Last week, tenant advocacy groups renewed their call for rent caps in Western Australia. REIWA remains strongly opposed to rent caps.
“We understand the frustrations with the rental market,” REIWA President Rob Mandanici said.
“WA rent prices have risen significantly over the past few years and rental affordability is at the lowest level in decades.
“However, rent caps are one of those policies that sound far better in theory than they work in practice.
“They may offer some financial security to the incumbent tenant, but they significantly disadvantage those looking for rental properties in the future.
“For example, when a tenant leaves, the rent is lifted significantly back to market levels, which new tenants pay. And investment property owners will set the initial rent at the absolute market rent and let the home sit vacancy for a few weeks if necessary to ensure they get the maximum rent possible because they know subsequent rent increases will be constrained.
“In addition, when an owner knows they may not be able to adjust the rent for years, the choice of tenant becomes a much more important decision. Owners will lean towards applicants who look like the lowest risk. The people who lose out are the ones with the least rental history, such as young people, people new to WA, and anyone rebuilding their life after a hard few years.
“The ACT is often cited as an example of rent caps working. However, their market is still extremely constrained and investors continue to sell and exit that market. The vacancy rate is 1.5 per cent according to Domain, which shows the ongoing imbalance between supply and demand. Rents are also at record highs. Rent caps have neither improved supply nor prices.
“Even Victoria, which advocacy groups often hail as the gold standard for tenancy regulation, has ruled out rent caps.
“In its 2023 Housing Statement the Victorian Government said: Rent control is a policy that, on the surface, appears to address the issue of affordable housing by limiting the amount landlords can charge for rent. But despite its intentions……rent control often worsens the housing crisis by discouraging investment in housing, reducing the quality of rentals and distorting the housing market.”
The international experience with rent caps
Mr Mandanici said there was a wealth of international evidence showing what happened when rent prices were regulated.
“A major study of San Francisco’s expansion of rent control found landlords responded by reducing rental housing supply by 15 per cent. Rent prices rose by 5.1 per cent,” he said.
“That market remains significantly challenged with the imbalance between supply and demand pushing rents up 25.6 per cent in the last year. The Mayor recently called for even more regulation.
“Stockholm operates one of the world’s most heavily regulated rental markets. Nearly 900,000 people were in its housing queue in 2025, with an average wait of nine years for a home.
“Ireland is often held up as the model Australia should copy. Yet its housing crisis persists, with a 2025 study finding evidence of exit from the rental market, specifically after rent controls were tightened in 2021. Rent controls were associated with more sale listings and fewer rental listings and registrations of private residential tenancies.”
The issue is supply
Mr Mandanici said the fundamental problem with WA’s rental market was not that rents were allowed to rise but that there are not enough rental homes.
“Rising rent prices are a result of the imbalance between supply and demand,” he said.
“Nothing in a rent cap will add a property to the rental pool. It does not release land, shorten an approval, or give anyone a reason to build. It sets a rule about what can be charged for something there is already not enough of.
“If we want renting to become more affordable, we need to increase supply. Rent caps will not do this. By adding more constraints on investors, they risk making it worse, which will then put more pressure on prices and on tenants.”
The side effects of capping rents
Mr Mandanici said capping rents had a range of effects.
“When rental income is capped, but costs are not, something has to give and it’s usually maintenance and the tenant is the one living with it,” he said.
“Rent caps also tie a tenant to the home they’re in, not the home they need. The San Francisco study found rent control reduced renters’ mobility by 20 per cent. If you have a new baby, a new job or a relationship that has ended, moving means giving up your capped rent and paying full market rent somewhere else. A cap that only protects you while you stay put isn’t security, it’s a trap.
“Rent caps also don’t consider who actually needs help. A tenant on a high income in a capped home gets the same benefit as a struggling family. If the goal is to help renters under pressure, let’s try and find ways to help them directly.”
Good regulation needs to consider how housing is provided
Mr Mandanici noted REIWA’s opposition to rent caps was not an argument against regulation in general.
“We support sensible tenancy law. Renters are entitled to security, to proper protections, and to a clear set of rules covering their relationship with the person who owns the home they live in,” he said.
“Good regulation also has to consider how rental housing actually gets provided. Most WA rental homes exist because a private individual chose to put their own money into a property for someone else to live in. That choice is made one owner at a time. It can be unmade the same way.
“An owner who decides the numbers no longer work can sell. The house still stands but it may stop being a rental and every property that leaves takes home out of a market that is already short of them.
“WA’s rental market remains under enormous pressure. This is likely to increase in the wake of the Federal Government’s changes to taxation policy. We should be doing everything possible to encourage investment in rental housing, while appropriately protecting the people who live in it.
“Because ultimately there is one economic reality no amount of regulation can change; if we want more rental homes, someone has to be willing to invest in providing them.”