Sunday, 19 February 2017

Choice reports on life in Australia's private rental market

‘54% of regional renters are +6% more likely to face discrimination than metro renters if they have kids or pets’

Australia has traditionally been a nation of homeowners. However, as the dream of the quarter-acre block dwindles, more and more of us are renting. Between 1994-5 and 2013-14 the number of Australian households that rent increased from 25.7% to 31%.  While home ownership offers many advantages, renting is not necessarily bad for consumers or society more broadly. Many advanced economies such as Germany have low levels of home ownership. However, Australia lacks many of the protections these countries afford to renters.

Australian renters live in a unique rental market. Australia relies on small investors supported by generous tax concessions to provide nearly all of its private rental housing. Social housing (made up of public housing provided by the states, community housing provided by not for profit companies and Indigenous community housing providers) makes up less than 4% of the housing market, down from over 5% 15 years ago.

Home ownership rates continue to decline in Australia as investors buy a greater share of the housing supply which subsequently increases pressure on renting and lowers owner occupation. Australia now has lower rates of outright ownership than owning with a mortgage, and investors make up nearly half of our home purchases. Housing is subsidised by the federal government via tax concessions. Home owners face no capital gains tax while investors have a capital gains tax discount of 50% and are able to deduct loses incurred through maintenance and interest payments. Some renters are subsidised through Commonwealth Rent Assistance but it is estimated that owners receive an average of $8000 per annum and investors $4000, while renters receive $1000.

These tax arrangements distort the Australian housing market, increase competition for limited supply, inflate house prices and unfairly advantage investors over owner-occupiers and lessors over lessees. This has contributed to a shortage of affordable rental housing available to low-income households of 500,000 dwellings due to frustrated prospective owners displacing other renters from available properties.3 These issues contribute significantly to Australia’s rising rate of homelessness……

As property prices have grown faster in the cities and in certain states such as NSW, Vic and WA, more people in those areas have been entering the rental market. As a result, renters in regional areas are more likely to have been renting for over five years (79%) than those in metro areas (64%). Meanwhile more renters in WA (41%), Vic (40%) and NSW (30%), including Sydney or Melbourne (39%) specifically, have been renting for less than five years than those in Qld (24%), SA (22%) or the other states and territories (28%). This suggests that more Australians have entered the rental market only recently in Vic, WA and metro areas, notably Sydney and Melbourne……

Most renters personally pay between $201 and $400 a week (53%), with 30% of renters paying $200 or less and 16% paying over $400. Unsurprisingly this varies considerably based on location, income and other factors. For example, 49% of renters in metro areas personally pay more than $301 a week in rent versus roughly a quarter in regional areas and 42% of renters overall. This rises to 55% for renters in Australia’s two largest cities – Sydney and Melbourne. Meanwhile, in these cities almost three quarters of renters live in households where the total rent is more than $301 a week. This aligns with the Rental Affordability Index data that found the median rent in Sydney in 2016 was $480 per week……

Many regional areas of Australia are more affordable but some also display unaffordable rents, especially for low and moderate income households. East and west coastal zones often display affordability levels similar to capitals…..

Despite recent talk of an over-supply of rental properties, Australia remains a landlord’s market with three quarters of renters believing that competition between applicants is fierce. As a result, prospective renters don’t feel like they can ask for changes and need to simply take what is on offer (62%), and worry that they’ll need to offer more money if they want to secure a place to live (55%). Renters also feel like the amount of information they are required to give for an application is excessive (60%) and unreasonable (46%). This creates concerns over privacy, with some renters (45%) fearing that their information will not be handled in accordance with the law. While renters largely agree that the application process is transparent (39%), 22% do not……

A sizable minority of renters (8%) are currently living in properties they regard as needing urgent repairs. This includes one in ten of those renting a house and 11% of women. People on a rolling lease are more likely to live in a property in need of urgent repairs (14%) than those on fixed-term leases. Renters in NSW (10%) and SA (12%) are more likely to report needing urgent repairs than those in Vic (6%) and NT, Tas and the ACT (2%). Meanwhile, 30% of renters report requiring non-urgent repairs to their property.

Only a quarter of renters report not having ever experienced any problem with their current property. In fact, many renters have experienced quite severe problems. For example, one in five renters have experienced leaking or flooding while the same amount have had mould that reappears or is difficult to remove – which poses a health risk…..

While many renters have experienced problems, not all have received adequate or prompt responses from their agent or landlord. Of all renters, just under a quarter received no response at all to their request for a repair. Meanwhile 21% had to wait over a week to even get a response about an urgent repair and 23% had to wait over a month to get a response for a nonurgent repair. Not only are renters not getting timely responses, but they can also face adverse consequences when they speak up. 11% of renters copped a rent hike after requesting a repair and 10% said that their landlord or agent became angry after they requested a repair. Some renters have even faced eviction for making a complaint (2%), requesting a repair (2%) or for taking their complaint to a third party like a tribunal or a tenants’ rights organisation (2%). Renters also had experiences with landlords that would access the property unannounced (6%) and take photos during inspections without permission (5%). One in ten renters also reported that they had experiences with routine inspections being arranged at times that were inconvenient…..

The experience of renters differs depending on whether they lease directly through a landlord or through a real estate agent. Of the renters who rent through a landlord and currently need repairs to their property, 75% have raised the repair with their landlord. Eighty-four percent of people renting through a real estate agent have raised their need for a repair. People renting through an agent are much more likely to have raised the issue multiple times (62%) than those renting through a landlord (41%). Overall about a fifth of renters received a positive response (all requested repairs have or will be carried out), regardless of renting through an agent or landlord, with 8% and 7% receiving a negative response respectively. Fourteen percent of those renting through an agent did not receive any response after raising a need for repair, while 10% of those renting through a landlord did not receive any response. And of those renting through a landlord, 64% received a mixed response (having some of the requested repairs completed, others not), compared to 56% of those renting through an agent…..

Half of all renters report having experienced some form of discrimination when looking for a rental property in the last five years. This includes discrimination for having a pet (23%), for receiving government payments (17%), on the basis of age (14%), for having young children (10%) and being a single parent (7%). Discrimination on the basis of race (6%), for needing to use a bond loan (5%), gender (5%), disability (5%) and sexuality (2%) are also experienced, though are less common. Older renters are much less likely to report discrimination. In fact only 20% of renters over 65 reported having experienced discrimination at all. Even renters aged 45-64 were less (43%) likely to report having felt discriminated against. Younger renters under the age of 35 were more likely to say they’ve been discriminated against (55%) – particularly in regard to their age (22%). Men (42%) reported less discrimination than women (56%) overall, though both were as likely to report discrimination based on gender (5%). Location also appears to have an impact, with renters in the NT, Tas and the ACT (41%) less likely to report discrimination and renters in SA (61%) much more likely to.

The impact of income on discrimination is mixed. For example households earning between $70,001 and $100,000 (41%) were less likely to report discrimination, while households earning between $100,001 and $150,000 were more likely to (55%). Fifty-seven percent of households earning less than $35,000 said they had been discriminated against, 62% of households earning $35,001–50,000 and 60% of households earning $50,001–70,000. However, the nature of the discrimination people reported experiencing varied greatly – those on low incomes were much more likely to have faced discrimination for receiving a government payment, for being a single parent, or based on their race or on their disability. Households on higher incomes were more likely to face discrimination for having young kids and having a pet. Renters who have previously had a disagreement with a landlord or agent about bond are the most likely to report discrimination (75%).

Read the full report here.

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