Landlords must offer renters two‑year leases, union pushes plan

Australia's peak union body says offering two-year rental agreements would provide more security to tenants. (ABC News: Gian De Poloni)

In short:

The ACTU is pushing the government to give all renters access to a minimum two-year lease.

It also wants to increase the rate of public housing being built from one in 50 to one in 10 new homes.

What's next?

ACTU president Michele O'Neil says the changes will not drive away landlords.

Landlords would have to offer renters at least two years on their lease and the proportion of new public housing would increase fivefold as part of a proposal from the peak body representing unions being presented to the government.

Under current laws, the legal minimum for lease agreements varies across states and territories and the standard is set at 12 months.

The Australian Council of Trade Unions (ACTU) said a nationwide two-year minimum, with the option for renters to opt for a shorter period, would give renters more stability and allow them to plan.

"Having a standard of at least two years across the country would give renters the security of knowing they can stay in their home for at least that period of time," ACTU president Michele O'Neil said.

The ACTU also wants a return to a Bob Hawke-style model of construction, increasing the rate of public housing being built from one in 50 new homes to one in 10.

Michele O'Neil says one in 10 new homes should be public housing. (ABC News: Tom Hancock)

Public housing is owned and administered by state and territory governments, and the 2026 State of Housing report found public housing stock declined by 1,143 rental units last year despite annual dwelling completions for public housing increasing 32 per cent over the same period.

"If we expand public housing you will see more rental stock available, and that is going to free up stock in the rental market and make private stock more sustainable," Ms O'Neil said.

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"It's the combination of measures that need to be put in place — the tax changes from the budget, public housing expansion, and stronger rental rights."

According to the ACTU Housing Plan the union will also be pushing for tighter rules around rent gouging and a long-term goal of at least 6 per cent of total housing stock being public.

To get there it is suggesting removal of GST on the cost of maintaining public housing and a review of the Commonwealth Rent Assistance setting.

Housing Minister Clare O'Neil said the suggestions were "really valuable" and would be considered by the government.

"They are not government policy but we certainly welcome them into a conversation about how we can improve the situation for Australian renters," she said.

"Australian renters, in many ways, are bearing the brunt of 40 years of Australian governments failing to address the problems in our housing system."

Union confident minimum would not drive away landlords

In a note sent by NAB to its investors earlier this week the bank modelled a scenario in which rents increased by up to 30 per cent to compensate landlords for tax setting changes to both capital gains tax and negative gearing.

It assumed the level of house prices remained unchanged, but found the the adjustment towards "more attractive rental yields" would likely require both higher rents and lower dwelling prices.

The bank later clarified it was "not a forecast" and had not taken into account a possible dip in house prices.

The negative gearing and capital gains tax adjustments, announced in the May federal budget, were part of an original push from the ACTU to improve housing conditions for workers.

In parliament on Tuesday, Prime Minister Anthony Albanese pushed back on the suggestion the changes would drive significantly higher rental prices.

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Ms O'Neil also pushed back on the claim, and said she was confident further restrictions on landlords, including the proposed two-year lease, would not discourage investment.

"I think it is more likely that some professional landlords are being opportunistic, and some professional landlords are using the tax changes as cover that actually will not apply to them to justify unacceptable rent increases," she said.

Modular construction part of productivity solution

Ms O'Neil said the union movement was looking to modular building in factories as a solution to productivity issues in the housing construction sector.

"We think modular housing is something that is a real opportunity to expand housing in Australia with high-quality housing, but expanding the stock," she said.

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Shadow Housing Minister Andrew Bragg is advocating a dramatic rewrite of the National Construction Code to simplify the building process and speed up construction.

After a productivity roundtable last year the government also said it would consider streamlining the code.

Ms O'Neil said Australian unions wanted to make sure an increase in housing stock, both public and private, did not come at the expense of quality.

"A high-quality house actually makes it more affordable," she said.

"It's a false economy if you have maintenance issues, or if your house is too hot or too cold. It causes all sorts of problems for health and security.

"We don't want to see any reduction in standards in housing that we build. In fact, we want to make sure that however much income you have, you have a safe home.

Melissa Donnelly's appointment comes after former peak union body secretary Sally McManus and president Michele O'Neil announced their resignations late last month.

The ACTU wants the changes to be delivered via the A Better Deal For Renters agreement, which was last updated during a meeting of National Cabinet in 2023.

The agreement committed to standardised genuine grounds evictions, a ban on soliciting rent bidding, and a national standard of no more than one rent increase per year.

It is not yet clear who will replace Ms O'Neil as ACTU president after she announced her resignation last month.

Last week the ACTU announced public service union boss Melissa Donnelly would take over from Sally McManus as secretary.