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Rising interest rates could push rents higher as landlords also struggle to cover their mortgages

Allan Qi did not intend to become a real estate investor.

The 32-year-old bought an apartment in Sydney’s western suburbs to live in six years ago, but became a landlord when he moved to Melbourne.

But he’s also a renter and has lived in the same house in Melbourne’s eastern suburbs for five years.

The apartment is negatively oriented, so the rent he receives doesn’t cover the mortgage payments.

It’s a struggle to balance the budget

With a household income of about $90,000 a year, technology and design teachers Allan and his wife Juan are already struggling to keep up with their spending.

They are worried about how high interest rates could go.

“Very, very nervous, very worried about the future,” Mr. Qi said.

Their investment loan is currently frozen, but when that ends, Allan says they’ll have to raise the rent or sell.

At the same time, he does not know what his landlord will do.

“I tried to avoid it [putting the rent up] Just because I’m a renter myself, I understand that we’re all struggling a bit,” Mr. Qi said.

“But because that interest rate is going to go up quite a bit, I’ll have to pass it on to continue surviving.”

The rental market is already in crisis

Many of Australia’s 2.8 million renters will fear just that, says Edwina MacDonald, acting chief executive of the Australian Council of Social Services (ACOSS).

“People are really afraid of what rising interest rates are going to mean for renters, that landlords are going to pass on the rising interest rates to renters.”

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