Yesterday in Crikey we wrote about how the tight rental market in Australia’s capital cities is provoking fierce competition among renters:

40 people turning up to inspect a rental property is routine in cities like Canberra, Perth, Brisbane, Sydney and Melbourne where competition is high. And anecdotal evidence suggests that parties often negotiate with an agent behind the scenes, hoping to secure the advantage by either bidding above the advertised price or offering three to six months’ rent in advance – or both.

Here’s some response from renters — landlords respond in the next item:  

Adrian Kitchingman writes: I can tell you that I have had exactly the experience mentioned in the article. After returning from Canada with my wife we needed to find a rental flat rather quickly. We decided to go for inner metro Melbourne and stuck to only a few northern suburbs near where we were staying (with my sister) as we had no car to get around. We came up against about five or more other possible tenants every time we viewed a place. Eventually we were advised to offer around $10 more a week by a friend to help securing a place. After taking this advice and letting an agent know (with the added “we can move in straight away and will sign for a year”) the agent told us they’d let us know the next week. To our surprise the next day the rental property was re-advertised with our offer as the new rate. No doubt we were a bit p-ssed at this as we were already reaching our financial limits as it was and couldn’t offer more. In the end we found another place which gave us the asking price. Now we’re looking down the daunting road of buying which doesn’t look rosy and is now soured by the fact that we may not be able to afford further rent hikes either (we’re both professionals). Our worst nightmare might eventuate yet… outer suburbia.

An inner suburban Melburnian writes: I have recently rented a place in inner Melbourne. This is exactly what I went through. My housemate and I are both employed full-time, had a great rental reference from the place we were living and a good rental history in general. Anywhere closer to the city than Northcote would attract at least 30+ prospective tenants and we were rejected on at least ten applications prior to getting our current place. At one inspection I heard someone complaining to the agent that they were having the same problem and actually heard the agent suggest that they offer more rent. Out of frustration we offered $20 more per week than the asking price on our rental application and had the place the following day. It was never mentioned by the agent. They just drew up the lease with the new figures on it.

Greg Blanden writes: It’s no different here in Adelaide – 20 and 30 people at an inspection, rents advertised in “the range of” and deals being done behind the scenes. There’s also rumours that some agents are taking a fat backhander direct from prospective tenants to recommend them. Another scam seems to be emerging here as well – a property will be advertised and if the interest is high enough the applicants will be told none were suitable and the property will turn up on the listings a few days later at a higher rent. I recently spent eight weeks looking for a place in the mid-lower end of the range, sometimes applying for five or six a week. Despite a stable employment history and a great reference from my property manager for the previous four years, I found NOT ONE of the outfits I applied to had even bothered to call to check with my referees! So, I wasn’t even making the short list! You don’t have to be a genius to work out the major cause of the problem – our beloved state government has flogged off most of its public rental housing stock to its developer mates, who have in turn sliced it up into micro-blocks for private dwellings. End result? Bugger-all affordable rental properties. And once again, the battlers get shafted!

Leila Ismail writes: It is interesting that the rental problem (particularly in inner-city areas) is only just starting to get attention – it’s been a major problem for a good couple of years now. Because of the high market demand, rental prices have gone up exponentially in the last two to three years, in some cases by $50 or more per week. For low-income earners and students, it’s a disaster. If you can find an apartment or house in your price range to begin with (and that’s hard enough), you then have to compete with unscrupulous real estate agents who play applicants off against one another and use ‘blacklists’, draconian application procedures (sometimes including a fee of one week’s rent – not refundable if you’re offered the property and refuse) … Students and blue-collar workers, as well as casual and part-time employees, are being pushed out of the inner city, and they’re the ones who can least afford to commute long distances to work or study. I know people who’ve had to give up their study plans (either that or work full-time and try to study as well) because they simply can’t afford to study full-time and pay rent.

David Kerruish writes: I’ve rented for the past six years and can tell you letting agents have never had it easier – and they know it. Try getting an agent to perform routine tasks and they don’t answer phones, don’t keep appointments and generally do everything to go out of the way to avoid their responsibilities. After surviving life in a place with no lights in the bedrooms, leaking taps and no fire alarms I was told by my agent a proposed 18% rent increase to stay for another six months was “fair” and “represented value”. I disagreed and took the plunge and purchased a property. At least I know what my monthly repayments will be for the next couple of years.

Scott Gamble writes: The NSW Office of Fair Trading has received a complaint, from me! I was outbid on a property about five months ago, and when I complained to Fair Trading I was referred to the CTTT. They took my $40 complaint lodgment fee, made me take an afternoon off work to go to a hearing, only to tell me they did not have jurisdiction over the case because I was not legally the tenant at the time. I had already paid a deposit, but as the property was leased to another party through a separate agency, they could not do anything about it. In this case it was the landlord who initiated the bidding by offering the property to the [real estate agency] if they could better the weekly price that I had committed to. I was told by the Director of [the agency] that it was “tough luck” and he admitted to knowing the property had a holding deposit on it when he leased it.

John Parkinson writes: Two anecdotes from my recent (August 2006) move in Victoria: The first involves an apartment for rent in Richmond, advertised at $375 per week. Upon application I was informed that property had been leased to another party who had offered $390 per week. I then offered to round it up to $400 and whilst the estate agent had initially told me the property was leased, then said he would see if the owner would consider it. After a couple of hours, the agent called me back to say the property had (again) been leased at $430 per week with three months rent in advance and asked if I would consider offering more, which I declined. It would appear to me that the agent had been ringing around several interested parties to secure the highest bid. The second was a house in Prahran advertised at $380 per week. During the inspection the estate agent openly informed the 20-odd people that turned up that they expected the property to lease at higher than the advertised price. On my application I again offered $400 per week, this time with six months rent in advance. This time my application was accepted. The resulting transaction (in excess of $12,000 including the bond) consumed almost all of the money I had saved for a house deposit, so I’m stuck renting for even longer while house prices continue to rise. Caroline Armstrong writes: Looking for a one bedroom apartment/unit in 2005 meant a series of inspections that were scheduled during weekday working hours and were always attended by 30 plus people. Answering ads for accommodation quoting rents of $250-$300 per week meant inspecting rundown, often mouldy apartments or units. The agent on site could never answer what work would be done prior to the successful tenant moving in. Some said they would ask, others indicated that if someone would take it as is, at or above the price listed then no work would be done. I inspected a small house and informed them that the back door was broken and the back fence had been pulled down. Complete disinterest in this information. Again the agent, when asked, did not know if the owner would approve any work being done. Very scary; I can’t imagine the state of accommodation at lower prices.

Lawyer Katy Barnett writes: Last year, when I was seven months pregnant, I fell down the front stairs of our rental home. The stairs had been broken ever since we moved in, and we had made a couple of requests for them to be fixed, to no avail. Fortunately, the baby and I were OK, but it gave us a terrible scare. Yet again, there was no action from the landlord after I told the estate agents what occurred. Two months after my baby was born, I decided that I had had enough. So we gave a month’s notice to end our lease – plenty of time, you would think, for a new tenant to be found, particularly in the present market. Unbeknown to us, the estate agency had recently changed hands, and now had a “call centre”. I could never get on to the person who was supposed to be dealing with our property. Despite my constant urging, no newspaper ads were ever placed nor were any signs put out the front (except by us). It took two weeks for ads to be placed on the web. The ads were brief and appalling, indicating that the new estate agency had no idea about the property or its features. I redrafted the ad myself (no mean feat with a two-month-old). It took the estate agency three weeks to put the redrafted ad up. After all that effort, all ads by that particular estate agency were taken off the Domain website two days after I redrafted it – I am guessing there was a dispute over payment. So, of course, no tenant had been found by the time we moved, and we were sued by our former landlord for unpaid rent when a new tenant was eventually found a month later. I have worked as litigator, but it is very different when you are a party yourself to litigation. I had not appreciated how terrible it is. I suppose the good thing is that if I go back to practice, I will be even more understanding of anxious clients who call to check up on their case. I spent a month trying to prepare for the case in VCAT and get the house rented out. Of course, being a lawyer, I prepared a meticulous brief of evidence (failure to advertise in paper or outside the property, failure to adequately advertise on the internet, and newspaper reports of this particular real estate agency’s problems in general). After all that effort, the VCAT Member decided that the real estate agency couldn’t be faulted for failing to advertise in the newspaper, and also said that she could not rule on whether the initial internet ad was sufficient (although it was clearly pathetic in the extreme). Fortunately, she did hold the agency to task for taking two weeks to get the internet advertising up, so although most of our bond was forfeited, we didn’t have to pay any extra money out of pocket. We would love to have our own house, but it is just impossible with today’s prices. You can’t maintain a mortgage and a family on a little more than one salary and be comfortable. I have acted for banks and enforced mortgages, which makes me very reluctant to over-extend myself. All too often I saw families on a knife’s edge, and one small thing pushed them over the edge. So here we are, renting again, hoping nothing goes wrong this time. Mr Costello was again exhorting us in December to “have another one for your country”. I can tell him that if the Federal Government did something about house prices, negative gearing and simplified our taxation system, that would make it a lot easier.

Riaz Deen writes: In June last year my girlfriend and I moved from inner Sydney to inner Victoria, and (perhaps due to NSW arrogance) expected plenty of places and very cheap rent. Our surprise was immense as 40-50 people were turning up to every appointment in Fitzroy and the rents were almost hitting Sydney prices. People were writing cheques and trying to put money down with their application at the inspection. It was incredible. It was useless putting in applications as no-one would call you back. Once an agent did call us back and said “It’s between you guys and another couple. They are offering three months in advance. Do you want to beat that?” We politely declined. 

Hammy Goonan writes: One of my current housemates and a close friend are both trying to find a house to rent in North and West Melbourne at the moment. There are at least 20 people at every inspection and both have had real estate agents tell them that at least half the properties are going to people who are paying above the advertised rental price. Both earn quite a good wage, have good tenancy records and are, as is admitted by several real estate agents, excellent candidates. However they can’t compete when people keep upping the price behind their back.

Greg Shaw writes: The current property I rent in Sydney’s Drummoyne was advertised at $450 per week in June 2005. I had previously lived for 12 years in Sydney’s inner east. Having always been a renter I was shocked and dismayed when having agreed immediately to the terms of the rental agreement at the inspection the follow up call proceeded into an auction to secure the tenancy agreement. I copped $460 but threatened the Dept of Fair Trading when it was clear they wanted more. Thankfully I got to sign the lease once my references were checked. This was my worst experience in finding a rental property. Back then it took ten weeks of searching to get a place. Why has it taken two years to realise there is an accommodation crisis in Sydney, not just for the homeless but for those who can afford to pay the right price for reasonable accommodation? The owners return from overseas in June 2007. I am not looking forward to this process again.

Peter Fray

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