Bills

Residential Tenancies (Rent Freeze) Amendment Bill

Second Reading

Adjourned debate on second reading.

(Continued from 4 June 2025.)

The Hon. J.S. LEE (22:11): I rise to speak on the Residential Tenancies (Rent Freeze) Amendment Bill 2024. While the bill by the Hon. Robert Simms is well intentioned, aiming to provide relief to renters facing escalating costs, I indicate that I will not be supporting the bill.

My opposition comes from a deep concern for the long-term consequences that this bill may have on our housing market and the broader economy. I spent a lot of time meeting with members of our community. Many of these community members are renters, and I have heard countless stories from renters struggling to make ends meet and I empathise with all of them. I recognise that this bill is born out of genuine concern by the Hon. Robert Simms for renters, and rightly so. The cost of living is rising and many are struggling. However, it is uncertain whether or not the proposed solutions are sustainable and will inadvertently exacerbate the problem.

The bill proposes a two-year rent freeze followed by annual caps based on CPI. The proposed rent freeze, while offering short-term relief, poses significant risks that could undermine our housing market and hurt renters in the long run. Experts warn that such measures can reduce rental supply, discourage investment and lead to underinvestment in property maintenance. As economist Brendan Coates of the Grattan Institute puts it:

Rent control has a seductive, intuitive appeal…but it also potentially has some big costs in the long run. If you do have rent control in place, then you are limiting the ability of the market to tell investors, developers, everyone else that we need more housing…and you can have a situation where basically the existing housing stock isn't maintained very well.

This insight underscores the danger of well-meaning policies that fail to account for long-term market dynamics. It has been documented that rent freezes can discourage investment in rental properties, leading landlords to exit the market or convert properties to owner-occupied dwellings. This reduction in rental supply can tighten availability and make it even harder for new renters to find housing. We must consider the long-term implications of such policies and ensure that our housing stock remains well maintained and liveable.

Rent controls can distort market signals, reducing housing mobility and entrenching inequality between existing and prospective tenants. We have seen this play out before in Berlin and New York and the results were far from ideal. Rent controls in these cities have shown that rent freezes can lead to black market rentals and reduced turnover, ultimately worsening housing outcomes. While this approach aims to provide stability, it fails to address the underlying issues of housing supply and affordability.

Even without intervention, we are already seeing signs of market correction. Data released by PropTrack in January showed that rents had begun to decline in over 100 South Australian suburbs. Considering this, market forces may very well be recalibrating without any legislative intervention.

We must pay attention to all the factors and consider alternative solutions that address the root causes of the housing crisis. While this bill attempts to address a real and urgent issue and may offer temporary relief, its approach may be economically risky and potentially counterproductive.

I believe that we can take on all the arguments presented for this bill tonight and use them to call on both state and federal governments to pursue more targeted and sustainable solutions, such as expanding rental assistance, increasing investment in social and affordable housing, and reforming planning laws. With those remarks, I indicate that I will not be supporting the bill.

The Hon. R.P. WORTLEY (22:15): I rise to give the government's position on the Residential Tenancies (Rent Freeze) Amendment Bill 2024, and it is with deep regret that I must inform the mover, the Hon. Mr Simms, that the government will be opposing his bill.

The Hon. R.A. Simms: Here we go again!

The PRESIDENT: The Hon. Mr Simms, that's enough.

The Hon. R.P. WORTLEY: On 3 August 2022, Minister Michaels hosted a Residential Tenancies Act review forum to hear firsthand the issues impacting the residential tenancy sector. In attendance at the forum were key interested parties and stakeholders. Following the forum, CBS engaged in discussions with other state and territorial residential tenancy authorities to consider the practicalities of implementing the proposed reforms before developing a discussion paper that was then released as part of public consultation.

Initiatives put forward were directly influenced by the public consultation, with feedback received from more than 5,500 participants, a significant number of which were written submissions received from stakeholder groups. The intent of these proposed initiatives was to strike the right balance between protecting both tenant and landlord interests while addressing issues of rent affordability.

On 29 November 2023, the Parliament of South Australia passed the most significant updates to residential tenancy laws in almost 30 years through changes detailed in the Residential Tenancies (Miscellaneous) Amendment Act 2023. On 1 May 2024, the Hon. Robert Simms MLC introduced the Residential Tenancies (Rent Freeze) Amendment Bill 2024 to the Legislative Council, proposing a range of measures to amend the Residential Tenancies Act 1995.

The bill included proposed changes that would freeze the maximum amount of rent payable for a premises under a residential tenancy agreement for a period of two years. It then makes further proposals to:

limit rental increases to the consumer price index perpetually, once the rent freeze period ends;

mandate the maximum rent payable for residential premises and rooming houses accommodation by backdating to the amount indicated in a residential tenancy or rooming house agreement as of 1 January 2024;

prohibit landlords and proprietors and their agents from offering premises or accepting payment greater than the maximum rent payable under the agreement, noting that premises under the residential tenancy agreement on or after 1 January 2024 will be prohibited from entering short-term letting arrangements to overcome the maximum rent secured;

require the Commissioner for Consumer Affairs to keep a register of rents under an agreement and publish the median rent amount for comparable residential and rooming house premises by postcode; and

empower the South Australian Civil and Administrative Tribunal (SACAT) to determine and order the maximum rent payable for premises, including any increases under the agreement for tenants, landlords and proprietors.

During the forum held for residential tenancies sector stakeholders, it was the overall view of the parties in attendance that rent control measures were not a viable solution to rental affordability issues and may, in fact, cause an upsurge in rental prices. Economists have long argued that rent control disadvantages both landlords and tenants, exacerbating housing shortages and inequality. For landlords and investors, incentives to build or invest in real estate in South Australia are drastically reduced if there is the likelihood they will receive a lower return for an investment than they would elsewhere.

Restrictions also risk encouraging landlords to sell, to earn market price for their property, or take dwellings off the long-term private market and, instead, enter the short-term rental market, e.g. Airbnb, which is currently less restricted. The potential impact of this scenario would mean the availability of rentals in high-demand areas, e.g. the inner city, particularly those close to public transport, and with significant tourism appeal, would be greatly reduced. This then forces displaced tenants to re-enter an increasingly competitive rental market where the current supply does not meet the demand and increases the risk of homelessness.

Further, restrictions on rent are likely to lead to disrepair of rental housing stock. If they are unable to recoup their costs through associated increases, landlords may be less inclined to invest in discretionary maintenance of their properties or, in some instances, maintenance that meets the minimum legislative standards. Deterioration directly disadvantages tenants who then risk finding themselves in rental properties that are not safe and/or fit for purpose. They would have limited options to move elsewhere, and therefore remain in housing that is not suited to them.

Tenants remaining in housing that is not suitable for them also exacerbates the mismatch between housing size and household size; for example, the space and/or bedrooms required in comparison to the number of people living in the property. Reduced rental housing turnover due to limited supply can mean larger families, for example with multiple children, are not able to access a property that appropriately houses all members because single or double occupancy households may remain in larger properties due to the inability and reluctance to source a tenancy in a more suitably sized property elsewhere.

The proposed bill also looks to require the commissioner to keep and maintain an up-to-date register of rents for all residential tenancies, with failure to comply resulting in a penalty to the landlord or agent. This proposal would require a substantial increase in resources within CBS, particularly at the time where the proposed rent freeze ends, when many landlords would presumably look to increase the rent amounts and would then need to do so via a formal notification of the commissioner. Likely bond increases and the enforcement of any proposed penalties would also create further resourcing pressures.

An inconsistency might also arise between the proposed legislation and the recently released reforms if a landlord were to apply to SACAT and have an order granted increasing the maximum rent payable—whether during the rent freeze period afterwards—if the rent had previously been increased within the last 12 months, with the recently commenced provisions preventing that from occurring.

The proposed bill does not acknowledge that the act currently allows tenants who believe that an increase to their rent is excessive to apply to SACAT for a decision about whether their rent should be reduced for a fixed period. The factors that SACAT must have regard to in deciding if the rent is excessive already include things like the general level of rents for comparable premises in the same or similar localities, and the state of repair and general condition of the premises. Once the new rental laws commence later this year, changes to this section of the act will require SACAT to also consider if a rent increase was disproportionate, considering the amount of rent payable.

The Real Estate Institute of South Australia have expressed their strong opposition to the freezing of rents in any shape or form, labelling the issue of rental affordability as one of supply, combined with the fact that more people are renting due to high interest rates. Further concern was expressed that the freezing of rents would simply drive landlords out of the market and artificially create an unfair ecosystem of property management. The Real Estate Institute of South Australia conveyed their confidence that the reforms already introduced by the government, and those soon to commence, will address many of the fundamental issues of tenant longevity in properties and reinforce that rent increases must be proportionate to the current rent.

Taking into consideration discussions at the forum, economic implications and the potential risk to both tenants and landlords, it is the government's view that the bill should be opposed. While freezing rents would appear to be a simple method to increase rental housing affordability, the unintended consequences of any such move would likely have a long-term negative impact on the total availability of rental housing stock in South Australia and drastically reduce its quality. In consideration of this, and the current vacancy rate of less than 1 per cent, the risks associated with the Greens proposed bill are deemed too great. So, I would just like to re-inform the Hon. Mr Simms that the government will oppose your bill.

The Hon. J.M.A. LENSINK (22:25): I rise to speak to the Residential Tenancies (Rent Freeze) Amendment Bill 2024 and also indicate that we will not be supporting this piece of legislation. I think everybody recognises the serious rental affordability challenges in South Australia, with rents in Adelaide surging by over 50 per cent since 2020. However, this bill is not actually the solution. What is being proposed is well intentioned but, as a number of other speakers have also similarly stated, is actually counterproductive. The bill proposes a two-year rent freeze, followed by a permanent cap on future rent increases at CPI. It imposes a new rent register, gives the tribunal authority to determine maximum rents and restricts initial rent levels on new tenancies based on historical formulas. It is actually a comprehensive regime of rent control which is unprecedented for South Australia.

These measures do not address the real problem, which is the lack of housing supply. Instead, they threaten to make that problem worse. Freezing rents and capping increases deters new investment and current investment, which is the way that we will get ourselves out of this issue. This bill would reduce rental stock and disincentivise the construction of new homes that we desperately all need.

There is an abundance of evidence from jurisdictions that have tried similar schemes which demonstrate that rent control leads to housing shortages. Investors who would otherwise produce new stock flee the market and there is an actual deterioration in housing quality, which is not something I think anybody would support.

The Reserve Bank Governor has warned that the only long-term solution is to build more homes, yet this bill would do the opposite. A range of stakeholders with vast experience in this space, including the Real Estate Institute of South Australia, have very strong objections. Landlords, particularly smaller investors, face rising costs and they may be forced to reduce spending on maintenance or exit the market altogether, which would result in fewer rentals, while those that would remain in the system would likely deteriorate in quality. According to REISA, investor sentiment in South Australia is already fragile, and something such as this bill would drive more landlords out of the sector which would be a devastating outcome for renters in the long run.

This bill also creates a dangerous precedence of state interference in private contracts and property rights, although the Labor Party has done a bit of that itself. It treats all renters the same, regardless of income or need, and places the entire burden of the housing crisis on landlords, many of whom are not wealthy but rely on rental income for their own stability or to build their nest eggs. Particularly, it asks mum and dad investors to foot the bill for existing problems with our housing market.

We have already seen the consequences of poorly designed rent controls in other jurisdictions, such as the favourite jurisdiction of the mover of the bill, the state of Victoria, where the introduction of rent caps has coincided—is that a bit too pejorative or is it true (sorry, I apologise, I should withdraw that)—with a decline in private rental listings and a contraction in supply. Internationally, measures in Berlin and San Francisco have led to housing market distortions, black market leasing and worsening rental access for those who need it most.

The Liberal Party supports genuine action which will assist in supplying the market, but we believe in evidence-based solutions which are sustainable, such as through bond support, targeted subsidies and planning reform, which will assist us to get out of this housing crisis that we find ourselves in. As I have already stated, we are unable to support this bill.

The Hon. R.A. SIMMS (22:30): I thank honourable members for their contribution: the Hon. Jing Lee, the Hon. Russell Wortley and the Hon. Michelle Lensink. It does not appear as if the numbers are in my favour tonight, although I would like to call a division, so if someone wants to come in and provide me with a second voice, now is the opportunity.

It is disappointing to me that this parliament seems reluctant to take action on rent prices. I want to acknowledge the leadership of the Malinauskas government on rental reform, and the Hon. Russell Wortley is right to acknowledge the work of the minister in that regard. The Malinauskas government has embarked on the most significant changes to the Residential Tenancies Act in 25 years. The Greens were very proud to work with the government to secure some really important amendments that have strengthened the rights of renters in our state. But the one area where we could not get agreement was on rent prices, and consequently rents have continued to soar in South Australia. They have continue to skyrocket, and we do need to take some action on that.

I must take issue with some of the comments that have been made by the Hon. Michelle Lensink and the Hon. Russell Wortley, where they seem to imply that such a scheme is without precedent. Let's not forget that the Menzies government implemented rent controls. The Curtin government implemented rent controls and, indeed, the radical left-wing government, the Marshall government, during the COVID years implemented a moratorium on rent increases, which the Greens supported and we worked with the then Attorney-General Vickie Chapman to extend.

We are in the middle of an economic crisis, we are in the middle of the worst housing crisis in generations, so surely now is the time to provide some relief to renters who are struggling. All this bill would do is freeze rent prices for two years, and it would cap future increases in line with inflation. Over in the ACT, for many years they have had a model where rent prices are capped in line with inflation. It seems to me to be a pretty sensible proposition, at a time when some landlords have been able to rake in massive profits, that there should be some limit placed on the profits that landlords can make.

We have to move beyond this approach to housing where we regard it simply as a commodity, where some people are able to make a huge amount of money and meanwhile we have other South Australians who are struggling, who are sleeping on the street, who are sleeping in tents and who are sleeping in caravans. I urge members of this place to turn their attention to those vulnerable South Australians. If they are not going to support this bill then it is incumbent on members of this place to come to the parliament armed with alternatives, because no political party, other than the Greens, has been talking about what we can do to deal with rent prices.

I think the time has come for our state to take some action on this. We could not get the Malinauskas government over the line when we were dealing with the rental reforms a few years ago. We got some good changes in place and we made some positive progress, but we could not deal with the issue of rent prices. But the people of South Australia want this parliament to take action.

It is very easy for members of this place to come into the chamber and say, 'The Greens don't know what they are talking about,' and, 'This isn't the answer,' and yet none of them have come with their own proposals to deal with this crisis, other than the capitulation to developers, which we know is not going to deliver real change for South Australians who are struggling. With that, I conclude my remarks.

Second reading negatived.