Rental crisis in Sydney as landlords jack up rents for inner city apartments

The rental squeeze has got so bad in Sydney’s inner city that rents are rising by as much as a third – and anyone who questions the massive hikes is getting the boot. See the worst suburbs.

Inner city Sydney renters are being booted out of their homes after questioning massive and sudden rental hikes in the past few weeks – with jumps of up to $300 a week in some cases – as the nation’s rental squeeze grows desperate.

Ground zero of the city’s rental nightmare is the CBD and nearby suburbs like Zetland, where landlords are jacking up prices by as much as 36 per cent.

Landlords have blamed inflation and returning international students for ramping up the rents.

And in a cruel twist, multiple households The Daily Telegraph has spoken to received abrupt termination of lease notices when they asked to negotiate the price hikes.

Real Estate Institute of NSW on Wednesday reported the residential vacancy rate for Sydney was just 1.7 per cent with chief executive Tim McKibbin calling it a “rental crisis”.

Excerpts from Facebook entries in a Zetland group detailing locals' experiences with rent increases. Pictures: Facebook

“REINSW members across New South Wales are telling us that they’ve never experienced the levels of desperation they’ve seen from tenants in recent months,” he said, “ … there’s simply not enough stock available.”

Zetland’s Paul Street resident Sarah, who lives in a small two bedroom flat with her partner, was told her rent would rise an extra 35 per cent, from $630 a week to $850 a week.

The landlord officially informed her: “Due to the inflation of the economy and overseas students coming back, the market has increased a lot compared to the Covid period.”

“I was flabbergasted,” she said. “I burst into tears.”

She sent the landlord a polite letter “kindly asking if they would be open to any kind of negotiation”.

In return, a day later, she was sent a termination notice and she would receive instructions about moving out.

East Village in Zetland. Apartments in the suburb have a 0.8 per cent vacancy rate. Picture: Richard Dobson

“I was so overwhelmed and stressed, we just couldn’t afford it and I don’t know where I’ll go.”

Zetland’s Gadigal Ave apartment tenants Natasha and Sam were also served with termination notices after requesting a price negotiation. They had been paying $880 a week for their three bedroom apartment when it was raised after six months to $950, and then were told it would go to $1200 a week in the first week of January.

“It was excessive,” she said. “We couldn’t believe it.” She rang for help from Fair Trading, and ended up requesting a hearing from the NSW Civil and Administrative Tribunal.

As a result, on Wednesday, her landlord sent her a termination of lease notice to be out by December 14.

Multiple other Zetland residents spoke out on social media about prices soaring, with one resident having her rent rise from $700, to $800 to $1020 for a two-bedroom flat within a three month window.

Over three months, one Zetland resident’s rent increased by more than $300 per week.

Couple River Jackson and Angela Pale changed rentals in Zetland due to a rapid increase of cost at their previous propriety.

“We changed rentals for the lesser cost,” Mr Jackson said.

“We’ve only lived here for two months because our previous rent increased drastically.”

Zetland couple Angela Pale and River Jackson have just moved into a new rental apartment due to the rising rent prices. Picture: Jonathan Ng

Tenants’ Union NSW chief executive Leo Patterson Ross said some rental rises had been “clearly off the charts”.

“Some people are getting an eviction notices or a rent increase and told to pick one,” he said. “People essentially have to choose whether or not to risk their home in order to challenge the increase.”

“We do see this periodically during times of crisis. It’s getting more widespread at the moment.

“A lot of people are really surprised to find there’s no limit to rent increases.” He said many other OECD countries do not allow that.

Mr Patterson Ross said a factor in the rises was that rents fell or were put on hold during the pandemic – especially in the CBD and inner city locations where there was less demand for small flats. Now they were catching up rapidly.

Digital Finance Analytics principal Martin North, a finance sector analyst says the rent rises are “a mess”.

“Everyone talks about mortgage rates going up but the rental sector is a huge issue (and) hugely under-discussed,” he said.

Three major factors were at play, Mr North said: rents were now catching up after being frozen during the Covid pandemic and property investors were having to pay more for their mortgages with interest rate hikes. Thirdly, there’s a “bidding war” going on because there is such little supply.

Pete Wargent, co-founder of Australia’s first national marketplace for buyer’s agents, BuyersBuyers said vacancy rates for units in Zetland were as low as 0.8 per cent.

He warned that Australia faced the prospect of following some of the policy mistakes of Ireland, where there were just 716 properties available for rent across the entire country as landlords had left the market in droves.