Government defends housing policy amid concerns renters could face rises up to 30 per cent

The Opposition has accused the Albanese Government of “gaslighting” renters as experts warn its negative gearing changes could place further pressure on soaring rents.

Under the changes, investors who buy an existing home after May 12 will lose access to negative gearing from July 2027, prompting warnings landlords could pass the additional costs on to tenants.

WATCH THE VIDEO ABOVE: Negative gearing reforms spark rent rise warning

The government forecast rents would increase by just $2 a week under the changes, but rents in Treasurer Jim Chalmers’ own electorate are already rising at three times that rate while NAB has modelled a scenario in which rents could rise by up to 30 per cent.

Shadow Attorney-General Michaelia Cash clashed with Housing Minister Clare O’Neill on Sunrise on Wednesday, claiming Labor’s housing policies were “smashing the market”.

“Clare, stop gaslighting Australians. Stop gaslighting the mums and dads who are currently watching this show and feeling the impact of your toxic housing taxes. But more than that, stop gaslighting renters,” Cash said.

“It does not matter what Clare says. She can sit on your show and defend her policies but the evidence on the ground, the evidence from the experts, is that Labor’s toxic housing taxes are smashing the market.

“How much more evidence does your government need that your toxic housing taxes are not just smashing the housing market, are not just forcing new homebuyers into negative equity, but they are now directly forcing up rent?”

NAB’s modelling found gross rental yields may need to rise by one percentage point to 4.5 per cent to offset the loss of tax benefits, although the bank later clarified the scenario was not a rental forecast.

Ray White’s chief economist backed the warning, saying new investors may seek to recover their additional costs through higher rents. The company manages about 250,000 rental properties nationwide.

O’Neill said there was an “awful lot” that went into determining rental prices, defending Treasury’s modelling of the changes.

“That Treasury, modelled in the context of the budget, was what is the isolated effect of what the government actually changed about the housing market,” she said.

“We’ve got a broken housing system in our country and it’s the renters of Australia who are bearing the brunt of 40 years of governments not doing enough about this problem. That has changed with the election of the Albanese government.

“We have easily the most ambitious housing agenda that a Commonwealth has had for 70 years. And when we’re building that agenda, which is about building more homes, getting renters a better deal, and getting more Australians into home ownership, it’s actually the renters of this country that we have foremost in our mind.