Rent stress in Australia is acute. The latest ABS figures show that more than 30% of Australian households are currently renting. The number of renters has actually more than doubled in the past 30 years.
Australian cities are amongst the most unaffordable for renting in the world. In some places rents have increased by 52% over the past decade. This has happened while the minimum wage has increased a mere 35%, and inflation by only 29% in the same period of time. Many people are spending more than 30% of their income on rent!
A staggering 40% of people who received rent assistance payments from the government last year were suffering from rental stress. Most live week to week and a bad turn of events has the potential to push many into homelessness. This begs the question: how to make rent more affordable?
Socialists argue that rent control should form part of the solution to Australia’s housing crisis. Generally, rent control means that rent landlords can charge to tenants is capped by legislation.
Rent control laws exist in Canada, Germany, Ireland, Sweden, and also in some states in the US. In Australia rent control was implemented during the 1940s as part of the effort to stabilise society and mobilise support for the war effort. It was immediately scaled back after the war, and now only applies to a tiny amount of properties.
When rent control is part of a comprehensive housing program it can be a useful tool to make housing affordable. From the 1930s through to the 1970s, New York City’s rent control measures were complemented by a massive building program of public housing. This made it possible for working class people to live in the inner city.
These measures were put in place to prevent landlords from profiting off the increase in property values driven by real estate speculation and a lack of supply. Rent control can have an impact on the power imbalance between landlords and tenants in a similar way to how the minimum wage acts as a safety net for low paid workers.
Like the minimum wage, rent control would eat into the profits of landlords and they would do their utmost to resist its implementation – or wind it back, as has been done in New York.
Opponents of rent control argue that legislation that capped rents would provide a disincentive for property developers to build more houses or to provide maintenance as they would look for other ways to make profits.
This is true but, instead of accepting the rule of the market, this points towards the need to take housing out of the hands of profiteers. Housing should be a basic right, and not another way for capitalists to exploit working people.
Alongside rent control we need to build more public housing. This would not only wipe out the waiting lists but would also create thousands of construction jobs. Such an initiative would have the added benefit of driving down rents in the private sector.
Wherever possible, socialists fight for reforms that ease the burden on working class people. Alongside rent control we stand for the right to long term leases and strict control over the conduct of landlords.
As well as a mass public housing building program, we demand that democratically elected resident committees are empowered to control housing estates. Ultimately, there is more than enough wealth in society to guarantee people a roof over everyone’s head as a basic right. The big four banks alone made $16 billion in profits together last year.
Having democratic control over the wealth created is the key to ensuring that people’s needs are met. Housing stress could become a thing of the past if the key sectors of the economy were brought into public hands and the wealth was used to provide homes and decent services for everyone.
By Tim Tran