Australia’s Rental Crisis: Understanding and Deep Dive

Australia is currently facing a rental crisis, with record-low vacancy rates leading to a power imbalance between landlords and tenants. This crisis has seen widespread rental increases, often in excess of $100 a week. In fact, almost three-quarters of properties experienced a rent increase in the year to February, a significant jump from about a quarter each year pre-pandemic. Approximately a quarter of these properties had experienced an increase of more than 10%.

This crisis has led to a surge in calls from landlords to property managers, seeking advice on how they can implement similar increases. Property managers are often left with the task of educating landlords on how the system works, ensuring that decisions are made responsibly and ethically.

The role of the property manager in this scenario is crucial. They serve as a go-between, managing the relationship between the landlord and tenant. It’s their job to work in the landlords’ best interests, informing them of changes needed to the property, screening applicants, managing maintenance requests, and ensuring all parties are acting in accordance with their legal obligations. Property managers are typically paid through commissions that range between 5 to 12 per cent of the weekly rent, meaning they also have a financial stake in rents increasing, albeit a comparatively small one.

However, it’s important to note that not all rent increases are initiated by the property owners. Some are driven by the market and other economic factors, such as rising interest rates and growing property costs.

The rental crisis has also exposed some unethical practices in the industry. For instance, a Sydney real estate agency was called out for suggesting landlords evict long-term tenants and re-lease their properties at a higher rate. This triggered calls to ban no-fault evictions. In another instance, a landlord attempted to raise the rent on every tenant in an apartment building by up to 70%.

Despite these challenges, many property managers aim to foster respectful relationships between landlords and tenants. They strive to create agreements that work for both parties, working to dispel the ‘us versus them’ mentality often associated with landlord-tenant relations.

At Create Real Estate, we believe in the importance of transparency, responsibility, and ethical conduct in managing property rentals. We understand the current rental landscape in Australia and are committed to providing our clients with informed advice and assistance during these challenging times.

In terms of rent increases, we adhere to a strict procedure that includes keeping tabs on market trends, conducting a “comparative market appraisal”, and engaging in responsible negotiations with the renter. We believe that if a property has been well-managed over the course of a year, any rent increase should not be exorbitantly high.

As we continue to navigate this rental crisis, we at Create Real Estate remain committed to upholding the highest standards of professionalism, integrity, and respect for all parties involved.