Queensland's Rental Cap Proposal: A Dangerous Path? (Interview With Zoran Solano)

Zoran & Maddyson Solano

What's Happening

In response to Queensland's housing crisis, as evidenced by record low vacancy rates, rental bidding and massive increase in homelessness, the state government is "very seriously" considering implementing a price cap on private rentals. 

This cap would limit annual rent increases in an attempt to ease pressure on the housing market. However, I honestly believe that this move could result in a "bloodbath" as investors withdraw from the Sunshine State, further aggravating the housing crisis for everyone.

As the managing director of Hot Property Buyers Agency, I've witnessed firsthand the challenges that renters and investors face in Queensland's housing market. Recently, the state government proposed a rent cap, aiming to alleviate the burden on families struggling with rent increases.

While the intention behind this proposal is commendable, I believe it could lead to disastrous consequences for the housing market. In this blog post, I'll discuss the proposed rent cap, why I think it may not be the solution, and what other experts have to say.

Why I Think This Isn't the Solution

While a rental cap may initially seem like an effective way to help struggling families, the potential consequences for the housing market could be disastrous. 

A rental cap could help struggling families, but it could also have massive detrimental effects on the housing market. For example, property investors may have to pay more for land, rates, and other expenses, making the property a liability rather than an asset. 

In my experience working with property investors, I've seen that many are already facing significant costs, and for some, these costs already outweigh the rental income they receive.

The proposed cap could discourage new investments and cause current investors to sell their properties, leading to a reduced housing supply and possibly even a decrease in property values. As Ray White Marsden principal Avi Khan asks, "And then when those properties are sold, where do the renters go?"

What Other Experts Are Saying

Experts and industry insiders argue that the housing crisis, not rent prices, is the real issue at hand. Bruce McBryde of the Property Owners' Association of Queensland explains that the government should focus on increasing the housing supply rather than penalising investors.

Antonia Mercorella, CEO of the Real Estate Industry of Queensland, shares this sentiment, asserting that the government's proposal fails to recognise investors' crucial role in providing housing options in the state. She emphasises that most of these investors are "mum and dad" investors with only one property and that the government should be thanking them, not punishing them.

In my professional opinion, the proposed rent cap could have dire consequences for Queensland's housing market. Instead of implementing a cap, the government should focus on addressing the root of the problem: the lack of housing supply.

Conclusion

While the Queensland government's proposal to cap rent prices may be well-intended, it is not the only solution to the state's housing crisis. Increasing the number of homes available to rent, as well as providing more support to renters, is what is really needed to make a difference. 

As someone who works closely with both renters and investors, I'm a strong believer that focusing on increasing the housing supply rather than penalising investors will be a more effective and sustainable approach. With the debate raging on and conditions dire for so many, I sincerely hope that the government and industry leaders can work together to find a solution that benefits both renters and investors and ultimately addresses the root cause of the housing crisis.