Time to stop sketchy private housing operators

An Adelaide property management expert has called for the State Government to stamp out dodgy private housing operators as part of its review of the Residential Tenancies Act.

Brett Wheatland, who runs RentingAdelaide and The Property Management Consultant, said sketchy private landlords were ripping off tenants, imposing illegal conditions and giving the property management industry a bad name.

He said while private housing operators were supposed to follow the same rules and regulations as landlords that used property managers at a real estate agency, this was not happening in many cases.

Mr Wheatland said some private housing operators were asking for excessive bonds, not lodging those bonds with Consumer and Business Services, and even making discriminatory requests such as tenants being “only vegetarian”.

“If a property manager were to do any of (that), we would be absolutely reprimanded… but private landlords are just not held accountable to any of it,” he said.

“There’s sort of a loose cannon approach, and they can get away with murder, more or less.”

Mr Wheatland, who is also the founder of the South Australia Property Management Community (SAPMC) on Facebook, noted that in some instances, the mistakes private housing operators made were innocent, but in others, they knew they were unlikely to be caught.

“I think some landlords turn that direction because they think, ‘I can do whatever I want if I do it by myself because there’s no penalties or consequences if I do it that way’,” he said.

Mr Wheatland said he’d made numerous reports to the governing authority to no avail, and had also made a submission to the review currently assessing South Australia’s rental laws.

He said he’d like to see more policing of private housing operators and more education for private landlords and tenants so all parties understand their responsibilities and rights.

“Part of my submission to them with the legislative changes was that all private landlords and operators and rooming house operators need to be registered,” Mr Wheatland explained.

“So then at least the government have a list of people that they can say, ‘Right, if Joe Smith wants to privately rent his property, that’s fine, but we’ll check in on him maybe once a year or he’s required to complete minimum standards as a housing operator to say he will collect the bond or no he won’t collect the bond.”

RentingAdelaide’s Brett Wheatland.

Mr Wheatland said adding such checks and balances should be relatively simple for the government to enact.

“It wouldn’t be hard for them to have some sort of process in place to say if you’re a private landlord, and you tick that box with the ATO, then we need you to fill out this form and confirm that you meet the minimum standards,” he said.

“With these reforms coming up, I think there’s an opportunity to write this into the script going forward.

“It’s time that legislation isn’t just purely focused on property managers, it’s actually focused on landlords and it is a landlord-tenant act.

“I think incorporating private operators has to happen so there’s more responsibility, more adjudication, policing, and maybe even some examples where private landlords have done the wrong thing.”

Mr Wheatland said many private landlords advertise their properties on Facebook Marketplace and in tenant and share house groups on the social media platform, and he’d like to see this stopped, as well.

The South Australian Government says

South Australian Consumer Affairs Minister Andrea Michaels said numerous mechanisms were in place to protect tenants if they were worried their landlord was in breach of the Residential Tenancies Act. 

Private landlords who fail to lodge bonds with the Commissioner of Consumer Affairs within two weeks face fines of up to $5000.

“The government is currently reviewing the Residential Tenancies Act with a view to instituting reforms aimed at making the system fairer for both landlords and tenants,” she said.

“This includes a review of the mechanisms available to regulate both private landlords and those who rent through a real estate agent, including consideration of whether the Residential Bonds Online system should be made mandatory, and clarifying how the laws apply to both boarders and lodgers.

“The review is also considering restrictions on the amount of information a landlord can seek from prospective tenants to minimise the potential for discrimination based on factors such as age, gender, religion, racial background or children.

“New offence and non-compliance measures are also being considered through this process.

“Consultation on the review closed recently and the government is now considering the next steps.”

Some of the other states

Real Estate Institute of NSW (REINSW) Chief Executive Officer Tim McKibbin said the legislative instruments that set out the rights and obligations of the tenant, landlord and agent in his state were the Residential Tenancies Act 2010 and the Residential Tenancies Regulation 2019, but there were some bizarre inconsistencies between the obligations of an agent and a DIY landlord.

“By way of a recent example, the government moved to protect tenants from rent bidding,” he said.

“However, the government elected to impose obligations on agents, but not landlords.

“Accordingly, a DIY Landlord can continue participating in rent bidding.”

Mr McKibbin also said DIY landlords often mistakenly believed being a private landlord would be simple, as experienced property managers often made their job appear easy due to their high level of skills.

“People who witness a professional in action can sometimes erroneously believe that they can competently complete the task,” he said.

“More often than not, this ends badly. The principal legislative instruments that set out the rights and obligations of the Tenant, Landlord and Agent are the Residential Tenancies Act 2010 and the Residential Tenancies Regulation 2019. 

“The former has 228 sections and two schedules and the latter has 59 sections and four schedules. These instruments are complex and impose penalties for non-compliance. 

“In my experience, the amateur will cost themselves more money than they will save as DIY.”

REINSW CEO Tim McKibbin.

Real Estate Institute of Queensland (REIQ) CEO Antonia Mercorella said most rental properties were managed by property managers on behalf of landlords.

“But we are seeing people advertising, for example, rooms in houses or granny flats,” she said.

“That’s where we tend to see more self-represented lessors as opposed to your more traditional tenancy that might be for a freestanding house, unit or townhouse, where the tenant is renting out the entire premises.

“Most lessors realise they don’t have the skill to do that, but there’s always going to be a few that decide to have a crack.”

Ms Mercorella said private landlords were still governed under the same legislation, but they often, mistakenly, thought they were not.

“That’s one of the dangerous areas where people assume they can pop someone in a granny flat or rent them a room in their house and no one needs to know,” she said.

“Sometimes what will also happen is someone will be renting a premises and think, ‘I’m not using that third bedroom, so I may as well rent that third bedroom to someone else’.

“But they don’t own it, they’re actually the tenant, so what they’re doing, in effect, is sub-leasing to someone else.

“That’s not permitted without the owner’s permission.”

Ms Mercorella said it would be good to see authorities cracking down on those that did the wrong thing.

“The challenge can often be that it is the self-represented ones that do the wrong thing and then give owners and property managers a bit of a bad name,” she said.

REIQ CEO Antonia Mercorella.

Real Estate Institute of Victoria (REIV) CEO Quentin Kilian said while some landlords may not like the Residential Tenancy Act legislation, the rules had to be followed.

But he said he had been lobbying for changes to the act over the past year, since 130 changes were made that included making it more difficult for landlords to remove “recalcitrant tenants”.

Mr Kilian said Victoria’s rental crisis was due to diminishing supply and an increase in population, with changes to legislation making it less attractive for landlords to buy and retain investment properties.

“Three or four years ago, an investor was able to buy a rental property, get a fantastic yield on that property, and get a good return for their money,” he said.

“Yields have dropped in the past couple of years, which may not be a bad thing and it’s part of the natural cycle of housing. 

“But at the same time, because of rising interest rates, an investor can now get as much from something as simple as government bonds or term deposits as they would have out of property.  

“So the more the government imposes new rules or makes it harder for an investor to comply with those rules, the less likely they want to be a landlord.”

REIV CEO Quentin Kilian.

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Kylie Dulhunty

Kylie Dulhunty is the Editor at Elite Agent.