In recent times, the government has been discussing the possibility of implementing a rent freeze for tenants in Melbourne, lasting for a span of two years. The aim behind this proposition is to alleviate the concerning issue of alarmingly low vacancy rates throughout the city.
Under this proposal, landlords would be prohibited from increasing the rent for their tenants during this two-year period. This initiative takes into account the fact that nearly 80% of property investors in Victoria are private individuals, often referred to as “mum and dad” investors.
Consequently, landlords would be unable to pass on various cost escalations to their tenants. These could encompass factors such as rises in interest rates that might have been accrued over the past year, increments in the cost of living, upswings in property maintenance expenses, and other related considerations.
At present, numerous property investors are barely able to sustain ownership of their properties. In fact, many are opting to divest rather than endure the ongoing financial burdens associated with maintaining an investment property.
Should this legislation come into effect, the ramifications could be substantial. A further exodus of property investors is likely, and the outcome for tenants would be equally bleak. The consequence would translate into a reduced availability of rental properties, further exacerbating an already dire situation.
For many property investors, this potential rent freeze would be the proverbial last straw. It would compound the frustration they already feel due to the perceived erosion of their rights through previous legislative reforms, compounded by the challenges posed by the pandemic, the impact of 14 interest rate hikes, and now this new proposal.
In essence, what is urgently needed is a collaborative approach, wherein the government listens to the input of industry bodies. This cooperative strategy is pivotal in finding a comprehensive solution to the persistent challenges plaguing Melbourne’s rental market.
