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Knowledge Is The Real Power

Knowledge Is The Real Power

Rent controls don’t work but better education does, argues David Faulkner

By: David Faulkner

1 October 2022

In recent weeks we’ve seen tenant advocate groups as well as the Human Rights Commission demand improvements for tenant rights and, once again, we see a call for rent controls.

Tenant advocate groups, such as Renters United, continue to apply pressure to improve tenant conditions, acting as a lobby group. They have directed their focus on councils with local body elections taking place, which isn’t a silly idea. Local councils have significant, often under-utilised power, including the right to inspect properties, ensuring they comply with relevant legislation.

Paul Hunt, the Chief Human Rights Commissioner, made similar demands in a recent opinion piece in Stuff. Hunt believes it’s unfair to burden tenants with enforcing compliance and that Tenancy Services should do this.

The ideology of such demands isn’t without logic. However, with an estimated 600,000 rental properties across the country, the cost and logistics of creating such a task force would be substantial. The one thing the public sector doesn’t need is more bureaucrats. Our bloated public sector has grown significantly under this current government and it’s debatable whether this has improved renter conditions.

Hunt’s article felt like another attack on landlords and property managers, basically accusing the sector of widespread discrimination. He also suggested the government implement another ideological yet ill-thought-through claim for rent controls.

In March 2021 an article I wrote grabbed the attention of the national media. I predicted we would see the implementation of rent controls following the government’s knee-jerk reaction to a housing crisis by nullifying the ability of landlords to offset interest against income. I argued this would have a significant detrimental impact on the amount of tax landlords would have to pay. Landlords would be forced to increase rent significantly to counter the added cost, and the government would look to enforce rent controls.

Sure enough, many regions have witnessed previously unseen rent increases as many landlords vacated the market, leading to a lack of supply and more costs burdened on landlords.

‘Tenants have, in fact, never had as many rights as they now do’

Power Imbalance

Hunt believes there’s a “power imbalance” favouring landlords as tenants are too afraid to take landlords to task for fear it will affect their chances of getting another rental.

Tenants have, in fact, never had as many rights as they now do. The last few years have seen the following changes introduced to protect the rights of tenants:

  • The ability to have all or part of the rent refunded to a tenant if they are renting an unlawful residential premise.
  • Greater tenant privacy rights, including a more robust two-step application process to eliminate tenant discrimination.
  • Name suppression in the Tenancy Tribunal, so tenants no longer fear being blacklisted.
  • The removal of no-cause terminations. Landlords must have a valid reason to end a tenancy. Unlawful tenancies can result in a tenant claiming up to $6,500 in exemplary damages, plus the notice may have no effect.
  • The introduction of Healthy Homes standards means no tenant should be living in a cold, damp, and unhealthy home.
  • Tenants can seek exemplary damages of up to $7,200 if a landlord fails to fulfil their obligations under landlords responsibilities and breaches Healthy Homes standards.
  • Tenants can seek a further $5,000 in exemplary damages if a landlord fails to follow through on work orders issued by the Tenancy Tribunal.
  • Tenants can make minor changes to the premises. Landlords must have a valid reason to refuse.

Tenant education requires improvement. In his article, Hunt references a case where a father was going to be made homeless through fear of retribution from a landlord who failed to repair a heater. If the Human Rights Commission had given this father the correct advice he would have had nothing to fear, and the heater would have been repaired.

Rent controls don’t work. Better education of tenants and their advocacy groups is the best and most affordable way of protecting tenant rights.