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Melbourne Real Estate Weekly Recap. Episode 8 - Rent Freeze

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Weekly Recap
Tim Ash
Tim Ash
September 6, 2022
minute read

Rent Freeze – What would it mean and why it’s a bad idea.

So how does the bill work and what does it mean?


Under the Residential Tenancies and Rooming Accommodation (Rent Freeze)Amendment Bill, landlords could only rent their property at the amount for which it was rented out on or before the August this year.

The rate would remain the same for the next two years, even if there’s anew tenant or the home has since been renovated.

After two years have passed, rents could only increase by 2% every 24 months.

They are are also calling for an end to section 91ZZD which means you wont be able to send a notice to vacate at the end of the fixed term lease.


According to the Prop track economist rental listings are down by 18% the same time last year and down by 30% prior to covid.

In Melbourne as we were the last ones out of lockdown our annual rents have only risen by 2.4% over the past 12 months.

Even though there has only been a 2.4% increase, investors are slowly starting tocome back to the market.

According to the Australian Breau of statistics the investors share of new housing lending is up to a little over a third nation wide after bottoming out at under a quarter in 2020.

Thistrend will start to bring some relief to the rental market particularly in some rural areas where rents are starting to level out however it will be a slow process as the number of investors buying relative to the stock of rentals is quite small.

As I’ve mentioned in a previous video inflation is currently sitting at 6.1% annually.

So it doesn’t make any sense that you can freeze one side of the equation, especially with interest rates expected to go up another 50 basis points today.

Do they expect investors to just carry the costs, especially after covid, not to mention the extra costs incurred by owners around minimum standards and lengthy delays at VCAT.

We’ve seen just how many rentals left the market during covid could you imagine how short the supply would be if the rent freeze was to be introduced for another 2 years and then to only be able to increase by 2% with inflation at 6.1% just this year.

The law will take the confidence out of the market, hurt the very people its intended to help as there will be a lot less choice and much higher competition and I believe you will find tenants offering a lot more than what the advertised rent is just to be able to secure a property.

This will essentially socialise the housing market, investors will put their money else where just like they did during covid which will create an even bigger shortage.

Realestate agents will do well in the short term as a lot more rentals will come on the market for sale and allow more choice for home buyers particularly in the apartment space.

The people saving for a deposit will be having to contribute more money to rent making it even harder to be able to enter the market.

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