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rising home prices chart upRural rooming houses, city “slums in the sky” and accommodation-for-sex advertisements have been in the news recently – symptoms of a rental market that is tough for tenants on low incomes.

Investigations after a blaze in the Lacrosse apartment tower in Melbourne last year revealed up to a dozen tenants were sharing two-bedroom apartments – including some who slept on balconies and in lounge rooms partitioned with curtains.

Shared accommodation is no longer the preserve of uni students: some tenants in their 30s and even 40s are still living in (or returning to) shared accommodation.

There are reports of divorced couples remaining in the same property, often with some modifications or the addition of a granny flat.

And some tenants have been caught sub-leasing rooms by the night on accommodation websites or offering accommodation in exchange for sex.

When rent is so expensive the risk of tenant default comes into sharp focus, particularly if a tenant loses a job or faces competing expenses such as the need to fix a car. Fortunately, property owners can insulate themselves from this with quality landlord insurance.

However, insurance isn’t the solution to all problems.

Landlords and property managers need to inform tenants that by-the-night sub-letting is not acceptable – as it requires tailored short-term landlord insurance rather than a conventional policy.

It’s also important to avoid overcrowding. Overcrowded homes suffer greater wear and tear; can be damaged by unauthorised “renovations” to create more bedrooms; and are at greater risk of fire from overloaded electricity systems.

Warning signs include:

  • Mattresses in living areas – or stacked in garages and sheds.
  • Unusually high rates of wear and tear.
  • Plugs leading to an excess of power boards.
  • Tenants reluctant to agree to inspections or requiring very long notice beforehand.
  • A single individual applying to rent a large home.
  • Signs that more cars have been parked at the property than expected – for example, damage to lawns.

Landlords who want to deliberately overcrowd their properties to increase rent need to be aware that they may fall foul of council and state rules regarding boarding houses.

Complying with those rules often requires significant investment in fire equipment upgrades, a minimum number of bathrooms and so on.

Standard landlord insurance also won’t cover property investors who lease by the room – to do so you would need a different type of policy tailored to the situation.

Rents in regional areas are significantly lower than in the city, but in Victoria they have been growing at a faster pace over the past five years.

Residents priced out of conventional rentals are turning to rooming houses – with 13 premises on the public register this year, compared to two last year.

The Anglicare Rental Affordability Snapshot for 2015 analysed more than 51,000 metropolitan rental properties advertised on one April weekend and found:

  • only one home would have been affordable for a single person on Newstart – that is, rent costs 30 per cent of household income or less;
  • fewer  than one in 100 properties were affordable for people on a disability pension, single age pension, parenting payments or parents on a single minimum wage;
  • families with both parents earning the minimum wage and two children could afford 17 per cent of properties on the market; and
  • families with one parent on the minimum wage and the other on a parenting payment would have affordable access to 2.7 per cent of properties.

 

Source: Residential Property Manager

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