Tenants who have already seen their rent rise to unaffordable levels in response to interest rate hikes fear they will face further increases, after the Reserve Bank of Australia lifted the cash rate for a fourth consecutive month.
Travis Jordan was living in a three-bedroom townhouse in Brunswick in Melbourne’s north but had to leave after his rent increased by $90 a week and a roommate moved out.
“We wanted to stay, but with only two of us instead of three we can’t afford that kind of rent increase,” Jordan said.
“The real estate agent said that’s where the market is. They said, ‘We are being generous in a difficult time.’”
The managing director of Australian Housing and Urban Research Institute, Dr Michael Fotheringham, said the RBA’s recent lifts to interest rates were having a knock-on effect for investment property owners and, by extension, their tenants.
“When mortgage payments go up, landlords look to cover that by increasing the rent … [and] increased interest rates increase mortgage repayments,” he said.
Fotheringham said rental vacancies were also at a “historic low”, hovering at about 1% for almost four months. With “demand outpacing supply” landlords “can afford to be a bit more ruthless”, he said.
“You frankly get a ‘if you don’t like it, leave’ response.”
That is what Lee Davis-Thaleourne and his partner were told when their rent increased by $140 a week. In June they received a new 12-month lease, raising rent from $450 to $590 a week. “We looked at that and thought, there’s no way,” he said.
“It would have taken up every single last dollar that we had. We would not be capable of saving anything.”
After making a counter-offer that was rejected, Davis-Thaleourne and his partner, who live in Victoria, had 60 days to move. But with his partner’s wheelchair accessibility needs, the search was not easy.
“We needed something that had some level of lift access, bathrooms designed for people who need to sit down to shower,” he said. “The new place we are in is not quite as good accessibility-wise.”
And not everybody has the financial buffer required to move.
The policy and advocacy manager at Tenants’ Union of NSW, Jemima Mowbray, said on average it costs a household about $4,000 each time they move, not including the bond cost.
“You’re facing the stress of not being able to find a home, scrambling to find something more affordable,” she said. “But you’re also going to build up a debt.”
As financial pressure builds, Mowbray said “more households are not being able to cover the costs of basic needs”.
‘A lot of people are struggling’
Wayne Jansson, a tenant in a rural town in north-east Victoria, said his rent used to be $190 a week. But after one rent rise a year ago and another in July he now pays $260.
“When people are saying you have to make a choice between paying rent, electricity, eating and medication, that’s absolutely accurate,” he said.
“A lot of people are struggling at the moment. It’s not just rent, it’s the cost of everything.
“I’ve run out of money before I’ve paid for everything – it’s just outrageous.”
The New South Wales Greens MP for Newtown, Jenny Leong, said there was a “desperate need” to reform rental laws. She has introduced a new bill to NSW parliament “regulating measures to provide relief and protection for renters”.
“People are going to libraries or community spaces to stay warm because they can’t afford to pay rent and keep the heating on,” she said.
The bill includes a cap on rents in line with the consumer price index.
The ACT caps rent increases at the rate of inflation in Canberra rentals plus 10%, and in Victoria, reforms to the Residential Tenancies Act last year required that tenants received 60 days’ notice of a proposed rent increase.
“In NSW, we don’t have those kinds of limits,” Mowbray said. If a tenant does assert their rights and challenge a rent hike, they risk losing their lease.
“Tenants also risk a bad reference when looking for their next property, which makes it very hard to find somewhere to live,” Fotheringham said. “There is a distinct imbalance. The power is with the landlord.”
