Magazine of the Socialist Party, Australian section of the CWI

Rent control: How would it work?

The capitalist market has created a housing affordability crisis in Australia. Landlords, developers and speculators have made billions of dollars profiting from people’s intrinsic need for a place to live.

The most recent figures from the Australian Bureau of Statistics are stark. Between 2006 and 2016, median weekly rent across Australia ballooned from $191 to $335 per week, rising twice as fast as inflation. In the same period, homelessness among young people aged 19-24 spiked 66% in Victoria and a massive 117% in New South Wales.

Currently, although landlords are limited in how frequently they can raise rents, the amount that it can be raised is unregulated. This is an extremely precarious situation, especially for low income earners and people who are out of work, as there is nothing to stop a landlord hiking rent beyond a tenant’s ability to pay.

Rent control should be introduced immediately to alleviate the financial hardship that millions of tenants face. Rent control involves legislating restrictions on how much landlords can charge. It functions as a price ceiling to help address the unbalanced power that landlords have over tenants, in the same way that minimum wage laws put limits on the exploitation of workers.

Rent control laws have been fought for by working people and exist in some form in several US cities, as well as Canada, Germany, Ireland and Sweden. However, many of these laws have gradually been wound back or did not go anywhere near far enough to begin with.

In Germany for instance, new rental contracts are capped at 10% above the average market rate in each district. While this prevents extreme rent increases, existing rents are already unaffordable. Cities like Berlin are some of the most expensive places to live in the world.

As part of the Socialist Party’s Renters Fightback campaign, we are calling for a nationwide cap on new and existing rents at 20% of income. In addition, we demand expanded rights for tenants including long-term and infinite leases, and mandates for landlords to ensure rental properties are well-maintained and liveable.

The best way for these rules to be administered and enforced would be through the creation of an independent State Housing Authority, with an elected board accountable to the public. Such a body should replace the role of for-profit real estate agencies in acting as an intermediary between landlords and tenants.

Landlords should have to register a rental property with the State Housing Authority, ensure it passes all maintenance criteria, and then be matched with tenants seeking to rent in the same area. The Authority could then determine an appropriate level of rent to be paid by each tenant.

Critics of rent control point to places like Sweden, where a form of rent control exists, and the average waiting time to be allocated a controlled rental property is nine years. Far from an argument against rent control this shows that the private market is incapable of providing enough affordable housing. This is an issue in places both with and without rent control.

The solution is to remove the profit motive entirely. Rent control is a partial measure that needs to be implemented in conjunction with other housing policies. Taken alone it is not enough.

For example, in addition to rent control the state needs to step in and provide high-quality public housing on a massive scale as an alternative to the private rental market. The Socialist Party is calling for 500,000 new publicly owned dwellings Australia-wide as a first step towards this type of setup.

This task should also fall under the responsibility of a State Housing Authority. Alongside new construction, it should be able to purchase existing buildings to ensure adequate housing is available in inner-city areas. Small landlords unhappy with the new rules would be able to sell their properties to the Authority at market value.

Housing should be a basic right, not a means to make profit. In a country with as much wealth as Australia, it is obscene that homelessness and rental stress exist at all. The major parties are criminals for presiding over this situation.

Socialists fight for all reforms to make life easier for ordinary people. However, only by taking economic control out of the hands of the billionaires to be wielded by working people can we transform society so that everyone’s needs are truly met.

By Alex Trott