Rising rents in many parts of Australia are putting pressure on households already struggling with the cost of living.
Rents have risen in all eight state and territory capital cities over the past year, data from Domain’s September 2022 rental report shows.
Rents in the combined capitals soared by an average of 12.8 per cent for houses and 16.7 per cent for units year-on-year in September.
“We are in an extraordinarily fast rising rent market at the moment,” Tenants' Union of NSW CEO Leo Patterson Ross told SBS News.
In 2021, of the 9.8 million households recorded, 31 per cent (2.9 million) were renting, with the majority (2.4 million households) renting from private landlords.
While rental prices took a dive in parts of the country during the COVID-19 pandemic, renewed demand and lack of supply are fuelling low vacancy rates that are seeing them climb past pre-COVID levels in many areas.
Source: SBS News
"Lower vacancies mean that landlords can afford to put the rent up and still find a tenant, and that's all driven by supply and demand. So something in the demand side of the equation really drove up demand from tenants for property for rentals in the immediate post-COVID period.”
Are the RBA’s cash rate hikes a factor in rising rents?
On Tuesday, the to a 10-year-high, raising the cost of borrowing and putting the prospect of home ownership further out of reach for many would-be first-home-buyers who are currently renting. But does this have an immediate and direct impact on rent prices?
“The rent is driven by the vacancy rate in the area that you're looking to rent. That's effectively the bottom line,” Mr Mickenbecker said.
The rent is driven by the vacancy rate in the area that you're looking to rent. That's effectively the bottom line.- Steve Mickenbecker, Canstar
“Irrespective of what happens to the landlord's costs because of increasing interest rates, if they have an opportunity to put rent up because there's a low vacancy rate in the area then chances are they will, because they'll say 'if we can get another $100 a week out of this property, then we might as well, whether our costs have gone up or not'.
“So in the short term, it's that low vacancy rate that is driving higher rents.”
How long will rents keep rising and what does it mean for tenants?
It’s unclear how long rents will continue to rise, Mr Patterson Ross said, but households are already feeling the strain.
“It's certainly a very worrying time, increasingly people are calling us worried about both their ability to find a new home, the amount of money that they're having to budget to secure a home, and rent increases during a tenancy,” he said.
“All that pressure alongside the rent increases also means people are very worried and not reporting other issues like repairs and maintenance because they don't want to put a target on their back and find themselves evicted, and then having to find a new home.”
The current rent rises are unusual in that they are “affecting a very broad range of people”, not just those who “always do it toughest”, Mr Patterson Ross said.
People who usually bear the brunt of competitive rental markets, including people on lower incomes, single people, people with children and people with disability are “all finding it very tough, even more than they were before,” he said.
“But that is also in the context that even the people who traditionally have found [renting] easier are finding it very difficult, even with strong income and a strong renting record.”
Mr Patterson Ross said callers to the Tenants’ Union who are “in the most distress” are “usually people with children, because they're so worried about how they're going to keep their family and children safe”.
How can tenants combat rising rents?
Renters are largely at the mercy of the market if they’re seeking to live in an area with low vacancy rates, Mr Mickenbecker said.
“You can look for an area that has a higher vacancy rate, so that you're not caught under that pressure, if you can find one and if it's a convenient place where you want to live,” he said.
“Other than that, you might be stuck having to pay more rent than you were before your lease expired or before you chose to move to another location.”
There is “not a lot that people can do” to combat the impact of rising rents, Mr Patterson Ross said.
“There are charities and other financial supports that can be good, some of them are government supports, particularly around covering bond for a new property for very low income households, but the really difficult thing is that there is no good advice in such an unfair and broken system,” he said.
“So people should be making sure that their applications, their paperwork is as comprehensive as they can, but that often means little if the basic problem is that there are 100 people applying for a property, and you're simply not the most wealthy person or the most attractive person to the landlord or agent.”
What are your rights if your landlord increases your rent?
Mr Patterson Ross said tenants should contact their local tenants' union or community legal centre to canvas the legal options for their specific circumstances.
He said with high demand for rental properties in many parts of Australia, the market and legislative settings provide greater bargaining and negotiating power for landlords and property managers.
Negotiation between the landlord and tenant is recommended as the first step as the landlord has the discretion to withdraw or reduce the amount of the rent increase. Developments should be followed up and documented in writing.
Mr Patterson Ross said tenants can choose to contest the rent increase by lodging an application with the relevant tribunal, commissioner or local court.
But the pathway does not guarantee the rent increase will be scrapped or reduced.
- Additional reporting by David Aidone and Biwa Kwan.
