State control urged as rent surges 12.7% is the headline that attracts our eager eyes in the Age today.

Many of the city’s most affordable suburbs have been hardest hit, with the typical rent on a two-bedroom house in Oak Park, Glenroy and Fawkner surging by 25%, according a report by the Department of Human Services.

Using our economic analysis we can see the Law of Rent strongly at play here. The crux of our argument comes down to this: landlords have a monopoly power over tenants in that they can say that renters must pay the asking price or ‘move out to the boondocks’! The 25% surge in rents see landlords playing the market, understanding that rents can be increased by that much in order to bring these affordable suburbs into line with other more trendy areas.

What option do renters have? This market power by landlords must be questioned. But do we do it with regulation? The more paperwork we throw their way, the more costs they can pass on. If regulation caps rent increases, this will deter investment in affordable housing.

What is needed is the supply side solution we keep pushing. Increase holding charges on land, be that through a higher Land Tax (reformed so that it’s set at a flat rate) or greater Site Rental at the council level. This will unveil a raft of under-utilised locations that we are trained to ignore – those vacant blocks of land surrounding key infrastructure or empty flats that get used once or twice a year, if that. Read one of our past commentaries on affordability.

Please can Mark O’Brien of the TUV read and understand these concepts. Greater FHOG or regulation will end in the same effect – higher rents.

Join us to forge ahead towards a simplified economic system where land prices are more affordable, less work hours are needed, less taxes are required and more freedom is possible. Believe it ….or keep reading these pages.