More than 2 million Australian households now private renters: AHURI report

There are more ways of entering the private rental sector in Australia than ever before  because of apps, online portals and social media networks, research has found. But experts warn the sector’s rapid growth should prompt a rethink of regulations that have failed to keep pace.

The private rental sector grew by 38 per cent between 2006 and 2016 with more than 2.1 million Australian households now private renters, according to Australian Housing and Urban Research Institute (AHURI) latest report The Future of Private Rental Market.

With that growth has come a variety of informal and unregulated ways of securing a rental, especially at the low-price end of the market, leaving young and low-income renters at a disadvantage. 

“There’s a fundamental shift taking place. Online platforms are changing the point of access and selection process,” says Dr Sharon Parkinson, of Swinburne University, the report’s lead researcher.

“Some of them are linked to formal real estate agencies but there’s also a lot of private organisation through Facebook groups and portals. This is particularly having a significant effect on the room rental market, which is shifting the price point and access. It’s inflating the overall cost,” Dr Parkinson says.

The report also noted tech disruption in the form of online property portals, and rent-biddings apps exacerbated the problem by benefiting moderate and higher-income renters through increased competition.

Dr Chris Martin, senior research fellow at UNSW’s City Futures Centre and the report’s other lead researcher, says while many new apps are convenient for tenants, landlords and property managers, it is a zero-sum game.

“Those who already have an advantage to accessing private rental they will have more of an advantage. That’s the worry,” Dr Martin says.

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He says these new intermediaries ultimately determine who has access to tenancies. “It’s something that regulators haven’t come to grips with yet.”

Dr Dallas Rogers, of the School of Architecture, Design and Planning at the University of Sydney, says policymakers need to update regulation to cover changes in the private rental sector to ensure it’s an even playing field.

“We need regulation on rent bidding apps. We need to know what these rent-bidding apps are and how the algorithms work and anticipate their effects,” he says.

Several rent-bidding apps have emerged over the past few years. Rent bidding is banned in Victoria.

“We shouldn’t let them in without having a critical look at it because it treats the rental app process like an auction and it goes against the idea that people have the right to secure housing,” Dr Rogers says.

“What’s interesting is technology can provide solutions to the rental problem but it can also compound the problem.”

Dr Parkinson says current legislation does not pick up on issues that might breach traditional tenancy laws.

“It hasn’t grappled with the issue of privacy, it hasn’t come to terms with the way discrimination is formulating around niche market entry points or informal Facebook networks or portals that specifically select particular types of renters,” she says.

The report comes just days after the release of the latest HILDA survey, which found a growing proportion of young renters are taking longer to buy homes.

Dr Parkinson says while the size of informal networks marketing private rentals is unknown, there is a cultural shift taking place. Policymakers need to address the need for different rental options for low-income earners who may be long-term renters with more social and affordable housing.

“People are increasingly seeing sharing as a way to overcome affordability. The room rental sector is exploiting that demand,” Dr Parkinson says.

“We used to think of it as a black and marginal market, but we’ve found is it is more prolific and broader in its scope and it incorporates friends and family, people who are organising [room rentals] via media network communities.

“The real issue is the those in the lowest 20 per cent, there’s just no way in [into private rental] for that group unless they share or access the room rental sector,” she says.