By Rachel Eddie
The number of Victorians challenging extreme rent hikes has tripled in two years as the number of tenanted properties goes backwards despite a government promise to increase supply.
Consumer Affairs received 7469 requests to review rent increases for “excessiveness” in the year to June 30, the Department of Government Services told a parliamentary inquiry ahead of hearings last week.
That’s up 37 per cent on the previous year, when 5448 renters went to Consumer Affairs to assess the increasing cost to lease their property. It’s tripled since 2021-22, when 2452 people challenged their rental rises.
Dan Jordan, 28, had to move from the CBD apartment he shared with his partner because the rent almost doubled in two years from $420 a week – first to $600, then to $800.
The student, who works in hospitality, sought a rental review from Consumer Affairs. “They didn’t do a lot,” he said.
Jordan was told the latest increase was not excessive based on the cost of comparable properties on the market nearby. The couple moved instead to a smaller apartment, where they now pay $500 a week.
Dan Jordan’s rent almost doubled within two years.Credit: Eddie Jim
Even if Consumer Affairs finds a rent increase is excessive, it is non-binding. A tenant would have to take it to the Victorian Civil and Administrative Tribunal if the landlord insisted on sticking with their price.
Tenants Victoria chief executive Jennifer Beveridge said repairs and maintenance used to be main gripes from renters – but this was now being challenged by complaints about rapid rent rises.
She said some people’s rent had gone up by 30 or 50 per cent, putting them in serious financial strife.
“Surprisingly, or maybe not surprisingly, we are also seeing significant percentage increases [in rent rises],” Beveridge said.
“It’s just not possible for it to continue to increase [at this rate].”
Meanwhile, a key measure of how many properties are being leased in Victoria has slumped.
The number of rental bonds held by the Residential Tenancies Bonds Authority – an indicator of how many properties are actively leased – has dropped more than 6000 in a year.
The government expects 230,000 additional rental properties will be added to the Victorian market over the next decade – including 70,000 facilitated by its housing statement plan – but the figures show the number is going in reverse.
Consumer Affairs executive director of regulatory services Nicole Rich told the parliamentary inquiry on Tuesday there were 732,125 active bonds in the state on June 30, down from 738,414 at the same time last year.
The state government expects 230,000 additional rental properties will be added to the market over the next decade, but new data shows the number is going backwards.Credit: Joe Armao
Despite that, the total value of those bonds is going up – reaching $1.46 billion compared with $1.38 billion a year earlier.
Under questioning from committee member Nationals MP Danny O’Brien, the regulator agreed that the combined cost of renting fewer homes had gone up.
Recent Department of Families, Fairness and Housing data indicated the reduction in tenanted rentals was even worse – down more than 20,000 in a year.
Victorian Greens renters’ rights spokeswoman Gabrielle de Vietri said Labor was leaving renters in the lurch by “tinkering around the edges” instead of capping rents. Under current rules, rent can only go up once every 12 months.
“While landlords can hike up rents by unlimited amounts, we’re just going to keep seeing more and more people forced out of their homes and into rental stress because of unfair rent increases,” de Vietri said.
Tenants Victoria has called for a new fixed formula to determine maximum rent increases.
But opposition housing affordability spokesman Evan Mulholland said the Victorian government’s land tax for investment properties – rolled out in January as a “COVID-19 debt levy” – was to blame.
“Premier Jacinta Allan’s massive increase in land tax has created an environment where it is uneconomical for mum-and-dad investors to have a stake in the property market, and it’s vulnerable Victorians who can’t get a roof over their head that are paying the price,” Mulholland said.
Real Estate Institute of Victoria chief executive Kelly Ryan said the reduction in active bonds and the increasing number of people challenging rent rises were intertwined.
She blamed factors including minimum standards for housing – introduced in 2021 and due to be expanded again – rent freezes and a ban on evictions during COVID-19. This was exacerbated by a run of interest rate rises before the Victorian government expanded land tax.
Together, she said, landlords were often left with two levers – sell or put the rent up.
“Not through anyone’s desire to want to do that, but that’s just the reality,” Ryan said. “They’re also feeling the financial squeeze in their own lives, their own mortgages and their own cost of living.”
Ryan said it would take years to realise the government’s pledge to increase housing density in Melbourne and boost supply, but that Victoria had already passed a tipping point.
“We need to deal with an issue we’ve got now,” she said.
Jordan said he wanted there to be some kind of limit on rent increases, such as the cap the Greens have been campaigning for.
“It’s pretty difficult because you need to strike the right balance for having rights for renters and live in a home … but you’ve also got to make it a reasonable investment for people,” he said.
The National Shelter-SGS Economics and Planning annual rental affordability index, released on Friday, found affordability was worsening in Victoria and had hit a historic low in the regions.
A Consumer Affairs spokeswoman encouraged anyone concerned about an excessive rent increase to contact it for assistance.
The Allan government will next week bring a housing bill to parliament to ban and penalise all types of rental bidding – first promised in last year’s housing statement.
A government spokeswoman said the best way to make more rentals available and drive down the cost of leasing was to build more homes.
“We know we need more homes right across the state because more homes means more opportunities for young Victorians – it’s why we’re introducing some of the boldest housing reforms in the country,” she said.
Start the day with a summary of the day’s most important and interesting stories, analysis and insights. Sign up for our Morning Edition newsletter.