I’m a real estate agent, and even I think renters should have 20-year leases

Aspiring to own your home has long been a cornerstone of our national identity. It is an idea deeply embedded in our cultural narrative – a symbol of success, security, and, most Aussies insist, a right.

This belief, however, has come at a significant cost to a growing segment of our community. By holding on to the notion that home ownership is the ultimate marker of success, we have shaped a society and system that regards those who rent as a subclass.

A significant portion of renters may never own a home.Credit: Monique Westermann

About 31 per cent of Australian households rent their home (2.9 million households), and this cohort is only, and will only, going to increase in coming years. As a result, ensuring renters can access secure and affordable homes represents at least a third of the challenge of our housing crisis. We know that solving this crisis requires complex and diverse solutions, but redefining our attitude to long-term and lifelong renting is essential if we are serious about fixing it.

Long-term renting is normalised in countries such as Germany and Switzerland, and major cities like Paris and New York. Many renters there enjoy secure housing and equal quality of life measures to home owners. Numerous studies indicate that while owners may experience short-term joy around buying a home, they also tend to face higher stress levels and financial burdens, which can offset any perceived benefits. In fact, after income, housing quality, and health status are accounted for, the differences in life satisfaction between home owners and renters tend to disappear, suggesting that ownership does not inherently improve happiness compared to renting.

But in Australia, renters are wary of asking for longer-term leases, fearing they will be discriminated against during the application process. Property investors have been conditioned to be suspicious of offering longer leases out of fear of being tied to a poor-quality renter (which happens exceptionally rarely). And property managers feel powerless to advocate for long-term leases because of the concerns of renters and rental providers.

A simple solution is to offer residential leases that resemble commercial lease agreements more closely, with options for terms of three, five, 10, 15 and even 20 years. These longer leases allow renters to enjoy the peace of mind and stability that comes with greater tenure, while investment property owners benefit from reduced vacancy and tenancy changeover costs.

Renters would receive capped annual rent increases tied to the consumer price index and, in recognition of their longer-term commitment, could be offered rent-free periods based on the length of their lease. In exchange, they would take on greater responsibility for the upkeep of the property, fostering a sense of ownership and pride in their home throughout the lease term.

For investment property owners, the government should provide indexed land tax discounts that increase with the length of the lease, creating a direct financial incentive for property owners to offer longer tenancies.

The existing conditions and protections of residential leases would continue to apply. A tenant could, if circumstances changed, terminate their lease early but would be required to keep paying rent until a replacement tenant is secured. If an owner sold a property, however, the renter’s lease would ensure they can continue living within the home until the lease expires or, as is the case in Victoria, a renter could elect to give 14 days notice to vacate the property upon receiving a notice of intention to sell the property.

Census data shows national home ownership declined by 2 per cent between 2011 and 2021. The Reserve Bank of Australia, the Productivity Commission, the Grattan Institute, and Australian Housing and Urban Research Institute have independently published reports addressing declining ownership rates and the conditions that mean this trend is likely to persist.

Aspiring tenants outside a rental property in the Melbourne suburb of Brunswick last year. Almost one-third of Australian households About 31 per cent of Australian households rent their home.Credit: Chris Hopkins

While much has been made of Melbourne’s recent poor performance in property price growth, it remains the seventh-least affordable housing market in the world (Sydney is second) considered “impossibly unaffordable”. Yet, for decades, the idea that every Australian should own a home has shaped housing policy and public discourse. Home ownership is framed as the only legitimate path to security and success. Renting is considered a temporary phase, something people do while they save for a house deposit or wait for better economic conditions rather than a viable, even attractive, alternative. As a result, our rental ecosystem has been shaped by a policy and attitudinal framework that has done little to encourage or support long-term renting.

Politicians across the spectrum have failed to deliver policies that support investors, renters and real estate professionals in opening up the rental ecosystem to the growing population of lifelong renters and long-term investors – two groups that naturally complement each other.

If we are to improve the rental system in Australia, we must begin by challenging the cultural primacy of home ownership. Housing policy should not be shaped solely by the goal of getting more people onto the property ladder but by ensuring that everyone – whether they rent or own – has access to secure, affordable and quality housing.

This starts with rethinking the way we talk about renting. Long-term renting needs to be recognised as a legitimate and respected choice, not a marker of failure or impermanence. Policy reforms are critical to making lifelong renting a viable option for more Australians, with longer leases, bidirectional responsibilities and incentives for investors and renters to sign on.

If we want to create a fairer, more equitable housing system, we must stop thinking of renters as second-class citizens.

Jacob Caine is president of the Real Estate Institute of Victoria.

The Opinion newsletter is a weekly wrap of views that will challenge, champion and inform your own. Sign up here.