Real Estate Institute of Australia president Pamela Bennett has slammed the Labor Party’s proposal to cap rents in Australia, saying it would be disastrous for rental affordability and the property market.
The proposal, which is to be considered at the national conference, aims to monitor rent costs in the private rental market and examine mechanisms to maintain affordability by introducing rent capping legislation.
"To cap rents in the private rental market would be counterproductive to the objectives of improving affordability. It would reduce the supply of rental housing which would be detrimental to rental affordability," Bennett said.
An REIA press release said that the move would see a similar outcome to the Hawke Government’s 1985 decision to deny investors tax deductibility of interest payments. That decision was reversed within two years after it resulted in an undersupply of rental property and escalating rents.
“The proposal is not sustainable and when it is reversed, rents will soar,” Bennet said, adding that instead of capping rents in the private rental market, more focus was needed on increasing supply in the public and private rental market.
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