- Australia's rental market crisis is pushing renters to explore alternative avenues.
- Privately managed rentals offer potential savings, mainly for landlords.
- Tenants must navigate scams, negotiation hurdles, and legal complexities.
It is no secret that Australia’s rental market is a disaster. According to SQM research, the national vacancy rate currently hovers around 1.0%.
Australian rental market vacancy rates
Other parts of Australia have fared worse, with the vacancy rate standing at a paltry 0.4% in Perth and 0.5% in Adelaide, a far cry from the 2.5% to 3.5% typical of a healthy market.
Perth residential vacancy rate
As rent and homelessness rise uncontrollably, and the number of rentals available dwindles, many renters have scoured alternative avenues, like Facebook or Gumtree, in search of a home.
Here, they are looking for what is colloquially known as ‘private rentals’, or rentals directly managed by a landlord without a property agent.
Realestate.com.au reports that landlords solely manage about a third of all rentals across the country. By cutting out property agents, they save thousands of dollars in fees, albeit at the cost of spending substantially more time overseeing rental processes, such as tenant applications, maintenance requests, and booking inspections.
Some renters believe that renting privately affords them a better experience overall, with the landlord’s savings being passed on by way of cheaper rent or better service overall.
However, Australian renters must remember that we are currently in a landlords’ market.
Tenants’ Union NSW CEO Leo Patterson Ross told The Property Tribune that while private rentals may have benefits in terms of communication, there are inherent risks involved with renting through a person who is not a trained professional.
“About 70% of rentals are through an agent. Property agents are licensed and increasingly required to undergo training to be able to work in the industry. A self-managed landlord has no registration or similar system and so there is less structure for when things go wrong,” he said.
“Some people like to rent directly from the landlord because they feel like they have more direct lines of communication and a more personal relationship.
“For many people, they may not notice much difference – a self-managing landlord may be just as business-like and professional as an agent.”
The wild west of the rental market
One of the major drawbacks of going ‘private’ is the prevalence of rental scams. Ross stresses the importance of viewing any property first-hand before making a decision.
“A common scam is to pretend that an inspection is not possible and rely on renters being so worried about securing a home that they pay bond or rent in advance anyway.
“When the renter tries to move in, they find out that the person is not the owner or agent — we’ve even seen examples where people were still living in the home for rent!”
Leo Patterson Ross, Tenants’ Union NSW
Circle Green Community Legal‘s principal lawyer of tenancy, Alice Pennycott, told The Property Tribune that individuals must be particularly cognisant of landlords communicating exclusively through text or online messaging platforms.
Additionally, she noted that individuals must exercise caution if they feel undue pressure from a rental advertiser. Aware of the nationwide rental crunch, scammers often exploit renters’ desperation to secure a home.
“If you’re not able to inspect the property in person and actually go inside, that can be a pretty big red flag.”
Alice Pennycott, Circle Green Community Legal
“We’ve seen some more serious incidents where tenants had paid money, thought they had the lease, and then looked up and realised that house is not up for rent at all, or someone else is already renting it. It can be really hard to get that money back.”
In 2023, WA ScamNet received 129 reports of real estate and rental scams worth nearly a million dollars.
Scammers are also known to swipe personal information, including one’s driver’s license, passport, or bank details, to steal their identity.
Can you get a good deal on the private market?
In this rental climate, a good deal may signal a red flag.
“Properties that offer rent that is too cheap compared to other properties in the area can unfortunately be a red flag, as are people claiming that they are not covered by tenancy laws,” Ross said.
“You can check places like our Rent Tracker Postcode Tool to see how the property compares to others in the area.
“Checking reviews sites or Google may also give you an idea of whether people have had good or bad experiences—though be aware that most properties aren’t listed, and so no news may not always be good news.”
Seven top tips on protecting yourself in the private rental market
- Have a contract or residential tenancy agreement,
- Understand the features and requirements you need for a home when inspecting, a quick walk through or photos may not suffice,
- Ensure you can meet the landlord in person and physically inspect the home,
- Do a reverse image search on photos of the advertised property,
- Keep copies of your agreements in safe places, along with other important paperwork such as bond paperwork, receipts, and so forth,
- Don’t be rushed when inspecting a property; be thorough,
- Do your research and seek advice from a relevant and qualified professional.
University of Sydney senior lecturer in the School of Architecture, Design and Planning, Sophia Maalsen, told The Property Tribune that having a contract is paramount.
“Regardless of whether you are renting directly from a landlord, you should make sure you have signed a residential tenancy agreement—essentially a contract—as this will stipulate your protections and obligations as a tenant and similarly the protections and obligations for the landlord,” she said.
“Without an agreement, there is very limited protection for both parties.”
Sophia Maalsen, University of Sydney
“Make sure you are aware of the tenancy laws and protections in your state. Your tenant’s union will be able to help and answer your questions. It is really important to make sure you have a signed residential tenancy agreement, as this is what offers tenants protection under the law.”
Ross added that it is imperative one clearly understands the features they need and the information they want to ensure that the property is suitable for their purposes.
“Unfortunately, photos and even a quick walk-through may not give you the information you need,” he said.
“It can be useful to have measurements of bigger furniture like your bed so that if you’re wondering whether you can really fit into the space – you don’t have to wonder.”
Along with ensuring that you can meet the landlord in person and physically inspect the premises, Pennycott said that prospective tenants can reverse image search photos of the advertised property to ensure the images are not plucked from another listing or website.
“Keep copies of your agreements in safe places. If you’ve got your agreement, bond paperwork, and receipts for things, hold on to them and keep them safe. So, you’ve got records of stuff in case that does go south.”
Alice Pennycott, Circles Green Community Legal
“In terms of more general tips, when inspecting the property, be quite thorough. Don’t let yourself be rushed when you’re having a look-through and checking out the property. Try not to feel pressure to agree to something, particularly if it is something that you’re not going to be able to afford.
“If you’re getting pressured into putting forward a higher amount of rent or something like that, if you’re not going to be able to sustain that, you’re going to get yourself in trouble later on, which can be difficult.
“And if you’re not sure about it, get some advice, do a little bit of research. The fact sheets that we have available, there’s some information that consumer protection publishes. Doing a bit of pre-planning can be really helpful as well to prevent yourself from getting into hot water later on.”
Should you negotiate?
Unfortunately, on this point, Maalsen and Ross concur that renters are rarely in a strong position to negotiate, with the rental market currently operating in a way that pits consumers against each other.
Nevertheless, Maalsen said that not all landlords are after the highest rent a tenant can afford, considering other factors, including need or fit for the property, so it may be worth a discussion should the opportunity present itself.
“It is a really tight rental market at the moment. We know from research that certain groups are also discriminated against when it comes to renting—this can be racial, cultural, and religious, but tenants with children or pets also often find it harder to rent. Having good references from previous landlords and talking to the landlord or agent can all help.”
Pennycott stressed that one should not eschew negotiating, should their landlord add extra stipulations to the standard agreement beyond the norm.
“If you’re entering into a standard agreement with terms that are applicable to everyone in agreements that are legislated, if they’re trying to add things that are additional that are inconsistent with what you think is reasonable in the circumstances, then you can certainly say that doesn’t actually seem right can we change that?” she said.
“For example, there’s a term in all agreements that you have as a tenant: You keep the premises reasonably clean while you’re renting them. And sometimes additional terms can be proposed that are more detailed and potentially more of a burden on you than what that standard provision is.
“Like you have to use certain types of cleaning products, get professional cleaners, or comply with things that are beyond what’s reasonably clean. If you’re happy to do it, that’s one thing.
“Sometimes people think they have to agree to all of it, and there are no avenues to challenge it. And yeah, you can. There are risks that come with that, I suppose.
“The risk is that it could mean they say, oh, well, we’ve got someone else interested actually, we’re going to go with them instead. It’s a bit of a tough situation, unfortunately.”
A broken system
When asked how renters can differentiate themselves in such a hotly contested market, Ross’ response was succinct.
We should not have to.
“We should work towards a system where renters aren’t competing against each other for their housing. Housing is a basic need to live a safe, healthy and dignified life. We wouldn’t accept this in other essential services – we set up the system to meet everybody’s needs.”
Leo Patterson Ross, Tenants’ Union of NSW
“This competitive process often pushes people to give up more information or personal data or try to beat out other renters by paying for things like reference checks on tenant databases. These strategies are often ineffective and not a good use of money.”
