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political reporter Claudia Long

Should the government freeze rents for two years? The Greens think it is a no-brainer, but economists are less certain

Economists argue a freeze isn't necessarily the best solution to unaffordable renting. (ABC News: Elizabeth Pickering)

The federal Greens are calling for a nationwide two-year freeze on rent increases as part of a plan to ease pressure on tenants.

The minor party are also pitching an end to no-grounds eviction, ongoing rent caps of up to 2 per cent every 24 months, expanding tenant rights and national minimum standards for rental properties.

But economists are warning the freeze may not be the right solution to Australia's housing crisis.

Seeking respite from cost of living crisis

Greens Spokesperson for Housing and Homelessness Max Chandler-Mather said the proposal would give tenants time for their wages to catch up on rent costs.

"It's completely unsustainable to have a situation where someone's rent can go up by as much as the landlord or real estate agent wants," he said.

"We're not calling for rents to be cut or reduced. We're just saying there needs to be a bit of a pause.

Max Chandler-Mather says the policy will allow wages to gradually catch up with rent increases. (ABC News: Michael Lloyd)

"In a context where wages have been only going up by just over 2 per cent, I think it's eminently reasonable to say that we just need to pause rents for a little while and regulate them in a way that ensures people aren't being evicted or shoved on the street."

Mr Chandler-Mather, a renter himself, wants to stop seeing tenants being crushed by the cost of living crisis engulfing the country.

"What this policy will allow [is] wage increases to slowly catch up to where rents are at the moment.

"Under our policy, which is actually relatively moderate, it wouldn't be until 2029 that wages would reach the same proportion as rents pre the pandemic."

Economists not quite convinced by freeze

Economist for the Grattan Institute Brendan Coates said the idea isn't necessarily the best solution to unaffordable renting.

"Rent control has a seductive, intuitive appeal which is that if you if you basically cap rent increases, then you're going to protect renters that are struggling to pay higher rental costs.

"But it also potentially has some big costs in the long run, which is that if you do have rent control in place, then you're limiting the ability of the market to tell investors, developers, everyone else that we need more housing.

Brendan Coates says rent control has some big costs in the long run. (ABC News: Peter Drought)

"And you can have a situation where basically the existing housing stock isn't maintained very well and there's less new housing built."

Instead of freezes and caps, he'd be keen to see more money in renters' pockets to support them to afford housing.

"The priority really should be raising the rate of rent assistance by at least 40 per cent," Mr Coates said.

"That would cost about $1.5 billion today each and every year and also the Commonwealth, the government should be pushing the states to reform land use planning rules that allow more housing to be built.

"Because we know that planning rules make it very difficult for developers and people to build more housing in the middle ring suburbs of their major cities."

Mr Coates is not entirely against the Greens' plan and said an end to no-grounds eviction would be a good move.

"Being evicted without cause is incredibly costly for many people… we're in a world now where as home ownership is falling, more people are renting for longer, including when they've got families and they need the stability and security as they build their lives around where their childcare centre is, where their school is and ultimately where they work," he said.

"So ending no grounds evictions is a no-brainer and pushing for better rental tenancy conditions that basically allow people to make the house their home is a really good idea.

"It's something that we've needed for a long time and if we saw that happen with federal government leadership, that would be fantastic."

Government under pressure to consider controls

CEO of the NSW Tenants Union Leo Patterson Ross said the Greens idea for a freeze should be properly considered.

"We think this is a really interesting idea, it does need to be worked through because it's not as simple as the federal government declaring it but we certainly think that rents are currently unaffordable," Mr Ross said.

"They should be returned to a level pre-pandemic and earlier because it has actually been more than a decade that rents haven't been keeping in line with incomes."

Like Mr Coates, the union backs the Greens call for an end to no grounds evictions and better nationwide standards for renters.

"No grounds evictions has been a problem in our tenancy system for decades, it undermines the rest of our law," Mr Ross said.

"So we have some decent laws that tenants in Australia don't get to experience because they're always at risk of eviction at the end of their lease or if they're outside a lease.

"The minimum standards, are also really important because we don't have a balanced, fair renting system.

"Although the laws already have a requirement to make sure that premises are habitable and fit for the tenants use, people don't have the ability to enforce those laws when we've got such a shortage of genuinely affordable homes."

The ABC approached Minister for Housing Julie Collins for comment but she was unavailable.

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