Despite falling house prices, landlords are raising rents across Australia

Despite a dramatic downturn in the property market, landlords are ripping us off blind. Here’s how to ensure you don’t pay more.

Landlords continue to increase rents despite the dramatic downturn in the property market.

The hike was experienced in most capital cities across Australia but particularly in Melbourne and Sydney where the fall in the property market’s value has been most pronounced.

Rent in Sydney units rose 3.8 per cent, and in Melbourne it was up 2.3 per cent in February, according to data from rent.com.au.

Coverage of the falling property market in Australia’s two biggest cities has been well documented.

So Adam Freeman was surprised when he received a letter from his real estate management advising his rent would go up $20 a week when his current lease expired.

“I just said no, I’m not willing to do that,” the 36-year-old IT manager who lives in Melbourne’s eastern suburbs told news.com.au.

“I don’t think you can justify that in this current housing market.”

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Housing advocate at consumer group Choice, Patrick Veyret, says landlords are taking advantage of the “really costly process” of renters not wanting to move.

“There are all these costs around finding money for the bond, finding removalists, taking time off work, paying for cleaners,” he said.

“It’s really expensive and it’s also really emotionally taxing.”

He told news.com.au often people were willing to accept a rent increase because they didn’t have a choice.

“What we’ve found is landlords, and especially real estate agents, understand this,” Mr Veyret said.

“They’re likely to often increase the rent and know that people who rent will just accept it because they don’t really have much bargaining power in this consumer arrangement.”

Mr Veyret wants consumer protections enacted in policy to help swing power back to the renter.

Currently, Australians wanting to contest against excessive or unreasonable rent increases must go through a tribunal.

Many markets in Australia have an oversupply of apartments.

Choice says this should switch; the landlord should be the party forced to go through a tribunal to argue their case for any lifts to rent.

“Say if the landlord hiked up the rent by 10 per cent, we think the onus of proof should shift to the landlord to prove and provide reasoning why they plan to increase,” Mr Veyret told news.com.au.

“Consumers and renters are often left in the dark; they get that letter the rent’s increasing and they have no real reason why.”

But he said Australians generally had a decent opportunity of contesting the increase directly with their landlord or agent.

“Just go to the table and be upfront and try and negotiate that this rent increase be decreased,” the advocate said.

“Very often, agents and landlords are willing to do that.”

Mr Freeman said renters should take advantage of the property downturn as evidence to support a push against any hikes.

“My view is that tenants have a bit of negotiation room at the moment. It sort of seems to be a tenants’ market,” he said.

“More people are putting houses on the market than selling them, and investors seem to be leaving the market, so as a tenant I think you can do pretty well if you negotiate.”

Rent.com.au chief executive Greg Bader said prices were unlikely to go down in high-demand areas close to a city’s centre — in particular, properties in short supply, such as those that are pet friendly.

But he does see potential for the apartment glut in most major cities to lower rent.

“With the number of properties available increasing in many areas, it’s likely that the market will see some softening as demand teeters off — most likely in areas where there’s some oversupply and in outer suburbs where there’s more choice,” Mr Bader said.

He said February’s rise in median rent might be more related to a boost in properties coming on to the market.

“I don’t really think it is due to landlords raising their prices, more to do with the well-priced apartments being snapped up in the January rush,” Mr Bader told news.com.au.

“I suspect this will balance out in March/April.”

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