The insecurity of rental housing and the unsatisfactory condition of many of these properties are receiving much-deserved media attention following the release of a national survey of tenants.

New research from CHOICE, the National Association of Tenants’ Organisations, and National Shelter has found that renters face widespread insecurity, poor-quality housing, and discrimination. These organisations are calling for governments to prioritise rental security and quality issues, not just housing affordability.

The stock response to this insecurity – which is longer fixed-term agreements – is not the answer, argues Chris Martin, research fellow at the University of New South Wales. Instead, the solution needs to take into account the structural features of the Australian rental market, including the mobility of tenants.     

Rather disturbingly, the research reveals widespread worry, dissatisfaction, and a sense of injustice among tenants. Other major findings include:

• 75% feel that competition for rental properties is unreasonably fierce
• 50% are concerned about being blacklisted on a tenancy database
• 50% have experienced some form of discrimination
• 30% live in properties that require non-urgent repairs
• 8% live in properties that require urgent repairs
• 10% reported an angry response after requesting repairs

“Residential tenancy laws cover many of these problems. That tenants are not successfully exercising their legal rights indicates a deeper problem of insecurity in renting. This problem is both structural and legal,” said Martin.

Part of the problem has to do with the structure of the rental property market. Small landlords dominate the Australian rental sector, and the majority (72%) own a single property. Sixty-two percent of these small landlords make a net rental loss, which is why many exit the sector when it suits them.

In order to exit, landlords might sell to another landlord or owner-occupier. These dynamics create structural insecurities for tenants. It also discourages landlords from binding their sole asset in a long fixed term.

And while tenants enjoy many protections under each state and territory’s Residential Tenancies Act, tenants grapple with much anxiety because landlords are able to give notices of termination without grounds.

“Without-grounds termination notices give cover to terminations by landlords for bad reasons, such as retaliation and discrimination. This means the prospect of receiving such a notice hangs over tenants when repairs and other issues arise,” said Martin.

He believes the legal insecurity of tenants could be alleviated in several ways.

Under the current laws of each state and territory, a fixed term prevents landlords from terminating without grounds for the duration of the fixed term. Likewise, a fixed term prevents tenants from lawfully terminating without grounds.

Martin argues that advocating for long fixed-term tenancy agreements is unwieldly for both landlords and tenants, and also threatens other valuable legal protections.

Instead of long fixed terms, Martin believes governments should abolish without-grounds termination by landlords.

“The law should instead provide a comprehensive set of reasonable grounds for termination, with notice periods and exclusion periods appropriate to each ground. This accommodates our present lot of small landlords, and can be done immediately,” Martin said.

“Over a longer term, we should set our housing tax and finance policies to get a more stable sort of landlord. That would be one who operates at greater scale, has a reputation to protect and is less interested in switching out of the sector than in receiving a steady trickle of rents from secure tenants.”

Related stories:
Hot Buying Trends For 2017
Should Landlords Accept Pets As Tenants?
 

Whether you are looking to buy your first home, move home, refinance, or invest in property, a mortgage broker can help. Access loans from all the major lenders, get help with paperwork – plus there is no charge for this service. Get help from a local mortgage broker