Cash and Cowboys
Barriers for entry to private rental by disadvantaged consumers

[An excerpt from the report written by Craig Johnston and produced by NCOSS. For details on obtaining a copy of the full 80 page report see below.]

Headlines

• Disadvantaged people face a number of barriers to entering the private rental housing market. These are market entry costs, discriminatory supply practices, and restrictive tenancy selection practices on grounds other than those typically covered by anti-discrimination law.
• The financial costs of entry are determined primarily by the level of rents. These directly affect the amount of money that may be asked for as rental bonds and as rent in advance, though both of these transactions are subject to a regulated price cap. Consumers seeking to enter (or re-enter) the market also have costs related to making a dwelling a 'home', such as connecting to utilities.
• The state recognizes the vulnerable position of low-income tenants and gives a subsidy to assist with fiscal costs, through the RentStart scheme. The RentStart scheme is new (or rather, a building on the previous Rental Assistance Scheme) and is yet to be tested. The startup subsidy that this scheme provides is linked to prevailing market rents. This link highlights the importance of existing regulatory price caps on the amount of bond money and rent in advance that might be asked for from tenants.
• Disadvantaged people face the consumer problems that better-off tenants face (and can buy their way out of). But they also present with attributes that can be read as 'risk' by landlords and real estate agents.
• For the major characteristics that define social groups and subjectivities in our society, anti-discrimination law seeks to prohibit the deployment of non-commercial factors from supply choices, and thus promote efficiency and equity in consumer transactions. Anti-discrimination law has had some success in changing behavior and attitudes, but many consumers still experience the discriminations that the law seeks to prohibit. This is because there is a 'cowboy' aspect to the industry, and the consumers are prone not to complain or seek redress for unfair trading. The most appropriate course to remove the market inefficiencies that social discrimination bring is further education. However, the situation of tenants with disabilities and tenants with children is not satisfactorily dealt with by anti-discrimination law in its current form, and further changes to anti-discrimination law are suggested in these two areas.
• Landlords have an interest in minimizing risk based on consumers' incapacity to sustain payment or potential to damage property. At face value the formalization of information exchange about 'bad' tenants on the supply side, through the commodification of this information in the form of tenancy database services, can be seen as a simple strategy to address this risk. But the way in which those services operate, and in particular the lack of transparency, accountability and means for meaningful redress for wronged consumers, create inefficiencies in the market through the institutionalization of misinformation and disinformation. A perverse outcome is a potential major reinforcement of the (already great) structural power imbalance in the market in the suppliers' favor. There needs to be appropriate regulation of tenancy database services by government in both the Commonwealth sphere (to protect privacy) and in the State sphere (to promote fair trading).

Recommendations

• Recommendation 1: That the current limit on the maximum amount of bond that may be asked for an unfurnished dwelling, at four weeks rent, not be raised.

• Recommendation 2: That the Residential Tenancies Act be amended to provide that the landlord meet all the cost of preparing a residential tenancy agreement.

• Recommendation 3: That the Department of Housing establish an implementation monitoring committee to monitor and evaluate the implementation of the RentStart scheme, which would include persons from the NGO sector, such as Shelter NSW, the Migrant Resource Centre Forum of NSW, the Tenants Union of NSW, the SAAP Peaks Forum and NCOSS.

• Recommendation 4: That the Independent Pricing and Regulatory Tribunal prohibit the collection by energy distribution and retail companies of security deposits from electricity franchise retail customers and gas tariff customers, except in one or more of the circumstances provided by the Victorian Electricity Industry Supply and Sale Code.

• Recommendation 5: That the Department of Fair Trading include information on the Department of Housing's RentStart scheme and contact information for the Department of Housing in its Renting guide and Residential park living guide.

• Recommendation 6: That the Department of Housing fund NCOSS to produce a resource publication on financial assistance and support services available for disadvantaged people seeking to establish tenancies in the private rental housing market.

• Recommendation 7: That the Department of Housing audit the extent of support provided to private renters under its Home Maintenance and Modification Scheme, with a view to minimizing barriers to access for those customers; such a review to involve peak disability advocacy organizations.

• Recommendation 8: That the Anti-Discrimination Act be amended to include 'parental status' as a ground.

• Recommendation 9: That the Anti-Discrimination Act be amended to prohibit discrimination against a person with a disability by failing or refusing to reasonably allow the person to alter accommodation to meet the person's special needs.

• Recommendation 10: That the Department of Urban Affairs and Planning develop and introduce a model development control plan on 'adaptable housing' that would apply the Australian Standard for an adaptable house class C to all new dwelling units.

• Recommendation 11: That the Department of Fair Trading distribute the Anti-Discrimination Board's Fair go! guidelines to landlords and real estate agents who lodge bonds with the Rental Bond Board.

• Recommendation 12: That the Department of Fair Trading establish an advisory committee for evaluation of its initiatives to reduce discrimination against Aboriginals in the private rental market, which would include persons from NGOs, such as the Aboriginal tenants services and NCOSS.

• Recommendation 13: That the Residential Tenancies (Residential Premises) Regulation 1995 and the Residential Parks Regulation 1999 be amended to provide that the Department of Fair Trading's Renting guide or Residential park living guide be provided to new tenants in the tenant's preferred community language (where the publication is published in that community language).

• Recommendation 14: That the Department of Immigration and Multicultural Affairs distribute the NSW Department of Fair Trading's Renting guide (with information sources of assistance in establishing tenancies and discrimination law and remedies) to new immigrants to New South Wales as part of its 'on shore' information strategy.

• Recommendation 15: That the course content for the vocational education and training courses, Certificate 4 in Business (Property Management) and Diploma in Business (Real Estate Management), be modified to include material on discrimination and anti-discrimination law issues.

• Recommendation 16: That the Commonwealth Parliament legislate to protect personal information in the private sector, and that such legislation incorporate the modifications to the Commonwealth Attorney-General's Department model as suggested by Privacy New South Wales.

• Recommendation 17: That the Department of Fair Trading seek an amendment of the Fair Trading Act or the Residential Tenancies Act to incorporate provisions on communication of information based on sections 30-34 and 36-37 of the Fair Trading Act (South Australia), with the modifications that there be an onus on a trader to disclose to a consumer that they received a report about the consumer, and that the dispute-resolution body be the Fair Trading Tribunal or Residential Tribunal as appropriate.

• Recommendation 18: That the Supported Accommodation Assistance Program's capacity to undertake brokerage and advocacy to assist disadvantaged people to access private rental housing and then maintain their tenancies in that housing sector be enhanced.

Limited copies of Cash and Cowboys are available for free. Contact NCOSS to have a copy sent to you. email: info@ncoss.org.au or ph: 02 9211 2599

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Council of Social Service of New South Wales
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