3
Barriers to accessing the
private rental sector
households where income levels have not kept
pace with rental price increases.
‘The critical thing we need to decide as
a real estate agent is whether the
tenant can afford to pay the rent. We
used to base this on a 30% rule but
now we have generally increased that
amount to 45%. It has become more
difficult for some of the low income
renters…..What a lot of people are
now trying to do is to share with their
brother, sister or pool the rent- we
have seen that happening a lot more’
[External stakeholder].
The private rental sector has become a long-term,
if not permanent, housing option for increasing
numbers of low income households (Stone et al.,
2013). The long-run decline in affordability at the
bottom end of the private rental sector in
Australian cities and some regional areas is well
established. Despite the growth of rental
properties over the past decade there remains a
critical national shortage of some 187,000
dwellings in 2011 (up from 138,000 in 2006) that is
affordable to those in the lowest 20 percent of the
income distribution (Hulse et al., 2014, p.29).
Increasing reliance on the private rental sector to
house low income households indicates that a
range of private rental support programs will be
needed to not only bridge the affordability access
gap but to also overcome the selective sorting
practices that can often place low income
households at the ‘bottom of the application pile’
(Short et al., 2008; Wallis Consulting Group 2008).
The more widespread use of month by month
leasing following the initial twelve month leasing
agreement was considered problematic for many
low income and vulnerable tenants. There was a
view that some landlords are finding ways to ‘get
around the existing tenancy legislation’ through
the month by month lease agreement. While
month by month renting can provide flexibility for
both tenants and landlords, it can pose a
significant threat to longer-term security as it may
be subject to misuse, as reflected by one
stakeholder
Consultations with clients, external stakeholders
and staff in the focus group reinforced the
difficulties that low income households faced in
the initial stages of gaining entry to the private
rental sector. This section focuses on the key
themes in relation to the difficulties that low
income households were reported to experience in
obtaining rental properties in the Whittlesea area.
The provision of financial support was considered
only part of the solution in assisting these
households to overcome constraints to access and
increase their competitiveness alongside other
prospective tenants.
We are seeing more tenancies with the
12 month lease ending and then going
onto a monthly agreement where it is
easier to evict the tenant. The security
of tenure is becoming increasingly
precarious despite there being
protection. We have found many
practices that place the tenancies at
risk for low income tenants. Landlords
have evicted clients on the basis that
they would like to renovate the
property or to move into the property
only to see it advertised the next week
at a higher rent [External stakeholder].
3.1 A shifting benchmark of what is
affordable and secure?
Service providers and real estate stakeholders
were candid about the difficulties faced by some
low income households in securing a rental
property to live in and highlighted how both real
estate and welfare agencies have attempted to
respond to this changing market context. One
significant development reported was that real
estate agents have had to adjust the affordability
threshold for lower income households from the
traditional cut off of 30 percent of income up to 45
percent. Although adjusting the affordability
threshold can mean that tenants who might not
have been considered eligible for a property
previously would now be eligible, it reveals the
state of the housing market for low income
5