Knowing as much as possible about the type of tenant your property is likely to attract can help you get the most out of an investment. Meeting the market in terms of price and inclusions is important… but does the nature of renters matter just as much?
The results of an annual industry survey of 3,100 Australian renters lobbed in to my inbox this week. I expected it’d rattle on about the shortage of accommodation, growing demand, tightening vacancy rates and skyrocketing prices. Well, in most cities anyway.
It didn’t. Rather than point to the frantic nature of the market and splash around statistics about how tenants are staying put, favouring cheaper properties and locking themselves in for long leases, the picture is quite different
Sure, many capitals are experiencing the types of conditions described above, but the study uncovered a surprising new trend that has been dubbed ‘up-renting’. Apparently, after moving into a new place, tenants keep one eye firmly on the rental market in search of somewhere nicer in a better suburb.
Rather than dig their heels in when finding somewhere to live, they’re constantly on the hunt for the next pad. Despite the hassle of moving house being comparable in painfulness to swallowing a box of steel wool, tenants don’t mind doing it. A large number also keep their options open, with 64 per cent of renters preferring a lease under 12 months. Three out of four only stay in the one home for two years or less.
Then there’s a big chunk of renters who don’t sign a lease at all. Almost one-third of tenants across Australia haven’t got one. Perhaps their time in a property is bound by a handshake and goodwill as opposed to a tightly regulated and legislated agreement.
Renting out a property without a lease agreement can be a nightmare for private landlords, especially when it comes to disputes. Settling a barney at the end of a tenancy period can be tough at the best of times, let alone when you’re going it alone.
What can an investor do with this information? If you’re noticing a turnover of renters who don’t stay long, perhaps it’s time to take a look at your property.
Leaking taps? Paint peeling off the wall? Critters sharing the bedroom with human occupants? It might be time to get on top of things. A nice, comfortable and well-maintained home will help keep renters happier. That’s important when you manage to find a good one – keeping them is in your best interest, after all.
When it comes to the types of properties most popular with renters, an established house, terrace or townhouse was at the top of the list with 61 per cent of survey respondents. That result seems to indicate a desire for more space. If there’s scope to add some storage space so tenants can cut down on clutter, you might be rewarded with loyalty.
If you’re in a transient area and can’t stand the revolving door of renters, consider insisting on longer lease periods. It means a greater level of commitment for all involved, but it could be worth it. You’ll save on frequent re-leasing fees, potential vacant periods and if you work in agreed price evaluations, you can still increase the rent periodically.
The survey shows that the tightening nature of the rental market isn’t enough to guarantee people will pay huge rent for a mediocre property and stick around without question. Can you blame them?
Shannon Molloy is the deputy editor of Australian Property Investor magazine www.apimagazine.com.au