2027 – The age of the renter
19/10/2017 James Hickey, Property Portfolio Manager
By the end of 2017, home owners are expected to become a minority in Australia - but perhaps nowhere more so than in the east coast capital cities. As a result of this, market experts are anticipating drastic changes in what it means to rent a property in Australia over the next ten years.
In the coming decade, changes in legislation are expected to have broad reaching effects on bond and tenancy rights and cause disruptions in real estate practices on a mammoth scale. The future of renting is tipped to change so significantly, its resemblance to what renters experience today will be almost non-existent.
In a recent article by Domain, founder of online rental marketplace Snug, Justin Butterworth, says he expects that in ten years, renting will not be a secondary, less attractive, option to buying a property but rather the preferred option. With the rise of housing prices across the nation, the age of taking on the challenge of a concentrated investment on a 30 year mortgage is coming to an end; a fundamental shift set to have some intriguing impacts in the years to come.
What I believe will change the property market for renters the most will be the emergence of a very different type of landlord. In the Domain article previously mentioned, Anthony Millet, chief executive of fractional investing platform BRICKX agrees that the ‘mum and dad’ investors today who mostly own just one investment property will slowly make way for a market where a large number of properties will be owned by multiple investors. The emergence of investment corporations building ‘built to rent’ properties, retaining the ownership and managing them professionally, is also a likely scenario.
This will pave the way for tenants to have more stable renting environments where they’re not beholden to the wishes and demands of a single investor. This is what is known as having ‘institutional landlords’ which has been proven to create some of the most desired rental markets in the world like Germany; a nation not only known for its beer, but also its ability to provide stable tenancies and well-maintained homes on long lease terms.
It’s well known that renters in Australia fear retaliation. Often tenants avoid asking for repairs and maintenance or even simply permission for a pet, out of fear of discrimination from either the landlord or the property manager. It’s for this reason that I believe the rental market should not be as privatised as it is and should be governed by clearer legislation. In the years to come, it’s hoped that tenants will be able to confidently enjoy the right to privacy, the right to repairs and most importantly the security of tenure within a property without a sense of fear.
It is important for new property investors/developers looking at getting into the market to seriously start considering building homes and offering contracts where tenants will have more rights, and more freedom, so they feel more like a home owner rather than a guest in temporary accommodation. I truly believe that alongside creating a more enjoyable and fair living environment for renters in future that this will be the newest avenue of investment success.
Within the next decade I am confident that investors and developers will seriously consider the demand for affordable housing. This, paired with the expected legislative changes offering a large scale over haul of tenants’ rights, will create a far more stable future for what is, as of this year, the majority of the country.
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