The answer to renters' woes: A mandatory test for landlords

You have to take a test before you can serve alcohol, drive a boat or car, do plumbing work or be a property manager. But when it comes to providing shelter for an individual or family, the only prerequisite is buying a property.

Tenancy-related issues and rental bonds are now some of the most complained about industries and new research shows one in five tenants live in homes that are derelict and near-slum condition compared to just 3 per cent of homeowners.

With more tenants in Australia now than ever before, it’s time to level the playing field. The answer to this could be as simple as a mandatory test for landlords.

Despite the complexity of tenancy laws and the importance of the job of providing shelter, there is no entrance exam or mandatory training for property investors who want to become landlords. Not even if they want to self-manage a home.

Already, tenants are required to provide an application when they want to rent a property. They essentially undergo a test that judges their performance financially and their rental behaviour in the past to determine whether they should be given access to shelter.

Landlords should be required to undergo a similar process.

A landlord rightfully wants to know a tenant is going to be able to afford the rent. A tenant should rightfully be allowed to know whether a landlord can afford to maintain their home.

This is already a concept other countries have embraced. In Scotland and Wales, landlords are required to pass a “fit and proper person” test to be able to be registered and rent their properties out.

This test looks at any discrimination in business activities, whether they have committed fraud or violent offences, information suggesting they’re a bad landlord, antisocial problems in any properties they are responsible for and whether they have a letting agent.

A test in Australia could also consider whether a self-managing landlord has a basic understanding of tenancy laws and whether any investor can afford the necessary upkeep that keeps a property habitable. It would ensure property managers aren’t put in the difficult position of working for a landlord who does not want to maintain a home properly.

It would also create the transparency needed to make the landlord-tenant relationship accountable – if a landlord cannot satisfy the necessary criteria then they will need to undertake more training or find a more suitable avenue for wealth building. It would allow the complaints of tenants to have far more gravity.

It would also make it clear that, however unsavoury the thought, not everyone is cut out to be a landlord. Being a landlord is to be a housing service provider and it takes some fundamental skills to do this adequately, not in the least the ability to communicate effectively, to be fair, to keep paperwork and to abide by the laws.

Under the current rules, a self-managing landlord can buy a property and rent it out without even a minute looking at the tenancy legislation.

Steven Rowley, director of the Australian Housing and Urban Research Institute’s Curtin Research Centre, warned self-managing landlords who did not know their legal responsibilities could “place the tenant at risk”.

“There is an argument that landlords, at a minimum, should demonstrate familiarity with tenancy legislation if they are not using a real estate agent. However, this does not necessarily mean they will adhere to such legislation,” he said.

If a landlord relies on being registered and passing a test that requires them to have provided a good home for their tenants, the onus is on them to adhere to the laws.

A quick test would help to ensure they’re up to date with their responsibilities and have not abused them in the past.

Improved training of landlords isn’t “too much to ask”, Tenants Union of NSW policy officer Ned Cutcher said.

“When you consider how much of a hand-up residential property investors are given by our federal tax system, this would seem a pretty minor quid pro quo,” he said.

There does lie the issue in how to police it, he said. Something that would be difficult “without also challenging the very notions upon which our housing system is built in the first place, which is personal gain”.

But while it might be difficult to challenge the status quo, with home owners set to become the minority in 2017 it’s inevitable the rights of tenants are going to become front and centre of the future conversation about the housing market. And it’s very much overdue.