Rental Squeeze Forces Tenants To Offer Extra Cash

Rental Squeeze Forces Tenants To Offer Extra Cash

Sydney Morning Herald

Saturday February 3, 2007

Kelly Burke Consumer Affairs Reporter

COMPLAINTS about steep rises in rent and difficulties in finding affordable accommodation - particularly in the inner suburbs - have risen considerably over the past six months, tenants' groups say.

Desperate prospective tenants are being forced into cutthroat bidding wars as the squeeze on Sydney's rental market tightens.

Existing tenants were becoming more reluctant to take action against unreasonable demands from landlords, Mary Flaskas, from the Inner Sydney Tenants' Advice and Advocacy Service, said.

"They know what the market is like, and they feel if they complain about anything they'll just get kicked out ... they'll be told 'if you don't like it then leave'," she said.

Eloise Finlay, a tenants' advocate in the inner west, said more people were bringing in stories of long queues at property inspections at which desperate would-be tenants offered property managers a higher rent than advertised to secure a tenancy agreement.

Some callers suggested the real estate agents were encouraging the practice, but this has been strongly denied by the real estate industry.

Michael Stavrianos, the director of LJ Hooker Woollahra, said between 5 and 10 per cent of rental seekers were making offers above the advertised price.

"But we certainly don't encourage it," he said.

Such offers were conveyed to the property owner, who made the final decision, he said.

"And we let the other [potential] tenants know."

George Hatzaras, the manager of the Newtown branch of Richardson & Wrench, said offers to pay more than the advertised rent were not common but did happen.

"We can't stop people from coming in and offering to pay an extra $20, but we don't encourage it," he said. "We don't think it's healthy".

In the inner west, rental prices for family homes had risen 20 per cent in 12 months, Mr Hatzaras said, while rents for units had risen between 10 and 15 per cent.

Over the same time, the vacancy rate dropped from 3.5 per cent to 1.5 per cent.

At an inspection last Saturday for a house in Gladstone Street in Newtown, 50 people turned up during the 15-minute process, Mr Hatzaras said.

The Real Estate Institute of NSW, which is lobbying for the abolition of land tax on all residential properties, said the state's rental accommodation shortage was the result of property investors opting for alternatives such as superannuation.

"But tenants cannot live in a share portfolio," said Cristine Castle, the institute's president. "It will take a major confidence boost to encourage investors to return to residential property, which can still deliver substantial returns over the long term."