Experts share their view on a rent freeze proposed by ACT Greens, and other solutions

The ACT Greens released a draft bill in late July pushing for a two-year ban on rent increases in the territory.

It coincides with the federal Greens' national push to have rent freezes and price caps included in the Labor Government's Housing Australia Future Fund, which was reintroduced to parliament this week after it stalled in June.

On a local level, Chief Minister Andrew Barr has already ruled out the ACT Greens' rate freeze measure, which could result in a split in the territory government's cabinet.

We asked three experts to put forward alternatives to freezing rents. Here is what they said.

Associate Professor Ben Phillips from the Australian National University's Centre for Social Research and Methods believes the ACT Greens' push for a rent freeze is unreasonable and unnecessary.

While advertised rents - the price of homes available for new tenants to rent - surged last year, Mr Phillips said there was evidence prices were coming down this year.

Through its draft bill, the ACT Greens were attempting to solve "a problem that doesn't necessarily, really exist", Mr Phillips said.

He said Canberra rents had increased "pretty slowly" over the long term.

A report published in March by the Reserve Bank shows over the past 10 years, rent inflation according to the consumer price index - which measures the prices of all rental stock - increased an average 1.5 per cent each year in Canberra.

"In recent years we have seen incomes increase more strongly than rents," Mr Phillips said.

"That's probably a shock to many people but that's what the official stats would say."

Mr Phillips said a rent freeze could deter investors, who were entitled to a "reasonable return on their investment" and were also facing cost pressures.

"Whether you like it or not, we have mostly a private rental market in Canberra and across the country and that's not about to change anytime soon," he said.

"So you want to have incentives there for people to invest."

Mr Phillips acknowledged rents were increasing for some people and many were facing living cost pressures, particularly those on low incomes.

Instead of a rent freeze, state and federal governments could be more generous to renters by increasing rent assistance and providing more public housing, Mr Phillips said.

But meeting the demand for public housing could take years.

"We've had a decline in public housing in the ACT and right across the country in the last 30 or so years and building that back up will take decades," he said.

"So rent assistance and increasing some of the working-age payments like the JobSeeker payment, that's where I would be looking in terms of a short-term fix for those who really are struggling the most."

Maria Edwards is the CEO of the Real Estate Institute of the ACT, the peak body for property agents. She said while there was a rental crisis in affordable and social housing in the ACT, the "mainstream" rental market in Canberra was not facing a crisis.

The rent freeze agenda was "short-sighted" and did not reflect what was happening in the local economy, she said.

"In the ACT, rents are going down and vacancy rates are going up," she said.

"So there's already plenty of nervousness for landlords and not a whole lot of incentive for them to consider buying an investment property or holding an investment property in the ACT."

A rent freeze would be "devastating" to tenants looking for a home in Canberra, Ms Edwards said.

She said investors were already citing the ACT's tenancy laws, high interest rates and cost-of-living pressures as reasons for selling their properties.

"There is the potential for [investor sales] to increase even further. Obviously prices are going to go up if the supply isn't there," she said.

As an alternative to a rent freeze, Ms Edwards believes investment in build-to-rent - where apartment developments are owned by one company and rented out long-term - is the key.

Encouraging investors to stay in the market should also be a priority, she said.

"Or at least not further penalise them," she said.

Ameeta Jain, a senior lecturer in finance at Deakin University, said the ACT's existing policy of rent caps was better than a rent freeze.

Rents can only increase in the territory by the rental component of the consumer price index in Canberra, plus 10 per cent.

But Dr Jain said increasing housing supply was also crucial.

"Chief Minister Andrew Barr has had policies to increase the supply of housing as well so it's not just capping rents it's increasing the supply of housing as well," she said.

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Dr Jain said freezing rents could encourage the practice of "black market" rent bidding. The ACT passed laws earlier this year to ban landlords and agents from actively encouraging rent bidding.

"Real estate agents don't say it in writing but verbally they say 'give me $20 more per week and we can give it to you'," she said.

"Rent bidding is banned but it's happening because the population of Australia has grown a lot but supply of affordable housing and housing stock has actually declined so policies need to move in the direction of increasing supply."

Dr Jain said rent freezes did not work in an economy like Australia.

"Land taxes are going up, insurance premiums, energy costs, everything is going up," she said.

"A rental house is also a commodity, it's a product in economic terms so it doesn't make sense. It doesn't add up. The product would not be supplied because the costs are increasing and the revenues are falling. It's simple economics."

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