PLS EXPLAIN

Will old mate Minns’ rental increase limits actually help you pay your rent on time?

Late last month, the Minns Labor government introduced some sweeping rental reforms into NSW Parliament. The softly launched scheme has been bubbling away for a few months, largely to avoid the overt wrath of landlords. And despite their somewhat hush hush nature, they’ve been regarded as some of the most significant NSW rental reforms in over a decade.

If you’re a tenant, here are the five key changes worth noting:

1. No grounds evictions are being banned.
2. Rent increases are limited to one per year.
3. Having pets in rentals will be easier.
4. There will be fee-free ways to pay rent.
5. There will be a ban on paying for background checks when applying to a property.

In the competitive (and expensive) rental market of Sydney, many regard point number two to hold the greatest impact. It will ultimately protect tenants from experiencing multiple price hikes within one year, which is just a little bit nice.

And while the reforms have been met with welcome hands to the 53% of Sydneysiders who rent their home, it’s dangerous to assume this will fix all of our problems. That’s where we come in, to unpack what you need to be aware of.

Rental prices

For starters, while there may be a limit as to how many rent increases can happen a year, a cap on the amount an increase can be still does not exist. This means that once a year, landlords can up the price as much, or as little, as they’d like.

With fewer opportunities to increase rental income, skyrocketing interest rates, and a broader sense of economic volatility (particularly in the housing market), blind Freddy could expect that when it comes to setting that new annual rental price, landlords are more likely to go heavy handed. In other words, you could be paying more than you otherwise would.

In response, many have called for the State government to implement rental increase caps similar to those in San Francisco. However, this isn’t a reform we can expect anytime soon. Minns has previously stated he has “ruled out” implementing this type of limit, followed in territories such as the ACT.

The Law Society Journal even notes the government’s historic belief that such a policy would add, “gasoline into the fire of a complex housing crisis issue”. Which seems ironic, given the fact that rental increase limits are kind of a band-aid fix in the first place.

Domain Rent Report data has even gone so far to claim that Australians would have saved $4 billion year on year to March 2024 had said caps been put in place. And I don’t know about you, but that doesn’t sound like adding gasoline to the fire by any means.

Supply

That leads me onto the second issue. Supply. It’s the less glamorous, but far more important perspective to consider when assessing why we’re in this rental market mess in the first place.

At the end of the day, limiting the number of rental increases a landlord can set in one year doesn’t change the reality that there are just not enough fucking rentals going around. In January, there were 844 room seekers for four available rooms in Bronte. In Tamarama, it was one room for 344 house hunters. Trying to find a rental that’s actually somewhat affordable? You might as well be collecting hens teeth.

Rent is high because there aren’t enough rooms or homes being rented. It goes back to the fundamental laws of supply and demand, so a rent increase limit doesn’t really address the root of the problem.

Now look, we’re not going to sit here all day and have a pity party about the new reforms. They are 100% a step in the right direction. But describing them as some ‘landmark win’ that will entirely transform the currently climate is frankly, a plain old lie. All we can do now is cross our fingers and toes that maybe, just maybe, they’ll help us a little bit.