Canberra's already record rents could be pushed even higher under proposed tenancy law reforms expected to be introduced in the ACT Legislative Assembly next week, the territory's real estate institute chief has warned.
The Real Estate Institute ACT president Craig Bright has also warned the reforms, particularly a proposal to limit rent increases to inflation, could hasten the departure of interstate investors from the Canberra market.
Mr Bright's warning follows a push for the changes by social service organisations in Canberra in an effort to help change the laws in the territory to better protect tenants rights - proposals which Labor has this week pledged to introduce.
Some of the proposals date back about four years when the government earlier mooted tenancy law reform, but formed part of a second tranche of changes that were seen at the time as in the too-hard basket.
Among the changes were allowing pets in all rental properties, allowing tenants to make minor changes if rectified before the end of the lease, limits on lease-breaking fees and putting the onus on landlords to justify rent rises deemed excessive beyond inflation.
In a rare foray into the political debate, Mr Bright has voiced real estate agents' concerns the full potential effects of the proposals expected next week could have unintended economic and social effects, if implemented.
The biggest concern real estate agents had was the limits on rent rises, which Mr Bright said could exacerbate the rising trend of investors leaving the Canberra that was already occurring because of high rates, land tax and other charges unique to the ACT.
While the legislation has not been released, a statement from Attorney-General Gordon Ramsay said there would still be room for landlords to adjust to market conditions, but the default should be that rent rises would be in line with a set formula.
Mr Bright said any rent control mechanism would be disastrous, particularly given Canberra's current record-low vacancy rates, and that if all the changes proposed were enacted, on top of existing record rises to rates and land tax, and body corporate fees, more investors would leave the ACT, or decide against buying.
"We’re certainly sympathetic to making renting more practical and reasonable, but if that involves more increases to the cost to investor-owners, it won't work because lessors have to make a choice and it looks like it’s no longer going to be viable," he said.
"It’s always a balancing act, but ultimately it would affect people in lower socio-economic situations, because clearly there is the problem of a lack of public housing, so people on marginal incomes are in the private sector.
"Investors will be forced to pass on the extra costs in higher rents, and the continual rising costs will put [lower income rents] under more pressure if they can't move into the public or community housing sector."
Mr Bright also said the institute was concerned about allowing pets in all properties, given one-bedroom units and the like may not be suitable, and he believed that was best negotiated through body corporates.
He said the institute was open to allow tenants to make minor changes to properties without express landlord permission but the changes such as putting up picture frames or similar work was done by qualified trades, given potential safety risks.
Mr Bright also said the institute had told government that lease-break fees, which can be up to six weeks' rent, should remain unchanged, as provided certainty for both parties, despite the government concerned landlords were getting more money than the rent owed, particularly if a property was swiftly re-let.