Masterclass: How to Solve the Rental Crisis
As a renter who’s felt the pain of Australia’s rental crisis, I’m eager to talk about solutions. We’ve heard a lot about the problem – now let’s focus on how to fix it. The good news is, there are plenty of ideas out there. The challenge is putting them into action in a balanced, effective way. In this post, I’ll outline some major strategies to solve the rental crisis: boosting housing supply, strengthening renter protections, changing incentives, and exploring innovative approaches. I’ll break these down and discuss the pros, cons, and how they could help. This is a big, complex issue, so solving it won’t happen overnight – but with the right mix of policies and determination, we can definitely make things better. Let’s dive into what needs to be done.
Table of Contents
Introduction
Build More Homes (Supply is Key)
Protect and Empower Renters
Fix Incentives and Funding
Think Outside the Box
Take Action!
Build More Homes (Supply is Key)
One thing almost everyone agrees on is that Australia needs to build more housing. Simply put, there aren’t enough homes for all the people who need a place to live, especially in high-demand areas. Increasing the supply of housing – particularly rental housing – is crucial. When there are more homes available than there are households, vacancies go up and rents come down. So how do we build more, and what kind of homes?
Invest in affordable and social housing: A powerful solution is for governments (state and federal) to directly invest in building social housing – these are homes rented out at low cost to those who need them (like public housing or community housing). For example, the government could fund construction of tens of thousands of new units that are reserved for low-income families, older renters, or key workers. This would immediately create more options for people struggling in the private market. It also adds to overall supply, taking pressure off rents generally. Social housing projects can be apartments in city areas or houses in regional towns – ideally mixed into communities, not in isolated blocks, to keep cities integrated. The benefit of government-built housing is that it remains affordable long-term and isn’t subject to investors selling it off. Of course, it costs money up-front, but it’s an investment with social returns (and even economic ones, like job creation in construction). Many experts argue Australia has under-invested in this for decades and needs a serious catch-up program. Think of it like infrastructure – just as we build roads and schools, we can build housing.
Encourage private development (especially rentals): Alongside public builds, we need the private sector to build more homes. One approach is cutting red tape in the planning process. If it’s easier and faster for developers to get approvals for new housing projects, they’ll build more. This might mean updating zoning laws to allow for more apartments or townhouses in certain areas (the so-called “missing middle” housing). For example, allowing duplexes, triplexes, or small apartment buildings in suburbs that currently only allow single houses could gently increase density and supply. Another approach is giving incentives for build-to-rent projects – these are developments where a company or institution builds a whole building of apartments specifically to rent them out (rather than sell each unit). Build-to-rent can bring in big players like superannuation funds to supply rental housing at scale. Governments have started offering tax incentives for this (like land tax or tax breaks) to make it more attractive. The idea is to create a more professional rental sector, with large landlords who might offer longer leases and quality service (since they’re in it for long-term steady returns, not quick flips).
Use available land wisely: In many cities, there are parcels of government-owned land or under-used areas (like old industrial sites) that could be unlocked for housing. Governments could release this land with conditions to ensure a portion is affordable housing. For example, if a big piece of land becomes available, require that say 20% of the homes built there are affordable rentals or social housing. This is sometimes called inclusionary zoning. It ensures that as cities grow, they grow with mixed communities and not just high-end housing.
Streamline construction and innovation: Another part of boosting supply is making building cheaper and faster. Supporting modular or prefab housing methods could help – these are ways to construct homes off-site and assemble them quickly, often at lower cost. That could be great for rapidly providing new rentals, especially in regional areas or for emergency housing needs. Innovation in construction (like 3D-printed houses, new materials, etc.) might sound futuristic but can be encouraged through pilot programs and funding, potentially giving us more units for less money.
The main pro of building more housing is straightforward: it addresses the root cause of too many people chasing too few homes. It’s a long-term fix that benefits not just renters but the economy (housing stress can be a drag on productivity and well-being). The con or challenge is that it takes time and money. Planning, approval, and construction mean that even with an aggressive program, it might be a couple of years before a significant number of new homes are ready. But that’s all the more reason to start now. Another challenge is local opposition – some communities resist development due to concerns about congestion or change in neighborhood character. This needs to be handled with community engagement and good design (making new developments attractive, sustainable, with amenities).
In short, “more homes = less pressure”. We need to pull every lever to get more homes built – public housing projects, private builds, tall, small, infill, greenfield – all of it. It’s not just about quantity but also targeting the types of housing we lack (like affordable rentals). If we succeed in significantly increasing supply, future rental markets will be much kinder to tenants.
Protect and Empower Renters
Building more homes is critical, but it’s a slow fix. Renters are hurting now, so what can we do in the short term to protect them? And beyond the immediate crisis, how do we make renting less stressful overall? That’s where tenant protections come in. By changing some rules, we can give renters more stability and bargaining power, which leads to a fairer market.
Limit extreme rent increases: One idea getting a lot of attention is some form of rent control or cap on rent hikes. Now, full-on “freeze rents at current levels” is pretty drastic (and controversial), but moderate measures could help. For example, a rule could say landlords can’t increase rent by more than a certain percentage (say, inflation or a bit above) per year for existing tenants. This would prevent the shock 20%, 30% hikes some have seen when re-signing a lease. It’s a balancing act – you want to shield tenants from gouging, but also not dissuade landlords from renting out their place at all. Many places in the world do have limits like this and still have functioning rental markets. As an emergency measure, some have called for a temporary rent freeze (no increases for a year) to let the market cool down. This could give immediate relief to renters, though landlords argue it doesn’t solve the underlying shortage. Even a short freeze, followed by capped increases, could buy time while supply is ramped up. The key benefit is reducing renter anxiety about unpredictable, huge rent jumps that force them to move.
Secure tenure (longer leases, no arbitrary evictions): Another big area is making renting more secure. That means strengthening laws so tenants aren’t forced to move out without a good reason. Several states are already moving to abolish “no grounds” evictions – that is, a landlord shouldn’t be able to say “lease is up, you’re out” for no reason other than maybe wanting a new tenant at a higher rent. Instead, eviction should require a valid reason (like the owner selling or moving in themselves, or the tenant breaching the agreement). This gives renters peace of mind that if they abide by the lease, they can stay as long as they want (within lease terms). We could also encourage or mandate longer leases. In Australia, a 6 or 12-month lease is standard, which is very short. Elsewhere, leases of 2-5 years or open-ended leases are common, which means families can settle, kids can stay in the same school, etc., without worrying about moving each year. Even if not mandated, perhaps create incentives for landlords to offer longer leases (like a small tax benefit or guarantee). With longer leases, you might also build in scheduled rent reviews or adjustments so both parties know what to expect.
Improve rental standards and services: Protecting renters also means ensuring the homes are decent. Minimum standards for rentals (heaters, no major leaks, safe electricals, etc.) should be enforced so that renters aren’t stuck in subpar conditions because they have no other option. Additionally, expand resources like tenancy advocacy services – places renters can get advice or mediation if they have disputes with landlords. These services help balance the power, since an individual renter can feel helpless going up against a big real estate agency or a legal-savvy landlord.
Rental assistance and support: While not a protection per se, making sure support systems are strong is part of empowering renters. This includes things like Commonwealth Rent Assistance (CRA), which the federal government provides to eligible low-income renters. Increasing the amount of CRA can directly help those struggling to pay rent (the government did raise it by 15% recently, but many say it needs to be higher). One must caution that boosting CRA without more supply could just lead landlords to capture that extra money via higher rents, but in the interim, renters in dire straits need that help. Another support could be emergency rent relief funds for those who fall behind due to, say, losing a job – something to prevent evictions and homelessness.
Enforce anti-discrimination: It’s illegal to discriminate against tenants based on things like race, kids, or disability – but it still happens subtly. Fair renting also means reinforcing these laws: e.g., ensuring families with pets or children are not automatically skipped over (some states now allow pets by default, which is good progress). Making the application process more transparent could help too. Perhaps a rental application blind to certain info like name or background could reduce bias – just like some companies do blind hiring processes.
By protecting renters through these measures, we make renting a more stable, respected tenure. If people know they can’t be kicked out on a whim and won’t face exorbitant annual rent hikes, they can plan their lives better. They might feel comfortable making a rental “home,” investing in the community, etc., rather than feeling like transients. For landlords, a side effect of stronger tenant rights is often more stable long-term tenancies (which can be a good thing – less turnover means less hassle and cost finding new tenants).
Of course, we have to strike a balance: we want to avoid unintended consequences like landlords withdrawing supply due to overly strict controls. But many countries have shown that reasonable protections (like limiting rent increases to once a year, requiring grounds for eviction, etc.) do not crash the rental market – they just civilise it a bit. In Australia, we’re catching up to that concept after historically leaning pro-landlord. The rental crisis has highlighted why these changes are necessary.
In summary, making renting safer and fairer is a key part of the solution set. It addresses the immediate hardships renters face and builds a healthier rental sector for the future – one where renting isn’t a second-class situation, but just another housing choice.
Fix Incentives and Funding
Another piece of the puzzle is realigning the incentives in the housing system. By this, I mean changing some of the financial and tax structures that currently shape landlord and tenant behavior. Some of the root causes of the crisis lie in these structures (like tax perks that encouraged speculation or the shift away from social housing funding). Solving the crisis for good may involve some politically tough decisions to tweak these.
Review negative gearing and capital gains tax discounts: We’ve talked about how negative gearing (the ability to deduct rental losses from other income) and the 50% capital gains tax (CGT) discount fuelled investment. One approach to cool investor demand (which can free up properties for home buyers and take some heat out of prices/rents) is to reform these. For example, limit negative gearing to only new builds. That means if an investor buys or builds a brand-new house or unit to rent out, they get the tax break (thus encouraging adding supply), but if they buy an existing home, they don’t (discouraging just swapping ownership of existing stock). This was a policy proposed at one point in Australia. It could channel investment into creating more rentals (good!) rather than bidding up the price of existing ones. Another idea: reduce the CGT discount from 50% to something like 30%. That would make property speculation a bit less attractive relative to other investments and might dampen the frenzy to buy multiple properties solely for capital gain. These changes have to be handled carefully – likely phased in or grandfathered – to avoid a sudden shock. But done gradually, they could nudge the market to be more about rental yield and long-term hold (since losing some tax advantages might make quick flipping less profitable). The overall aim is a market with more stable, responsible investors and more opportunities for first-home buyers (which ultimately reduces rental demand).
Increase funding for housing initiatives: Solving the rental crisis will need money. Government budgets should allocate more to housing – think of it as critical infrastructure. That means sustained funding for social housing construction, subsidies or low-interest loans for community housing providers, and possibly grants or tax credits for private developments that include affordable rentals. The federal government recently proposed a Housing Australia Future Fund that invests $10 billion and uses returns to build social housing each year. That’s a start, but some argue we might need even more direct spending given the scale of the shortfall. State governments, which historically built this housing, need to ramp up their contributions too. It could be financed by bonds, by dedicated housing taxes, or simply out of general revenue because housing stability has such far-reaching benefits (health, productivity, etc.).
Innovative financing: We can also look at creative financing solutions. One example is housing bonds or investment funds where private investors (like superannuation funds or ethical investment funds) can invest in affordable housing projects for a modest but stable return (often needing a government guarantee or incentive to make it viable). This taps into large pools of capital to help fund construction.
Land and tax reforms: Some incentive fixes could be at local/state level, like rethinking stamp duty and land tax. For instance, replacing stamp duty (a big upfront tax on property purchase) with a broader land tax can make it easier for people to move or buy, potentially helping renters become owners when ready. A broad-based land tax also nudges property owners to use land efficiently (since they pay tax on it yearly, they are incentivised not to leave it idle or under-utilised). Some states are considering this kind of shift. Also, applying or increasing vacant property taxes (as Melbourne has done in inner city) can encourage owners of empty homes to put them on the rental market or sell them. If someone has a luxury apartment sitting dark for most of the year, a tax can push them to rent it out, which adds supply.
Support for renters to buy: Another angle is helping renters break out if they want to. Schemes like shared equity (where the government co-buys a portion of the home with you) or expanded first-home grants for long-term renters could help transfer some renters into ownership, relieving pressure. But we have to be cautious – simply giving everyone money to buy without increasing supply can just raise prices. Shared equity is interesting because it doesn’t inflate prices as much (it just reduces the loan you need).
Commonwealth Rent Assistance (CRA) reform: We touched on raising CRA amounts earlier. Another incentive idea: allow CRA to be paid for public housing tenants too. Currently, if you’re in public housing, you often can’t get CRA because your rent is already reduced. But if states and the federal government agree, they could let those tenants receive CRA, which effectively gives the housing authority more rental income – money that could be reinvested in maintenance or new housing. It’s like the federal government taking on more of the cost of social housing via rent assistance. Of course, that’s a transfer of expense from states to federal level, so it needs negotiation (and ideally should result in states investing more since they save some money).
To summarise, fixing incentives is about aligning the economic signals with what we want: more long-term rental supply, less speculation, more affordable housing, and stable funding. The benefits could be profound: if investors are incentivised to build new rentals (for tax benefits) and to hold them long-term (for steady returns rather than quick profits), renters get more choice and stability. If governments allocate serious funding to housing, we get more social homes that take pressure off the private market.
These changes can be politically sensitive (messing with tax perks always is), but the rental crisis has built a stronger case for them. People can see now that a free-for-all market led us here, and some thoughtful adjustments could improve outcomes for everyone (even many investors might prefer a stable market over a boom-bust one). The key is to implement changes gradually and pair them with the other measures (like supply boosts) so the system adapts smoothly.
Think Outside the Box
In addition to the more traditional solutions we’ve discussed, solving the rental crisis may benefit from some creative, outside-the-box ideas. These are things that might not have been part of the mainstream conversation until recently, but as the crisis forces us to innovate, they’re worth considering.
Tiny homes and alternative dwellings: One quick way to add affordable housing is through tiny homes, granny flats, or converted spaces. Some councils have started allowing homeowners to put a small self-contained unit in their backyard (sometimes called a secondary dwelling or ADU – accessory dwelling unit). If widely adopted, this could add tons of rental units across suburbs, relatively fast. For instance, if you have a big yard, you could build a studio or one-bedroom tiny house and rent it out. It’s cheaper and quicker than building a full house, and it can help a renter while giving the homeowner some income. Similarly, converting under-utilised buildings – think old motels, office buildings that are empty due to remote work, or unused shop tops in commercial areas – into rental apartments can quickly provide more homes. Governments can identify such opportunities and provide grants or streamlined approval to encourage conversions.
Co-living and shared housing models: In some cities overseas, co-living spaces have emerged – kind of like upscale dorms for adults, where you have a private room (sometimes with a bathroom) and share kitchens and living areas with other residents, often with flexible lease terms. They can be more affordable than a full apartment and appeal especially to young professionals or people new to a city. While not a solution for everyone, co-living could relieve some pressure by offering an alternative between a share-house and a studio apartment. Additionally, fostering home-sharing programs could help – for example, matching older homeowners who have spare rooms with younger renters or students who need a place (with perhaps a discount in exchange for helping around the house). These are small-scale things, but in aggregate they can house many people.
Rent-to-own and shared equity rentals: New tenure models that blur renting and owning might help some people build stability and wealth even while renting. Rent-to-own schemes allow part of your rent to count towards purchasing the property over time. So you start as a tenant and end up as an owner. If structured well, this could help long-term renters gradually acquire a stake. Another concept is shared equity rentals where maybe a housing provider or government retains part ownership of a property, making it cheaper for the tenant who rents-to-buy the other part. These require financing mechanisms to set up but could be piloted.
Community land trusts and cooperatives: These are more radical in the Australian context but have worked elsewhere. A community land trust is a non-profit entity that owns land and ensures that housing on that land remains affordable long-term (by leasing it under conditions or selling homes at below-market prices with resale restrictions). It effectively takes the land cost out of the equation to lower housing costs. For renters, a land trust could provide rental housing insulated from market pressures. Housing cooperatives involve residents collectively owning and managing their housing (common in some European countries). Co-op housing often charges lower rents because it’s not-for-profit and any “profit” goes back into maintenance or lowering costs for members. Supporting the formation of co-ops with seed funding or land could create a stock of permanently affordable rentals run by the community.
Tech and transparency: It’s 2025 – maybe technology can help ease the housing search and match process. For instance, a well-regulated platform for verifying tenant histories and matching tenants-landlords more efficiently might cut down on the mess of rental applications. Or using data to identify exactly where shortages are most acute to target new housing construction there. Some have suggested that access to data on rents and vacancies could make the market more transparent and competitive. SaveMyRent comes to mind as a tool that puts data into the hands of renters and prevents them from being taken advantage of by imbalances in power. When everyone knows what the true market rent is, it’s harder to gouge.
Policy experiments from abroad: We can also try borrowing successful ideas from other countries. For example, Vienna’s social housing model (massive city-built housing with mixed-income residents) is often lauded – we might not replicate it entirely, but maybe a “Vienna-style” pilot development in an Australian city could showcase what’s possible. It wouldn’t be the first time Austria and Australia are confused. In Germany, tenants have a right to stay as long as they want (indefinite leases) and that fundamentally changes the rental experience – perhaps a trial of indefinite leases for certain new developments here could be tried, to see how it works in our context.
The core of thinking outside the box is not being afraid to try new things. The crisis has shown the old way isn’t working for everyone, so innovation is needed. Some ideas might fail or not scale up, but others could flourish and become part of the mainstream solution set.
Finally, community involvement is crucial. Solutions shouldn’t just be top-down. Engaging renters’ groups, local communities, and even enlightened landlords in coming up with ideas can yield smart grassroots solutions. For instance, some communities have crowdfunded to build tiny home villages for those in need.
In solving a big problem like this, it’s wise to try multiple approaches and see what sticks. Flexibility and creativity can complement the heavier policy lifts like building more housing or reforming taxes.
Take Action!
The rental crisis in Australia is a tough nut to crack, but by combining these strategies – boosting supply, protecting renters, fixing incentives, and innovating – we can make a real difference. Solving the crisis is not about one silver bullet; it’s about many actions working together. Build more homes so there’s enough to go around. Strengthen renter rights so people aren’t living in fear of eviction or steep hikes. Change the rules of the game so the housing market serves shelter needs, not just investment gains. And be open to new ideas, because doing things the way we always have will only repeat the same problems.
From my perspective as a renter, the most heartening thing is seeing this issue finally get the attention it deserves. For years, renters were somewhat invisible in housing debates. Now, with nearly a third of households renting and so many struggling, renters’ voices are louder – and being heard. We’re seeing governments (federal, state, local) all put housing at the top of the agenda. That momentum is crucial.
Of course, challenges remain. Some stakeholders will resist changes (certain investor groups dislike tax reforms, some local residents oppose new development, etc.). Funding needs to be found and wisely spent. Implementation needs coordination between levels of government. And results won’t be instant – it might take a few years to really feel the difference, especially for supply to catch up.
But imagine the future if we get this right: It’s a future where finding a rental isn’t like the Hunger Games. Where moving homes is a choice you make, not forced upon you by an eviction notice or a rent spike. Where your rent takes a reasonable share of your income, leaving you enough for other essentials and savings. Where more people who want to own can do so, because houses aren’t being bid out of reach as much. And where if you’re content to rent for life, that’s okay too – it can be stable and secure.
In that future, housing is treated as fundamental infrastructure and a human right of sorts – not left entirely to boom and bust. We’ve seen during this crisis that housing stability affects everything: work, health, family life. Solving the rental crisis will have positive ripple effects on society.
The path to that future involves the steps we talked about: build, reform, protect, innovate. We need political will and public support to carry them through. As a renter and citizen, I’ll be advocating for these changes and doing what I can in my community (even if it’s just speaking up or helping a neighbour navigate the system).
It won’t be easy, but I’m optimistic. Crises, as painful as they are, also create the drive for change. The rental crisis has spotlighted issues long ignored. Now we have an opportunity – even an obligation – to address them. By working together – governments, communities, and even renters and landlords finding common ground – we can ensure that in a few years’ time, we look back on the “rental crisis of the early 2020s” as something that we overcame, having built a stronger, fairer housing system for all Australians.
The solutions are in our hands – now it’s time to make them happen.
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