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From Schwartz Media, I’m Ange McCormack. This is 7am.

The rental crisis in Australia shows no signs of slowing – rents have spiralled, and many tenants are at breaking point.

The Greens are calling for a national freeze on rents - which they say would save households thousands of dollars per year.

But in a country where renters have been overlooked - is there political will to address rising rents? And would capping them even work?

Today, former Labor campaign strategist turned pollster, and director of the Redbridge Group, Kos Samaras, on why the major parties could face a rebellion from voters if they ignore renters any longer.

You can read Kos Samras’ article in The Saturday Paper, this weekend.

It’s Thursday, August 10.

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ANGE:

Kos, you've taken a real interest in renters as a demographic in Australia. I want to know why that is. And historically, how have our political parties perceived renters as voters?

KOS:

I think why I’ve personally got an interest in it is that most of my family are renters to this day. But also it's, from my perspective, a political or logical perspective that I have on society, and that is that people without assets have historically in this country been treated fairly poorly by our major political parties. And historically that sort of treatment has been excused or there has never been a really a political price paid for ignoring these type of constituents. Now, we've had the property markets come along for the last 20 years, and it's created this, I would say, paradigm where you either own property, or you don't. And the chances of you getting into that housing market now, particularly if you’re a young person, are extremely remote. So we almost have these fixed cohorts now that don't quite move all that much these days.

They’re mainly the people that we talk to, our millennials, people under the age of 40 and zoomers and overwhelmingly to sum it up, society promised me that if I studied hard, I went and got a university degree, I did all the right things. I will be able to get ahead in life. Have a good job. I've got that good job. But it seems I will never be able to own a property.

And so there is this growing sense of resentment that these generations have towards older Australians and in particular towards established political parties where they've created a situation now where there are almost two classes of Australians, one that belongs in the renter space and the other one who owns property.

Archival tape -- Q&A Guest:

“And most of the, also most of the government are homeowners or a lot of them have investment properties as well. Yet, we're looking at like, the way that the rental market is happening. Rental increases are just going berserk.”

KOS:

So a lot of young people, we have young couples, for example, are choosing not to have, start families because the rental market is so haphazard and unpredictable that they can't plan their life more than eighteen months, two years ahead.

Archival tape -- Q&A Guest:

“Renters are on lower income, typically more casualised workforces, and we're expected to I don't know pay for raising interest rates. A rental, like an investment property is that - an investment. It's a risk. And yet our lives and our ability to kind of be in society and have a place to have a place over our heads is at the mercy of landlords…”

KOS:

So it's preventing them from making some significant life choices, which other people can. Because at the moment in this country, you could argue that the laws that are in place don't make tenants feel like it's their home. They feel like I'm here temporarily, I could be evicted at any time. And I think it's important for us as a country to empower renters so the home they are living in feels like a home.

Archival tape -- Patricia Karvelas:

“How grumpy is your generation?”

Archival tape -- Q&A Guest:

“I’m f*in sick of it! Like, come on.”

ANGE:

And that demographic is getting bigger right, in Australia. So why have politicians prioritised voters who can buy into the property ladder over voters who can't? Because, you know, as you're saying, this is actually more and more voters. Isn't it a political mistake to ignore them?

KOS:

Yeah. Up until recently, renters have not really expressed their politics through the ballot box. They've always been this quiet constituency that people really didn't pay much attention to, people being politicians. There's always been this fixation on mortgage backed electorates, on people who are getting into the housing market at a certain age and so on and so on. You know, we had the John Howard era where they introduced the first home buyers grant and he's always been of this incredible focus on owning an existing property. What we now have is effectively a constituency that he's rusted on in terms of their housing arrangement being they're probably not going be able to buy a home and they're working at ways to be heard. And we could see that in the last federal election, where a number of seats moved from the Liberal side of politics over to either the Greens, the Teals, or the Labor Party.

ANGE:

And so there is now agitation, you think, and it's becoming politicised.

KOS:

Politicised, that’s right, and we could see that banter within the Federal Parliament now between the Greens and Labor.

Archival tape -- Max Chalmers-Mather:

“With so many renters, one rent increase away from eviction, will we finally take national leadership and coordinate a national freeze on rent increases.”

Archival tape -- Albanese:

“This isn't an SRC. This is a national government. This is a national government. And what national governments have to do is put forward real solutions to issues.”

KOS:

Although I would argue with those two political parties actually they should be allies on this. Most voters actually have a view that if you're dealing with housing, if you forced them to choose between the Greens and Labor, there isn't much difference. So, it's probably not worth their while having this barney in the federal Parliament over an issue of stalling a bad bit of legislation that might help renters and young people accessing the housing market or having a better situation at home when it comes to their rental property.

ANGE:

And I guess there is a trend in this country of a perception that, you know, changing housing policy is hard. There's this idea that governments, you know, don't want to disadvantage so-called mum and dad investors who are renting their properties out. How true is that idea and are mum and dad investors, even the majority of landlords in Australia?

KOS:

Yeah. So there’s this notion that it's a mum and dad investor. There's no real data to tell you that there are couples that own the home. Right. So it's a term politicians use or the media uses to attempt to attach an emotional colour or filter over who these people are. 75% of landlords own only one additional property to the one they live in. So overwhelmingly they are these, you know, they are people who only have one additional property. The numbers of people who have multiple, multiple properties, are very small. This notion of, well, if we introduced certain measures to protect renters, these people will sell up, is not necessarily true. The data for our research doesn't back it up. We know that right now there is an increase of those type of investors, the ones we just talked about selling. But interest rate rises have a far more greater impact on that.

ANGE:

So Kos, if political parties are really concerned about these ‘mum and dad investors’, and they’ve historically looked after them as voters… is that going to be challenged anytime soon? Could the next election be the renters election?

KOS:

It kind of was in 2022 without really being about renters, but they were the ones who contributed more to that outcome than other constituencies.

So in 2019, the whole narrative after that election was about those coal seats, you know, the seats that Labor lost or could not secure because it got its climate footing wrong, or it picked on investors through promising to get rid of negative gearing. That was the narrative. In 2022 the constituencies that felt ignored in 2019, found a way to be heard - that was through climate and through housing as well. Housing in 2022 was in the background. It's now very much going to come into the foreground.

ANGE:

Coming up after the break - how other countries tried - and failed - to control rental prices.

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Archival tape -- Albanese:

“The commonwealth does not control rents, the commonwealth does not have the capacity either to abolish the private rental market.”

Archival tape -- Mehreen Faruqi:

“The Prime Minister is the most powerful man in this country. The Prime Minister is the chair of the national cabinet. It is the Prime Minister’s responsibility, and absolutely within his jurisdiction, to coordinate with the states and territories a rent freeze and a cap on rents.”

ANGE:

So Kos, I’m keen to talk about some solutions here and the latest idea we’ve started to hear about is a cap on rents. The Greens are pushing for a hard freeze nationally, and we’ve also heard that the Labor government in Victoria could be considering some kind of soft cap. So what do we know about how effective those sorts of proposals are?

KOS:

Yeah, so we do know the caps have been implemented around the world through, you know, countries like the US and parts of Europe and so on. And the evidence suggests that, although they are well meaning and the intention is all about trying to protect tenants from having to absorb exponential rises in their rent. The evidence suggests that what happens is the end result is not good for tenants. So in New York, for example, there has been some form of cap and rent control for a very long time. What those laws have effectively done is created a two class rental market. So investors in New York no longer have an incentive to pay for upkeep of those rental properties. So you have a lot of rental properties that haven't been renovated. Damages are not being repaired. And then you got the other end of the market where there is a lot of wealthy New Yorkers who are prepared to pay above the odds to basically live in really nice refurbished rental properties. So if you've got money in New York and you want to rent, you're going to have a good place to go and live. If you don't have money in New York, but you've got to rent, you're going to be living in a very, very downtrodden apartment that probably hasn't had a lick of paint in the last 30 years. And that's the consequence of rent control. So we do know that they generally don't work. They inevitably have an impact on tenants.

ANGE:

Wouldn't that impact, though, be a longer term one if that happened in Australia, say there was a freeze on rents. You're saying that landlords would need to recoup their costs somehow, so then they would not, you know, upkeep the property and so on. But in the short term, say over the course of if we just did this for a year, surely that would have a positive impact on renters’ pockets.

KOS:

Yeah, it would. But we go back to the problem that we're talking about before, about these investors who are overleveraged and having to sell their properties. So if those rent caps don't allow the landlord to keep pace with the interest rate rises and we could see a situation where properties will be put back on the market, then we know that once they put back on the market, there is an argument, oh well that increases supply. Well, really, in reality the people that have got capital and the numbers stack up here, to buy those properties are boomers.

ANGE:

It couldn't open up the property market for renters who are looking to buy?

KOS:

Well, the problem is the prices wouldn't drop enough for renters to actually access that market. Some of the research we've done in Melbourne, we surveyed renters in Melbourne exclusively and asked them if you could watch a price market. Two thirds of all renters that we surveyed in Melbourne, their response to that question was $500,000. So they're going to be competing against individuals who will be spending $750,000 to $1 million quite easily to purchase those homes, get put back on the market. So again, you create a situation where the cap is well-intentioned, but the consequence against punishes the tenant because, one, you've got less rental properties on the market. Two, when the landlords offload them, put them back on the market, it's not the renters who are able to buy them.

ANGE:

So to address this issue or potential issue of properties not being well-maintained and so on, if there was a cap, couldn't governments come up with a secondary solution to that and mandate some kind of standard across rental properties or something like that?

KOS:

Yeah, I think your point goes to a broader issue, which is about where I think what needs to happen in this space is, you need some form of rent control. Yes. You know, you can pair it to interest rate rises and CPI. Leaves very little room for those complaining about, well, you know, I'm going to have to sell my property now that you've capped me. No, not really. You can raise it in line with the interest rates. So that would be a sensible solution. If you consider there's a rent control in place and you can only raise it in accordance with CPI or interest rate rises. Well, that's fair, right? It's fair on the landlord and it's fair on the tenant.

And then on top of that, exponentially increase the rights for tenants. There are laws in other countries, for example, where the tenant can perform the repairs and build a landlord for it. So in many European countries, if something's broken in the house, it needs repairing. You don't have to, as a tenant, beg and grovel the landord to fix it. You fix it and build them.

ANGE:

I'm wondering if modelling a rent cap off CPI or interest rates rises is fair or would go far enough because renters by their very nature aren’t buying property, they're not part of the property market and yet they're being punished by a measure that is affecting home owners. I'm wondering how fair that really is because, you know, shouldn't they just have access to a sort of a home that is fairly priced?

KOS:

Yeah, that's I mean, you’re raising an interesting point, because if you introduce rent controls now, we've already seen an exponential increase in rental prices, which are above and beyond interest rate rises and CPI. So it's an interesting challenge there because if you introduce rent controls now, even with CPI and interest rate rises, you could find yourself in a situation where, okay, it takes away the landlord’s ability to argue that they need to sell, but they're probably already in an advantageous position because they've up until that point have actually been bumping them up above and beyond the expenses that die off from into that space.

ANGE:

And Kos we started by talking about how renters have been ignored by politicians from both major parties for a long time, as the wealth divide grows in Australia, what are the political consequences for governments if they don't do anything for renters if they continue to neglect this demographic?

KOS:

Yeah. So we know through our own research that the level of anger within these communities is growing exponentially I would say by the month now, especially now, if nothing is done in these space, that is drastic, but more importantly, illustrates to renters that governments are in their corner trying to fix the problem, genuinely trying to fix it. Because when you speak to real life renters and you say, well, do you think the political parties are trying to do anything, the immediate response is, of course they won't. They’re all property investors, they don’t have any personal interest to do so. So there's a lot of scepticism out there that there is any genuine intent amongst major political parties to do anything in this space. The consequences if they don't. Well, we saw a bit of that. We got a bit of a preview in 2022. So, you know, seats like Bennelong, Reid and Higgins went to the Labor Party, Wentworth to the Teals, Brisbane of course, you know, went to the Greens. Greens picked up three seats in Brisbane. If you look at these three seats, they got significant number of renters in those electorates and overwhelmingly these renters that we talk about are of a particular age cohort that we've spoken with touched on, right? So millennials and Gen Z, but also single parents, single adults who are much older and feel disenfranchised by the system. So they will find a way to make themselves heard. So if the Labor Government doesn't get its skates on and projects strongly to this constituency that is serious about fixing the problem, they will be in trouble in seats like MacNamara in Melbourne, seats like Cooper and Wills in Melbourne as well. So those to the Greens. A pathway to victory for Labor, for example, goes for a lot of these seats now.

We heard yesterday that the Federal Labor Government is now seriously considering moving into addressing the rights of tenants in this country and obviously talking to other state governments too to ensure they do something serious in this space. Now the question is how far they go.

ANGE:

Kos thanks so much for your time.

KOS:

No problem.

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ANGE:

Also in the news today…

Brittany Higgins has made her first comments since the release of the Sofronoff inquiry earlier this week.

In a social media post, Higgins criticised the police who were investigating her claims, saying they cast judgement on her because of her public advocacy and regularly said she shouldn’t proceed with pressing charges.

Bruce Lehrmann has always strenuously maintained his innocence.

And…

Around 8 in 10 Australians believe more money should be spent on public schools, according to new research by the ANU.

The poll also found more Australians still believe a private education results in better outcomes, despite evidence showing student outcomes are largely the same between private and public education.

From Schwartz Media, I’m Ange McCormack, we’ll be back tomorrow.

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