Eureka Group in firing line over 30 per cent rent rises on most vulnerable
Despite almost 50 rulings against the company, Eureka has pursued rental increases of up to $2000 a year on pensioners who now fear they could be evicted and made homeless.
Australia’s largest provider of rental homes for pensioners, disability and veterans’ recipients has been referred to the consumer watchdog after a residency tribunal rejected 48 cases of rental increase demands amounting to almost 30 per cent in what could be a significant test case for the commonwealth.
The ASX-listed Eureka Group is under scrutiny from the Australian Competition & Consumer Commission over alleged unconscionable conduct and deceptive and misleading practices, amid claims it was imposing excessive rent increases on the country’s most vulnerable during a housing and cost-of-living crisis
The company, which runs 52 retirement housing villages across the country housing almost 2800 residents, faces potential investigation following a host of complaints by residents to Tasmania’s Department of Justice tenancy commissioner, which has consistently warned the company that the rent increases it was seeking were “unreasonable”.
The company, which saw its profits soar by more than 130 per cent last year before a failed takeover bid by the Aspen Group, was seeking similar increases in multiple jurisdictions including NSW and Western Australia.
Ben Bartl, the principal solicitor with the Tenants’ Union of Tasmania who has acted for 48 residents so far, said many were too fearful to challenge the rent increases. He has referred the company to the ACCC for “harmful” conduct.
Many of the residents received two rental increase demands, each of 15 per cent, within one year.
“Over the last year, we have assisted almost 50 Eureka residents with unreasonable rent increase applications,” Mr Bartl said. “Every single application has been successful with Eureka forced to reduce its rent by around half. Sadly, many Eureka residents that we spoke to were too scared to file unreasonable rent increase applications for fear of being evicted.
“In a national housing crisis, our laws need to better protect renters against unreasonable rent increases. In our opinion, Eureka’s conduct in increasing the rent by amounts that the Residential Tenancy Commissioner has already determined to be unreasonable amounts to unconscionable conduct.”
Eureka Group claims to be Australia’s largest provider of affordable rental housing to seniors across six states and territories, with 95 per cent of its residents relying on the pension and commonwealth rent assistance.
The Tenants’ Union of Tasmania has asked the ACCC to investigate on the basis Eureka was ignoring multiple decisions by the Tasmanian Tenancy Commissioner that its rent increases were unreasonable.
In its referral to the ACCC, the tenants’ union cited an alleged contravention of section 21 of consumer laws by targeting older people and those with disabilities, and falsely advertising “affordable accommodation”.
The company’s new chief executive, Simon Owens, vowed to investigate the rental increases, which were sought prior to his appointment six weeks ago.
“If we have 48 judgments against us, that is something that needs to be looked at very carefully,” Mr Owens said on Sunday.
“There was a 14.63 per cent increase which got reduced to 7.3 per cent … I don’t understand how that could have been proposed. It does not seem reasonable to me.
“One of the first things I did as CEO is I wanted to review and personally sign off on rent increases across the country. I understand it is a huge issue for every household in Australia. I want to go through every unit in every community we have. It hurts. I get it.”
Mr Owens said he could not comment on why the company proposed the larger increases. “Whatever the case is, there is no excuse for asking for that … It seems excessive to me and I wouldn’t seeking to impose that increase,” he said.
Mr Owens said Eureka recognised that cost of living was “a massive issue” for all of its residents, not just in Tasmania.
“Our rent increases are tied to what government determines with pension and commonwealth rent assistance,” he said.
Madelaine Holt, a former director of enforcement for the ACCC, said the company’s behaviour “ticked all the boxes” for the watchdog to investigate.
“The provision of essential services, such as housing, as well as conduct that has a disproportionate impact on vulnerable consumers are priority areas for the ACCC,” said Ms Holt, principal of Holt Advisory.
“Eureka’s business model of offering affordable rental accommodation to older people and people with disability and then substantially increasing rents within a year may amount to breaches of the Australian Consumer Law and should be investigated.”
In the first six months of this year, 26 residents of Eureka in Tasmania submitted unreasonable rent increase applications with Tasmania’s Residential Tenancy Commissioner, with the average rent increases of $50 a week on leases as low as $390 a week.
In every single case the commissioner found that the proposed rent increase was “unreasonable” with the average rent only being able to increase by $25.
Eureka did not seek to challenge any of the 26 decisions made by the commissioner.
Despite being told that its proposed rent increases were unreasonable, Eureka continued to write to its residents imposing large rental increases. The letters of rental increases were confirmed by The Australian.
A further 22 residents submitted unreasonable rent increase applications since then.
Again, in every single case handed down by the commissioner, it was determined that the proposed rent increase was deemed “unreasonable”.
It is understood that Eureka has also been imposing higher rents in other jurisdictions including Broken Hill, NSW, with $50 a week increases, and in Perth where residents have been told they would need to pay an extra $44.50 a week.
In the ACCC referral, supplied to The Australian, the Tenants Union said that, in its 30 years of operation, it was the first time it had felt compelled to refer a matter for harmful conduct.
“In all of the RTC’s determinations of unfair rent increase, Eureka declined to appeal against any of the decisions,” it said.
“In the majority of cases, the RTC reduced Eureka’s proposed rental increases by 50 per cent.
“We are writing to urge the ACCC to investigate harmful conduct by Eureka Group Holdings Limited. In over 30 years of operation this is the first time the Tenants Union of Tasmania has made a report to the ACCC indicating significant harm we consider Eureka’s conduct is causing.”
The ACCC confirmed to The Australian that it had received the referral and was considering it in the “usual process”.
Eureka is not a commonwealth-funded aged care facility but is a registered National Disability Insurance Scheme provider.
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