Rental crisis: Why tenants are treated like second-class citizens

Aussie renters are being squeezed like never before. (Source: Getty)

If you’re a renter and you live in Australia, you’re in good company. In fact, according to the ABS, more than a third of Australians rent their homes rather than own them.

As interest rates have risen and mortgage holders struggle with repayments, Australian tenants are also being squeezed like never before and are almost at breaking point.

Adding to this pressure, Australia is in the midst of a migration boom, with more than 300,000 people projected to reach our shores in 2023 and just short of a million people expected to arrive by the end of June 2025. This has put renters in an impossible situation as rental prices soar while there are historically tight vacancy rates.

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In my work as a property lawyer, I have seen so many examples of unfair treatment of tenants at the hands of landlords and property managers. From questionable evictions, repairs that are never completed and outright discrimination simply for being renters, it’s never been harder to be a tenant. Yet, despite so many Australians being renters, the law remains firmly stacked in favour of landlords.

I’ve seen many examples of tenants complaining about the properties they are living in - because they are damaged and need repairs, from broken floorboards to appliances - who are then evicted for complaining.

Many property managers - who have full control of the properties they manage on behalf of the owners - don’t actually notify the landlord of any repairs that are needed. Then, when the tenants complain too much, property managers can use a no-grounds eviction for renters who are on a periodic lease.

No-grounds evictions should be scrapped

Currently, property managers are actually incentivised to evict tenants because, when they do, they get a full week's rent plus the advertising costs to find a new tenant.

Thankfully, many states are on track to ban no-grounds evictions. Not only will this give tenants the security of having a place to live, and not having to bear the costs associated with moving every few years for the sake of greedy agents, it will also ensure the landlord has consistent cash flow.

Removing the no-grounds eviction law would help protect tenants from those unfair evictions but it would still mean the landlord could evict tenants for property damage or for not paying the rent.

Tenants need more avenues for help

Ensuring a rental property is fit for habitation is another important issue, particularly as more landlords are renting out individual rooms or garages as separate units.

The problem here is working out who actually regulates this practice. Councils will only intervene when there is a threat to public safety, such as structural issues in a unit complex. The only other avenue for a tenant to complain about fit-for-habitation issues - such as mould - is through Fair Trading and state-based bodies such as the NSW Civil and Administrative Tribunal (NCAT). However, this often leads to landlords or property managers retaliating with an eviction notice.

When tenants have a problem and try to get advice from tenant-advocacy services or the tenants’ union, there’s a good chance they’ll find those places already overloaded and overworked. A lot of advisers who work there aren’t solicitors either so, while they can give out information, they can’t provide legal advice.

If tenants want to take things further, it’s still not easy. For example, NCAT doesn’t allow parties to be represented by lawyers unless both parties consent and have representation. Further, most solicitors are not familiar with tenancy laws unless they specifically study it as an elective at university. Solicitors also don’t want to give advice because it’s rarely worth their time.

Rent reductions should be more common

Another common complaint from tenants is that some of the features advertised as being included in the property simply don’t work. Technically, tenants can apply for a rent reduction for things that are not in good order or need repair, or for things that are promised but aren’t provided. While that all sounds good in theory, as the current laws stand, landlords and property managers have far too many easy options to move tenants on and get new ones in. So, asking for a rent reduction comes with the risk of having no home at all.

My advice would be to only seek a backdate of rent reduction if you’ve been issued with a termination notice.

Renters treated as second-class citizens

Finally, there’s the stigma of renters being bad news and subsequently being treated as second-class citizens by their property-owning neighbours. I’ve seen situations where tenants have been abused and discriminated against simply because they are tenants.

In one case, neighbours complained to a tenant’s property manager, landlord, council and the police, and even tried organising a petition to have the tenant evicted and force the landlord to sell. This is all because these homeowners didn’t want tenants living on their street because they feared it would negatively affect their property values.

I’ve also heard of situations where neighbours tried to stop tenants working from home prior to COVID because one of their client’s cars was parked in front of their neighbour’s house. In one case, the neighbour would abuse the vehicle’s owner and take photos of them and their car in an attempt to harass and intimidate. This scenario is common, to the point that the NSW Real Estate Institute now provides training to property managers on how to handle neighbour disputes. Often these disputes get referred to the police.

In theory, rent increases should be based on market value, which is dictated by supply and demand. The problem we’re having at the moment is that COVID has made renters complacent.

During the pandemic, many renters enjoyed rent reductions, which didn’t increase when lockdowns ended and borders reopened. To add to this, rents hadn’t increased in many years prior to COVID because landlords didn’t have a reason or incentive to jack up rental prices, thanks to low interest rates. This meant tenants didn’t have to deal with regular rent increases each year.

The shock of the market correcting itself, as well as the fallout effect of COVID, rising inflation, and subsequent fall in real wages growth is why tenants are feeling the financial pinch right now. To compound the issue, many investors sold during the pandemic, resulting in less supply of rental properties in the market.

The rental crisis is yet to peak but, with few rights and fewer available properties, tenants are dealing with a nightmare situation of unprecedented proportions. It will take massive reform to the Residential Tenancies Act to properly protect tenants.

Until then, renters should arm themselves with knowledge about their rights, and hope for the best.

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