Rent Control in Australia: Pros, Cons & 2025 Policy Insights

As rental prices hit new highs across Australia in 2025, the debate over rent control has reached fever pitch. With some cities seeing double-digit rent increases and vacancy rates at record lows, calls for government intervention are growing louder. But what exactly is rent control, and could it work in the Australian context?

What is Rent Control, and Where Has It Worked?

Rent control refers to laws or regulations that set a cap on how much landlords can increase rent for existing tenants. The goal: protect renters from sudden, unaffordable hikes, and promote housing stability. The concept is not new—cities like New York, Berlin, and Stockholm have implemented various forms of rent regulation for decades.

• New York City: Has a patchwork of rent control and rent stabilisation, capping increases and providing tenants with strong eviction protections. However, critics argue it has led to a shortage of available rentals and reduced investment in housing stock.
• Berlin: Introduced a controversial rent cap (Mietendeckel) in 2020, which was later overturned by Germany’s constitutional court. The cap temporarily froze rents but also led to reduced supply as landlords pulled properties from the market.
• Stockholm: Long-term rent regulation has created stable rents, but also lengthy waiting lists and a thriving subletting market as demand outstrips supply.

These examples highlight the delicate balance between affordability and supply—a tension at the heart of Australia’s current rental crisis.

2025: Australia’s Rental Crisis and the Push for Reform

This year, Australia’s rental market is facing unprecedented strain. According to the latest CoreLogic data, national rents rose by 8.6% in the year to May 2025, with Sydney and Brisbane outpacing the national average. The national rental vacancy rate remains below 1%, and more than a third of renters now spend over 30% of their income on housing—a classic definition of rental stress.

In response, state governments are testing new policy levers:

• Victoria: The government is consulting on a proposal to limit rent increases to once every 24 months and cap them at inflation (CPI) plus 2%.
• Queensland: Introduced a 12-month rent increase limit in 2024, but advocacy groups are calling for further action, such as a hard rent cap.
• ACT: Already has a rent cap linked to CPI, but some argue it needs to be stricter given the pace of market rises.

Federal Labor has so far resisted calls for nationwide rent control, citing concerns about discouraging new housing supply. However, with cost-of-living pressures dominating headlines, the political appetite for reform is rising.

Pros and Cons: Who Wins and Loses with Rent Control?

Rent control isn’t a silver bullet, but it does offer tangible benefits for renters—especially in overheated markets:

• Stability for Tenants: Rent caps can protect vulnerable renters from eviction and prevent displacement from rapidly gentrifying areas.
• Predictable Housing Costs: Knowing rent can’t spike unexpectedly helps households budget and plan for the future.
• Community Cohesion: Stable tenancies foster stronger neighbourhoods and reduce turnover.

But the downsides are real—and Australia’s property sector is vocal about them:

• Reduced Investment: Investors may shy away from the rental market if returns are capped, worsening housing shortages.
• Maintenance Concerns: Landlords might cut back on repairs if rent increases can’t keep up with costs.
• Market Distortions: Over time, rent control can create black markets, with tenants subletting at higher prices or ‘key money’ payments becoming common.

Recent modelling by the Grattan Institute suggests that while modest rent caps (tied to inflation) can help relieve pressure, heavy-handed controls risk shrinking supply and making things worse in the long term. The challenge is to strike a balance that gives renters relief without choking off new housing construction.

What’s Next for Australia’s Renters?

As the housing crisis deepens, expect rent control to remain at the centre of political and policy debate through 2025. With state elections looming and renters representing a growing voting bloc, governments are under pressure to act. Whether Australia opts for targeted, time-limited rent caps or broader regulation, the coming year will likely see significant experimentation—and scrutiny—of any new policies.