How High Property Prices Are Changing Our Way Of Life

Photo Source: B Rosen, Creative Commons

Rural 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 to afford.

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, with some tenants in their thirties and even forties still living in (or returning to) shared accommodation. There are reports of divorced couples remaining in the same property – often with some modifications or with the addition of a granny flat.
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 – it requires tailored short term landlord insurance rather than a conventional policy.

It’s also important to avoid overcrowding as an investor. 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.

Rents in regional areas are significantly lower than in the city but, in Victoria, they have been growing at a faster pace over the last 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 that:

• only one home would be affordable for a single person on Newstart – ie: 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.