found a 20% reduction in resident “mobility” — that is, tenants did not have to move as often. Some even ended up buying their rental properties. But the AFR counts this as a negative.

While the ACA said “lost rental housing supply likely drove up market rents in the long run”, it found rentals in San Francisco did reduce in the long-term as property developers and landlords re-developed buildings to avoid controls and often sold to owner-occupiers.

Other studies have found rent controls had little impact on the number of available rentals and can increase the supply.

A 2020 study mapping out rent controls and tenants’ rights across Europe makes the Australian government sound even more out of touch.

The AFR’s class bias means it will not analyse how the “market” is failing growing numbers of people, both young and old, some of whom were once secure.

With 45% of low income households experiencing rental stress, giving investors free reign to jack up prices is no solution.

Rent controls and freezes must be part of a broader push to end the commodification of housing and revive the idea of housing as a human right.

In Berlin in 2015, the state government decreed a “tense housing situation” and applied a rent freeze. In January 2020 the Parliament of the Federal State of Berlin adopted the Rent Cap Act, imposing a five-year rent freeze, and rent caps limiting monthly rents in particular for older buildings and considering the state of the bathroom and central heating. Rent can be raised if modernisations are made. Fines can be levied on a landlord if they breach the law.

Rent controls preserve the supply of affordable housing and, as Jacobin noted in an article on housing in the US in 2019, responsible government must take an interest in ensuring people on low incomes can live across the city, not just in the outer suburbs.

Rent controls would help communities thrive, allow people to live closer to work and family and give people breathing room in the midst of a cost-of-living crisis.

Rent controls alone will not fix the housing crisis: we also need massive investment in ecologically sustainable public housing, a vacancy tax, an end to unfair landlord subsidies, such as negative gearing, and strict regulations of AirBnBs and other short-term accommodation.

Green Left is committed to fighting for real solutions to end the housing crisis. Help us by donating to our 2023 Fighting Fund and becoming a supporter today.

[A “Housing as a Human Right” panel will feature public housing activists at the Ecosocialism 2023 conference in Naarm/Melbourne on July 1. Get your tickets here.]

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