Is reform needed to make renting fairer?

There is a push amongst the nation's tenancy bodies for better legislation to help protect renters amidst a growing rental crisis.

Across the country renters are being hit with some of the largest increases in years, with some suburbs even seeing rental prices increase by over 30%.

It means that in some capital cities, like Melbourne and Sydney, it is not uncommon to see dozens of potential tenants viewing a property.

It's a system that is pitting people against each other to fight for what limited supply there is says chief executive of the Tenants' Union of NSW, Leo Patterson Ross.

"We don't pit consumers against each other for things like food and other necessities, but we do for rental properties," he says.

There are issues around supply says Ross, but the process to secure a residence itself can also be unfair.

"Landlords undertake a risk assessment on potential tenants, but the problem is they are usually swayed by the financials of it," he says.

Despite having recently been made illegal in New South Wales, rent bidding, where tenants will offer more money than advertised to secure a property, still hasn't gone away.

"Rent bidding still happens because agents are allowed to inform other bidders about someone offering more money and then you also have people that offer up months of rent in advance," says Ross.

Rates rises drive competition

It's something that is happening more and more according to co-founder of Evoak Property Management Harrison Lamond, particularly as more renters are joining the market.

"House prices have become unaffordable for many people so there is a growing list of Australians that are forced to continue to rent," he says.

Lamond says he has seen a lot more homeowners becoming renters as interest rate rises have made mortgage repayments increasingly unaffordable.

"There is a lot of fear, and we are seeing clients choosing to sell their properties because they are maxed out and their interest rates will soon be changing to a variable rate which they can't afford," he says.

It's a competitive landscape says Lamond, and people are willing to offer more money than asking in order to secure a property.

"If they are a good tenant in every way then a landlord will likely pick the person that is able to offer more money," he says.

Push for reform

Ross admits that most of the rental issues in Australia were caused by a lack of supply.

"We could solve most of the problem through supply, but the issue is that it's not practical to do it as you'd need a surplus to ensure there Is always choice."

But there are some practical things that can be implemented to better democratise the process.

"We would like to see individual applicants judged on their own merits and whether they are able to demonstrate they can pay rent. Property managers should have to provide clear reasons why a person is refused," says Ross.

There are a few potential ways it could be done, including a first-in, best dressed method or an algorithm ballot, all with the end goal of making the process fairer.

"There needs to be clear reasons behind why a tenant may be rejected and changing the system is a first step," says Ross.

City Futures Research Centre's Dr Chris Martin agrees with Ross, saying that there is urgent need for policy change to enhance tenant rights.

Dr Martin says reforms are needed to prohibit no-ground terminations which tenants are reporting more of as landlords push up rent.

"No-grounds terminations are unfair, give cover for bad reasons for termination - such as discrimination or retaliation - and undermine tenants' legal rights to get repairs done and challenge rent increases," he says.

Ahead of the New South Wales state election, both Labor and the Coalition have pledged to look at reforms which would require a reason for evictions, but Dr Martin says they don't go far enough.

City Futures has come up with five proposals that it would like to see implemented by whoever forms government in the state following the election.

It includes emergency packages and regulatory relief, land tax reform, investment into social housing and developer contributions to affordable housing.

Gaining an edge

These types of changes take time, but there are ways to help boost your rental application to the top of the pile.

Property manager at Executive Style Property, Tyler Leighton, says that the best way for tenants to get ahead is to offer up as much information as possible.

"There are so many people at inspections currently so there's no shortage of applicants which means it's important to offer as much information as you can," says Leighton.

Landlords are conducting their own risk assessments when choosing potential tenants says Tyler and having a good tenant ledger ready to go with financials, information about where you work and references goes a long way.

"Most managers use various platforms which does make it a straightforward process and tells you what to supply, but try to oversupply information particularly references," he says.

Lamond agrees saying that references are one of the key elements of any potential application.

"If you have a previous rental history and can use that as a reference that's even better, you want the landlord to feel comfortable about you as a tenant," he says.

This doesn't mean though that first-time renters are necessarily at a disadvantage, because everyone has been there at some point he says.

"If you're a first-time renter then you have to show your affordability in other ways and use references from employers or a family friend, you just need somebody that can vouch for you."

It can also help to make friends with the property manager while you are at a viewing says Leighton, because the manager has a direct line to the landlord.

"Making a good impression is part of it because as a property manager we have a say, but at the end of the day it is the landlord's choice," he says.

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