Playing the Renting Game

Last week’s front page of the Herald featured Steve Grant’s, “The roll of the dice”, a story about an emerging entrepreneur who’s invented a card game premised upon her experiences as a renter. According to Steve, the game is designed to highlight “WA’s unfair tenancy laws” a sentiment supported by Fremantle councillor Rachel Pemberton.

Cr Pemberton is co-ordinator of a group called the Making Renting Fair Alliance who are keen to see an overhaul of tenancy laws including such things as longer-term tenancies, banning unfair evictions and giving renters the right to make minor alterations to a property without permission.

The state government is in the early stages of reviewing WA’s residential tenancy laws with stakeholders such as REIWA and Tenancy WA able to have their say.

There has already been significant changes made to the Residential Tenancies Act in recent years, all of which have afforded greater protections for renters. Changes include limiting the amount of inspections per year to four, minimum levels of property security, mandating the installation of smoke alarms and RCD’s, the effective removal of option fees, prescribed lease documents and protections for domestic violence victims.

Whilst many property investors would disagree, almost all these changes were necessary in order to keep up with changing community expectations. However, some of the latest proposed changes by tenant advocates go too far. For example, the demand that landlords must offer tenants longer leases is predicated on the fallacy that tenants want longer terms. The fact is, the norm of six to twelve months leases are almost always at the request of the tenant and landlords love a long-term tenant; it minimises vacancy and provides income certainty.

And taking away a landlord’s right to choose their tenant on reasonable terms by “banning unfair evictions” – whatever that means – resembles a government housing policy by proxy and distorts a naturally occurring cyclical market.

Also, I don’t think a tenant should have the right to make any alterations to a property no matter how minor. Property owners often lease their homes for short periods expecting to return to it in the future. It is simply unfair to force them to allow third parties to make changes to their home without their consent.

Private investors, most of them unsophisticated mum and dad types provide about 80 per cent of rental housing in Australia. The risk is that if the pendulum of fairness swings too far in favour of tenants at the expense of the people who carry the risk and cost of property ownership, it will be left to state governments to provide more housing as investors naturally turn to alternate vehicles of wealth creation such as shares, managed funds and superannuation. When this happens – and it will – rents will inevitably rise as housing supply falls causing far more significant problems for those that rent.