Rising Rentals and Tenant Legal and Financial Issues
According to a new survey by global data, analytics and technology company Equifax, there is a prediction of a 61.5% rise in the volume of rental applications and related workload this year in Australia.
In the face of increasing workloads caused by hot rental markets nationwide, and tenants becoming more empowered to seek beneficial rental agreements, traditional processing methods could cause concerns for landlords, tenants and property managers alike.
“Property managers have to wade through a lot of detail about a prospective tenant’s identity, financial and legal history before giving their tick of approval. While this is an integral part of their day to day, it can come with a significant drain on time, resources, and even the mental capacity needed to steer towards more complex tenant matters,” said Scott Mason, General Manager Commercial, Equifax.
Impacts of changing tenant behaviours
Financial and legal issues were most prevalent issues that impacted property managers’ work in 2021, with survey respondents ranking tenants wishing to terminate leases early (35.51%), refusing to pay rent (23.36%) or refusing to leave premises upon eviction (10.84%) as their most common issues.
The survey also indicated that tenants may have become more comfortable with challenging rental agreement terms or exploring their options. A small proportion of property managers felt that tenants refusing to reimburse for repairs and maintenance issues caused by their own actions (6.73%) or assessing Government rental support packages (10.28%) and breaking their residential tenancy agreement (8.04%) were their biggest pain points.
“The application process has changed due to the pandemic. Developing a better online application process has allowed us to offer a high degree of customisation to property managers, complemented by a high degree of automation, which enables references and application processing to be completed in record time,” said Andrew Reece, Co-Founder and CEO, Inspect Real Estate.
“Adding the National Tenancy Database into this process allows property seekers to complete their applications and property managers to process them with speed and accuracy not seen before.
“The National Tenancy Database helps verify the information in 2Apply.com applications that is needed by property managers to make informed decisions about whether applicants are right for the property.
“It also allows property managers and landlords to make decisions quicker, meaning they can advise successful applicants of their decision sooner as well as reducing vacancy rates – it’s a win-win situation,” Andrew Reece added.
Renters adapting to lockdown living
Prolonged lockdowns in various Australian states facilitated some unique tenant management issues during lockdown periods. Financial considerations were the most pressing concerns, including tenants’ loss of income impacting their ability to make rental payments (29.92%) and a higher volume of tenancy applications compared to properties available for rent (25.41%).
Other emerging issues relating to tenants’ lifestyles due to people spending more time working from home or staying indoors, include increased adoption of pets (15.87%), higher energy bills (9.89%), increased subletting and parking issues (9.54%), or increased noise pollution for neighbouring properties (6.85%) during these 2021 lockdown periods.
“As people have spent more time at home, this has encouraged tenants to familiarise themselves with and challenge the terms of their rental agreements, become more knowledgeable about renters’ rights in their state and put forward more strata and maintenance requests to their landlords. Understanding how to manage these tenant requests alongside keeping up the high standard of tenant checks will help property managers to effectively navigate the evolving rental landscape and find the right tenants for their properties,” said Scott Mason.
Most survey participants claimed that employment history and rental history are the key considerations detected which prevented successful tenancies, followed by an applicant’s financial identity or blacklist history.
Over three quarters of property managers (75.47%) believe that an applicants’ absence from tenant blacklists is not a guarantee they will make a good tenant, as tenants can only be blacklisted for three years. However, over a quarter (26.73%) of property managers did observe that there was an increase in applications that were rejected in 2021 due to tenants appearing on a blacklist.
Also read top viewed Ai Legal article: The Role of AI in Legal Research.
