Eureka issues mea culpa to ASX over unreasonable rent increases for pensioners

Eureka Group claims its rent hikes are pegged to the federal government’s rental subsidies and pension increases, after admitting rent hikes of up to 14pc had been excessive.

Margaret Stephenson and Fred Lehmann with fellow residents at Eureka Launceston Gardens retirement village.

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The corporate landlord at the centre of findings that it had imposed unreasonable rent increases on pensioners has claimed its rent hikes had been pegged to the federal government’s rental subsidies and pension increases, after admitting in a statement to the stock exchange that rent hikes of up to 14 per cent on some its most vulnerable residents had been excessive.

The company’s new CEO on Monday vowed to personally sign off on future increases to take into account cost-of-living pressures after The Australian exposed almost 50 cases of rents being sought by the company being found to be unreasonable.

ASX-listed Eureka Group Holdings has defended its model of linking rent increases to the federal government’s increases in pension payments and the federal budget’s 10 per cent increase in commonwealth rental assistance, which Labor has argued were designed to provide relief from inflation for vulnerable Australians.

The Coalition has seized on the controversy, claiming the company’s admission, in a statement to the ASX on Monday, was evidence that Labor’s cost-of-living handouts had the reverse effect and were delivering an inflationary impact on rental costs for older Australians.

Opposition housing spokesman Michael Sukkar said the case had lifted the lid on Labor’s cost-of-living subsidies, which in the case of Eureka were being passed on to corporate landlords.

“The revelations of rent increases from the Eureka Group just highlight the pain pensioners are feeling under the Albanese government,” Mr Sukkar said.

“With uncontrolled inflation, any increases to rental assistance seem to have been completely swallowed up by landlords, leaving pensioners worse off.

“It’s now clear that Labor’s inability to deal with inflation has severely hurt all Australians, and pensioners in particular.”

The Australian revealed on Monday that the company, which owns and manages 52 villages across the country housing almost 2800 residents, had been referred to the Australian Competition and Consumer Commission following 48 individual complaints to Tasmania’s Residential Tenancy Commissioner for unreasonable increases.

In all cases, the commissioner rejected the company’s rental demands and had lowered the amounts it was allowed to charge.

Tenancy lawyers acting for Eureka residents have now referred the company’s behaviour to the ACCC, alleging it was engaging in unconscionable conduct and deceptive and misleading practices.

Ben Bartl, principal solicitor with the Tenants’ Union of Tasmania who has acted for 48 residents so far, said many residents were too fearful to challenge the rent increases. He has referred the company to the ACCC for “harmful” conduct.

“We are encouraged by Eureka’s acknowledgment that they have made an error but the proof will be in the pudding,” Mr Bartl said.

In a statement to the ASX on Monday the company acknowledged that some of its rental increases had been deemed unreasonable but said it worked on a business model that linked rent increases to the rise in commonwealth payments.

The company said the rental increases at the villages in Tasmania – that were referred to the Residential Tenancy Commission and were found to be unreasonable – occurred prior to the appointment of new CEO Simon Owen last month.

Simon Owen

“Eureka’s rent increases are tied to what the government determines with pension and commonwealth rent assistance,” the statement said.

Mr Owen, in the statement to the ASX, said the company had faced double-digit increases in key cost areas such as insurance, council rates, electricity, food and interest rates, which were outside the company’s ability to control.

“However, it is very important that we get the right balance between our commercial objectives as an ASX-listed company with shareholder expectations and our social obligations to our residents,” Mr Owen said.

“Clearly, we did not get it right with some of the proposed rental increases in Tasmania and we need to put in the place the appropriate checks and balances to ensure that we achieve the right outcomes.

“It is critical that the company has a rigorous process in reviewing the agreements and that we fully factor in the cost-of-living pressures that are affecting all Australian households to ensure that any rental increases are fair and reasonable.

“I take this issue very seriously and it is not acceptable that we issued an increase in rent for one resident by as much as 14 per cent.

“The company has a transparent and open relationship with state governments and regulatory authorities, and always co-operates fully with them.

“As Australia’s largest pure play provider of affordable rental housing to independent seniors, Eureka must maintain a high standard of service across our entire portfolio of retirement villages.

“In general, our rent increases are aligned with increases that our residents receive in the Commonwealth Pension and Rent Assistance, which makes it very transparent.”