The housing crisis continues, and there’s nothing renters can do about it

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The national vacancy rate has fallen to its lowest level on record, and the rental market sits firmly in favour of landlords.

According to Domain, tenants will be facing more increases in asking rent, and competition will intensify between families who are trying to find a place to live.

So, if you’re renting, or trying to find a place to rent, should you expect any sympathy?

Rental markets the tightest on record

If you’ve lived in your own home for a couple of decades and haven’t had to live in the private rental market, you may not know what modern tenants have to do to secure shelter.

The power imbalance between landlords and tenants is extreme.

And a huge part of the problem has to do with the contradiction sitting at the centre of Australia’s approach to housing.

Shelter is one of the our most fundamental needs, but a generation of Australian policymakers who were bewitched by the siren call of “consumer choice” ended up building a system that restricted the choices of shelter available to people, especially for low income families.

And it’s feeding a generational and wealth divide between owners and renters, and a severe housing crisis.

Have a look at the tables below from Domain’s latest rental vacancy report.

Nationally, the vacancy rate hit a record low last month, with record lows being recorded in Sydney and Brisbane.

The “vacancy rate” is a percentage that indicates the proportion of estimated rental stock that is vacant over a month. A vacant rental property is defined as a property on the market for longer than 21 days.

The next table shows the volume of vacant rental properties that were on the market last month.

The number of rental listings has fallen dramatically over the past 12 months after COVID restrictions were lifted and the international border was reopened.

Canberra was the only city to see an annual increase in rental stock, up 17.2 per cent, after more rentals were added to its market in 2022.

Domain also published a graphic to show how rental listings have behaved in the COVID era.

It shows what happened when the international border was closed in 2020, what happened when Melbourne endured its extended lockdown and huge numbers of people left Melbourne and Sydney for other states, and what happened after borders were reopened to international students and skilled migrants.

“All capital cities continue to operate in a landlord’s market, with a shortage in supply and availability of vacant rentals driving up asking rents and further escalating competition between tenants,” Domain said last week.

“This creates a difficult environment for prospective tenants and highlights the need to address the rental crisis in many areas.”

We need to talk about pacified income

At the moment, for people who are trying to secure a place to live in the private rental market, it’s extremely easy to feel that you don’t matter as a person.

It feels like you’re no more than a bank account to some landlords (though not the good ones, who can be fantastic).

The euphemism in investment circles is that rentals provide landlords with a source of “passive income.”

But a more honest phrase would be pacified income, in too many circumstances, because that describes the situation of too many tenants trapped in the rental cycle.

Try this thought experiment.

Imagine you’re not renting by choice. You’ve been locked out of the property market because the pace of property price increases pushed home ownership out of your reach years ago, and you didn’t have the bank of mum and dad to give you a leg up.

You somehow secured a place to rent, so you consider yourself lucky. But you only discovered how bad the place was after living there. It has extremely poor insulation, for example, so the energy costs are crippling. The internet connection is appalling. The plumbing is always blocking because tree roots have got into the pipes.

But after a year, your landlord tells you they’re increasing the rent by $50 a week because that’s where the market is. They want you to pay them an extra $2,600 this year.

It’s insulting, but what can you do? Rental vacancies are at record lows.

The average cost of moving is roughly $4,000 (not including the bond), so there’s no way you can afford to move. You know this, because you’ve had four rentals in five years and it’s broken you.

So you’re basically done. How can you save enough money to get out of the renting cycle and buy your own place? You resign yourself to the fact that you’ll probably be facing multiple rent increases.

You’ve become a source of pacified income.

Why don’t landlords have to provide much information?

And remember, that all comes after the degrading process you had to go through to secure the rental in the first place.

On your application form, you had to provide a copy of your passport, your drivers licence, and your bank statements.

You had to provide your rental history for the past five years, with contact numbers.

You had to provide details of your current employment, including if you had a full-time or part-time position, how long you’d been there, and what your gross monthly salary was, with contact numbers of your bosses.

You had to do the same thing for your previous place of employment, including what your gross monthly salary was there.

You had to explain why you left your last rental, and how long you planned to live at this rental. You had to describe, in 250 words or less, why you wanted to live in this place in particular, as though you were sitting a job interview.

You were also asked if you planned to buy your own property soon.

And you answered all of those questions, because what choice did you have?

But once again, you wondered why the same amount of information is never provided to you about landlords.

As a prospective tenant, it would obviously help you to make better decisions about where to live if you were given far more information during the application process. For example:

  • What do former tenants say about this place? Did they enjoy living here? Did they have problems with the landlord?
  • Are there problems with the plumbing here? If so, how long have those problems existed?
  • Does this place have a problem with mould?
  • How long does it take for maintenance to take place here?
  • What have the average annual energy bills been for this place over the past five years?
  • What’s the internet connection here?
  • How often has the landlord raised the rent in the past few years? How much was the rent raised each time?
  • Does the landlord plan to raise the rent in the next three years? If so, by how much each time?
  • How many investment properties does the landlord own?

And so on.

You could quibble about the questions, but you get the point.

It should be a two-way street with important information like that, but it’s not in Australia.

Tenants are typically given less than 30 minutes to inspect a place, and they’re largely flying blind with information after that.

And if they can’t afford to buy their own property, there are few housing options available for many people other than in this private rental market.

Why is it like this?

Build it, and they will come

Well, as the Australian Housing and Urban Research Institute pointed out in 2020, policymakers put Australia on the path of “landlordism” years ago.

For the past 40 years, policymakers have turned their backs on social and public housing, and they haven’t explored alternative housing models with much enthusiasm.

It’s either home ownership or the private rental market where the rights of landlords are prioritised.

Professor Andrew Scott from Deakin University says Australia’s abandonment of important post-war building and funding arrangements after the 1970s created a very different society by the 1990s.

“By the early 1990s, there was a clear shortage of housing for people on low incomes, which of course continues to the present day,” he said in a recent report from the Australia Institute.

“The effects of this are shocking — nearly 14 per cent of Australians today live in poverty after their housing costs are taken into account. That proportion rockets up towards 50 per cent among public renters.

“The number of low-income private renter households in rental stress — paying more than 30 per cent of their income on rent — has doubled since the mid-1990s to now exceed 700,000 households.”

It makes you think about Australian “society.”

The former British Prime Minister Margaret Thatcher famously claimed there was no such thing as society, there were only individual men and women and families.

But it’s worth remembering the context of that quote.

When she said that, Ms Thatcher was arguing that individuals needed to start taking more responsibility for themselves.

She gave three examples of the types of complaints made by people who needed to take more personal responsibility. And coincidentally, one of those complaints had to do with housing.

“I am homeless, the government must house me!” she mimicked.

“They are casting their problems on society and who is society? There is no such thing! There are individual men and women and there are families, and no government can do anything except through people, and people look to themselves first.”

So, if you’re struggling to find housing and you feel like you’re not considered part of society, take comfort.

You can’t be part of something that doesn’t exist, so it’s one less thing to worry about.

By business reporter Gareth Hutchens (Original ABC Article)