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Rent gouging threatens Brisbane inner city retail community

Article also published on candobetter.wikispaces.com web site for James Sinnamon's campaign site or Lord Mayor of Brisbane

It is not only renters and home buyers who are suffering from rising land values these days.

Three years ago Latrobe Street Paddington was run down. However, a number of hard-working local businesspeople have set up retail stores there and, in doing so, changed its character. Businesses include the Urban Grind coffee shop, which attracts loyal customers from as far away as The Gap, the Green Tangerine women's accessories store, the Mary Rose Gift Shop, Pet Supplies and the Biome organic life-styles store. These businesses have striven to sell locally produced products in preference to cheaper overseas imports. They have worked cooperatively and have been in the practice of making joint trips interstate in order to obtain merchandise.

Now, as reported in the Westside News local newspaper of 20 February 20081 these businesses have become victims of their own success. Landlords have recently demanded rent increases which have forced four of these businesses to close down and threatened the viability of two more. The annual rent of Urban Grind, which will be closing down, was increased from $42,420 to $59,943 in one hit. Another's rent was raised from $54,000 to $90,000 and the rent for a business in nearby Given Terrace was raised from $89,000 to a staggering $228,000. Local real estate agents have actively encouraged landlords in raising these rents.

This business community fears that this will be the start of a trend which could see the whole character of Latrobe Street changed as chain stores move in.

A group to fight to preserve the Latrobe Street retail community has been set up, but will not be able to save four of the businesses from being closed down. Whilst legal avenues to challenge these sudden rent increases exist, they simply did not have the resources to utilise them.

How to end fleecing of small businesses by landlords?

At a public meeting at Bardon Hall on 20 February, all three local candidates contesting for the Brisbane City Council Ward of Toowong expressed sympathy and pledged to do what they could to help. Sitting Liberal Councillor, Peter Matic, somewhat at variance with prevailing philosophy of the Liberal Party, suggested that the businesses form a union. Other local government candidates in attendance who showed sympathy for the Latrobe Street retailers included Yvonne Li from the Labor Party and Anne Bocabella from the Greens.

However, how these businesses can ultimately hope to prevail against the economic forces that are increasing the value of the land under their feet is hard to envisage unless legislators are prepared to tackle those forces head on.

The rent hikes faced by the traders are part of the price to be paid for the runaway property boom of recent years. The wealth gained in this boom did not fall out of the sky. Rather, it had to have been taken out of the pockets of other Australians.

Objectively, property speculation is of no benefit to the Australian community as a whole. Accordingly, Brisbane City Council, as well as state and federal government policy, should be aimed at reducing, rather than increasing its scope within our economy. Furthermore, they should cease actively fuelling real estate hyper-inflation by allowing record levels of overseas immigration. Whilst immigration proponents like to pretend that they are motivated by lofty motives of compassion for new arrivals seeking to begin a new life, the reality is that they want high levels of immigration2 to drive up the demand for real estate.

Interim measures to mitigate the effects of rising land values could include:

  • Local, state and federal governments becoming the landlords themselves and cut out from the equation, private landlords. Governments, as far a possible, must retain every piece of property they currently own with a view to making these available to suitable small businesses.
  • Set up a Council funded fighting fund, so that businesses, such as Urban Grind, which do have good prospects of legally challenging excessive rent increases within relevant government jurisdictions, can do so.

For my part, if elected on Saturday 15 March I will adopt these and whatever other other measures I am able to in order to curb such excesses on the part of rapacious landlords.

James Sinnamon
Candidate for Lord Mayor of Brisbane in the 2008 elections

Footnotes

1. Boom to Bust, Westside News 20 Feb08, page 1

2. For example, refer to "An inconvenient truth about rising immigration" by Ross Gittins in the Sydney Morning Herald of 3 Mar 2008.