Renting V Ownership – The Great Australian Dilemma

When I got married, I didn’t care too much that we couldn’t afford to buy a home. So, we rented.  That was when a nice three bedroom house in Wagga Wagga (where we first lived) was going for somewhere near $150,000. The first house we rented was $175 per week – it had air-conditioning, gas heating and a backyard with two sheds. And, most importantly, an owner who was all too willing to fix things if stuff went wrong. Good because not long after we moved in, we were a single income family with a baby on the way. And we stayed a single income family for the rest of that marriage. Therefore, tenants.

Why is this important? It’s because there is a rarely told story out there about the schism between the world of rental and house ownership. We are told frequently that home ownership is “The Great Australian Dream”. Indeed, when I was a tenant, I was told “you’ve got to buy!” – by someone whose parents gave them the deposit for their home. Yeah, thanks for that advice.

I liked to think that being a tenant was an reasonable lifestyle to live – after all, Europe has a pretty high percentage of tenants.  And these days, renting your first place – and perhaps your second or third – is a very real necessity for young adults moving out of home and new arrivals into the country. As buying a house has become considerably more expensive over the past few years – and with banks less willing to hand over their cash since the GFC – it is an issue that needs to be confronted.

It is unfortunate, however, that I found being a tenant nothing less than a stressful, frustrating experience.  That is, after we left the friendly surrounds of Wagga and came back to Sydney. The first place we moved into was $50 pw more than the Wagga house and it had no aircon or heating. It did have, however, old carpets and hadn’t been painted for a while. And a neighbour / owner who made comments about our lifestyles. An ex-nun, no less. Each time we needed something fixed, she’d get a friend to look at it and not fix it. The property agent was next to powerless – she’d make suggestions, but then we’d get snarky responses from the owner. The situation wasn’t helped through the property inspection process.  My ex is a great power of cleanliness and the place was spotless each time. Yet, on one occasion, the property manager was clearly relishing her work as she pointing out to an accompanying trainee tiny bits of dirt and grime. It was a nightmare.

But then we moved to Rosemeadow, south of Campbelltown. We lived in a four bedroom place. There were several things that were broken or needed fixing in the house and we wondered why the property manager couldn’t get anything done. It turned out our place, along with most of the rentals in the suburb, it seemed, was owned by a company – one that didn’t like to fix anything. They did hire maintenance people – we even met one or two who did quotes to send back to the company. But we never saw them again. Whilst the company didn’t like to pay maintenance companies too much, they liked to put up the rents each time they could. The property manager was powerless to do anything, due to the monolithic nature of the company.

Then, one day, one of our children slipped in the bathroom. The same bathroom that had significant leaks. I rang the property manager and told him the situation. Then, by some miracle, I actually got a call from someone associated with the company and we had a maintenance man sent out to fix the leak. This was like gold-dust. And, while he wasn’t getting paid a whole lot, he was actually good at what he did and was keen to help us as much as he could.  So, we got him to fix all sorts of things in the place.

Otherwise, life was a bit less stressful in that house – the property managers were far less anal retentive when doing inspections.  This was Campbelltown and we weren’t wrecking anything – so we were a five minute rush through for them.

My point here is that being a tenant should not be that hard. It shouldn’t be about poor maintenance, risk, snarky property managers, owners who don’t care. But for many it is. And there is little that can be done about it, because property investors are treated a bit like lairds in this country – there’s relatively few of them, rental properties are scarce and negative gearing makes the whole investment thing easy. It then becomes about money, not providing a place in which another human can live in dignity and comfort.

This time around, Preston Towers, the name my partner and I have for the flat in which we lived until last week, is now an investment property. The rental return compared to the value of the flat is insane. The rental price has gone up $70 p.w. since I bought it two years ago.  But we didn’t want to leave it as it was. So, as I said in a previous blog, we put in new carpet, taps, shower screen and lights into the place before the new tenant came in – as not to cause disruption for that tenant. When I mentioned this at work, I was told by a work colleague that we were crazy – it was better to wait to be told to replace things. It apparently “didn’t matter if you disrupted a tenant”. Clearly, she hadn’t been a tenant. That was a fairly startling insight.

In addition, I got an insight into how tenants are selected. The property manager gave me detailed rundowns on the situation and background of prospective tenants – she was most scornful of tenants who were just moving out of home – 18 year olds, looking to start out. Don’t forget, this is for a flat in South Penrith, not exactly the most flash area around. There was a cavalcade of prospective young tenants ready to pay the rent asked for. In the end, she found a couple in the 30s who had just had a child and had a long, positive rental history. I quite liked that idea, so that’s who now lives there. But I was less worried about young tenants than the manager.  It gave me a big insight into just how hard it must be for young people wanting even to rent a place. In Penrith, they probably shuffle down the levels of quality and end up in the not so pleasant areas of Kingswood or Werrington. To mix with all the other young tenants – hopefully building up enough brownie points to have a shot at somewhere like Preston Towers. Mind you, I can also see this from the property manager’s position – she would have dealt with some bad tenants as well in her time. And she didn’t seem as anal as the ones who I have dealt with as a tenant. Mind you, I am not a tenant anymore.

The night of our final departure, the one before the arrival of the tenants, I was chatting to my neighbour. She arrived not long after me and was fairly ill – I remember a Christmas Eve where she had an ambulance officer looking after her. She was in the flat as a result of a public housing “Cumberland” scheme, where people with good histories are placed in private flats. And her flat was extraordinary in its neglect. The carpet was the same as the original, early 80s carpet that had been installed in all the flats (I know, I found some in one of the built ins in ours). There was no range hood, light fittings were broken and the shower leaked.  The owner seemed impervious to suggestions to fix things – and little wonder, considering that the public housing tenant had little choice but to stay and put up with it. What annoyed me is that the changes that needed to be made would have cost very little money and is all tax deductible. Especially a range hood. The one in our flat cost $80 and $50 to install.

We are not going to be that kind of landlord. The philosophy we have is that it is their home, not your cash cow. Sure, if there was no negative gearing and the rest, we couldn’t do it – and I have taken out landlord insurance. But it doesn’t take much to be a good landlord. Being a tenant makes you realise how just little things make a tenant’s life that much more comfortable and happy.

I am troubled about life as a tenant for so many out there, especially the young and those new families who may have little tenanting history. It’s an issue that won’t be fixed by the shiny new suburbs promised by Barry O’Farrell, which will be expensive to buy and build upon (already, it costs nearly half a million to buy and build in Oran Park, 30 minutes from Campbelltown in peak hour). We need more apartment blocks, within easy access of train station, owned by people who are prepared to respect the dignity of tenants. Then perhaps there would be a touch less anger about.

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3 thoughts on “Renting V Ownership – The Great Australian Dilemma

  1. I wish you’d been my landlord. I bought a house 2 years ago, not because I wanted to, but because I was sick of paying rent to landlords who didn’t take their legal obligations seriously. The tenants union is useless too – apparently even though landlords are legally obliged to fix things, if they don’t, a tenant’s only option is to move out. Not really an option. There are no real consequences for bad landlords. Yes, they have a turnover of tenants, but because rental properties are in relative short supply, they’ll have no trouble finding more victims. Australia needs better tenancy laws and more professional landlords.

  2. There is not enough space to write about the horrors and indignities I have worn as as a tenant, and a good tenant at that! The one thing I found was that some landlords are actually quite reasonable and it is the *agent* that is the one who couldn’t be bothered passing on the fact that things need fixing. I had complained *in writing* every week for over 2 months that the security door couldn’t be locked (and therefore rendering it useless for ‘security’) and nothing had happened, until I started chatting to the guy who mowed the lawn on the weekends. The gardener turned out to be the landlord, and knew nothing about my security door. He got out his mobile and gave the agent a bollocking then and there, with me listening to the whole thing. It was fixed the next day by the landlord himself.

    In the end, though, the problem with renting in Australia is that the tenant has absolutely no power at all to make sure that the landlord keeps their side of the contract. It is illegal to withhold rent, or part thereof for *any* reason (like, for example, the oven & grill not working, the showerhead falling off the shower, the toilet perpetually backing up, I could go on) And the landlord can pretty hold the tenant accountable for any little thing that isn’t clearly marked on the rental agreement as already being in that state (lesson: take the time to fill that rental agreement in, and err on the side of extremely picky, as you can be assured that the agent will be extremely picky when they take it out of your bond) and, if s/he feels like it, the landlord/agent can pretty much up the rent until it becomes impossible for the tenant to pay and/or can just kick them out at the end of the lease for no reason at all. If only the agent were the broker between the two parties, but the are not – they are entirely employed by the landlord and have no interest in the tenant’s rights/

    If I ever find myself with a property to rent, like you, I have vowed to make sure that any tenant I have gets a fair and equitable deal and that they get to enjoy *their* home rather than merely being the source of income from *my* property.

  3. How does one legislate against greed and stupidity? Negative gearing tends to encourage such attitudes, unfortunately. We’ve all experienced it at some stage in our real estate tenancies. The landlord who gripes whenever money needs spending, the arrogant & abrasive property manager, etc. I completely agree with your ethos. You, as a landlord, are providing a home for someone to live in, not simply the use of an asset for which you charge a penance.

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