How to beat the rental crisis

A shortage of low-cost rental properties has resulted in a scramble among potential tenants to find somewhere to live. So what do you need to do to beat your opponents to a property?

According to David Imber, policy and liaison worker with the Tenants Union of Victoria, the shortage is a systemic crisis that has been getting worse over the past few years.

"There is a mismatch in stock, with not enough low-cost property, not helped by the Federal Government cutting funding on public housing by 30 percent over the last 10 years," says Imber.

Chris Martin, policy officer with the Tenants Union of NSW, believes the shortage is a result of structural changes to super, which reduced investor interest in rental stock, and the end of the speculation boom in housing, combined with the multiple interest rate rises.

Whatever the reason, most of the crisis appears to be at the lower end of the market. "My sense is that the shortage is a particular problem for the inner city and low-cost rental market," says Martin.

Given the crisis, which no doubt is exacerbated as tertiary students return to study, what tactics can you apply to be the winning tenant?

There are more harmless ways of scoring a property than the so-called silent auctions, which have potential renters offering more than the going rate or up to a year's rent in advance.

While this practice appears to be on the rise, Imber says it doesn't help anybody. "You might as well be bidding against yourself — it's not helping you nor is it helping anybody else. It just adds to increasing median rents. And it is often in breach of fair trading."

Graham Joyce, president of the Real Estate Institute of Australia, says his association does not encourage such a practice. "It is not our practice for agents to seek higher rents than those advertised. Rents are not everything. You are better off having a quality tenant who doesn't cause damage to your property than an extra $15 a week. Quality (of tenant) is paramount; the rental amount is secondary."

BIS Shrapnel estimates that rents will rise more than 40 percent over the next five years. The NSW Tenants Union claims that about one quarter of low-income households pay more than 30 percent of their income on rent. "These households simply cannot afford to pay more rent," says Martin.

If you are a group of friends hoping to rent together, will putting just one name down as a tenant help you to secure the property?

The answer is probably no, according to Imber. "If you have more than one name on the lease, this gives the landlord greater security as it reduces the risk should one of you lose your job."

Another issue for would-be tenants is patience with the process. Joyce says that if there are a dozen applications for one property, it takes time to process these.

Clearly there is a shortage of rental property and while that exists it inevitably puts pressure on rents.

Perhaps with the steadying of interest rates and property prices falling in some states, more people will be able to look at buying and thus curb rental demand.

Checklist

1. Be organised
2. Arrive early to open house inspections
3. Dress appropriately — thongs and shorts will not win over agents
4. Write a letter expressing your interest to accompany your application.
5. Attach references from previous landlords and/or managing agents.
6. Provide proof of income
7. Lodge an application with all agents in your preferred area and ask to be advised of properties.

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