When I was in my early 20s I rented a studio apartment from an old Israeli dude who happened to live upstairs. Most nights I?d hear him either yelling at the telly, or his mail order Russian bride. He was an absolute nightmare.
When the front door to my apartment broke, his solution was to give me a screwdriver. Seriously. For the next few weeks (while he hunted for the absolute cheapest second-hand handle he could find), I walked around with a screwdriver in my man-bag to open my front door.
My mistakes were many: renting without a formal lease, paying rent in cash to a purring Russian woman who was more my age than her husband?s, and renting in Australia rather than, say, Germany.
Hold the bratwurst.
Australia has some of the most backward rental laws in the OECD.
We?re one of the few countries that allow ?no grounds? evictions (except in Tassie).And in most states if a renter needs to break a lease they can be required to keep paying until the landlord finds another tenant ? and they could also be hit for advertising costs. Contrast this to European countries like Germany, where renting is the norm (rather than a sign that you sit at home all day smoking bongs).
The Germans enjoy much longer leases, which often run for decades, and they have strict laws that protect tenants from getting the heave-ho.
In fact, the longer you live there, the more secure things become: you get three months? notice if you?ve lived there less than five years, six months? notice up to ten years, and nine months thereafter. And if you?re an oldie, your landlord can?t evict you without a court order, and paying compensation.
Australia, on the other hand, has shorter lease times and shorter notice periods ? and landlords enjoy some of the most generous tax breaks in the world, in the form of negative gearing.
The truth is that our 1.8 million landlords hold a lot of political sway ? so don?t count on any of these laws changing anytime soon. However, the rental market is changing for the first time in a decade, and its good news for renters.
Last week, SQM Research released its National Rental Index and it has recorded the highest vacancy rate since the index began in 2005. Nationally, there are 66,120 properties that are empty waiting for a tenant.
When you couple that with the record number of building approvals that will add to the supply of rentals over the next year, you can understand why the head of SQM Research, Louis Christopher, suggests that ?the next twelve months will absolutely favour renters?.
Let?s not get too carried away, though. Rents aren?t going to drop too much. Reason being that even with interest rates at historical lows, most landlords are struggling to earn returns that beat a basic savings account. (Which is why, from a pure cash flow perspective, it?s nearly always cheaper to rent than to be the landlord).
And the nature of real estate suggests that good joints in great locations are always going to be competitive. But that doesn?t mean you can?t get them, or enjoy some of the German-style benefits of a long, happy lease.
Cont..
