This study investigated how low-income renters navigate the private rental sector (PRS) via three core pathways: the formal (via traditional or mainstream real estate agent intermediaries), informal (direct to rooms and dwellings privately managed by landlords and sub-landlords) and supported pathways (via community housing agencies). It provides practitioners and policy makers with an evidence base on changing practices and ways forward in shaping equitable PRS institutions.
The rapid expansion and reach of online rental platforms, combined with growing diversity among renters and investors/landlords, is changing how low-income individuals and households gain entry into and experience tenancy management within the private rental sector (PRS).
Low-income renters, particularly those in the lowest (Q1) income quintile, face increased barriers to navigating the formal pathways of the PRS via mainstream real estate agent intermediaries. This is leading to reliance on informal pathways, including the less secure room-rental sector, which is managed and regulated by individuals and families.
Analysis of Journeys Home data reveals that the main type of living arrangement for those with Q1 individual (40%) and Q1 household (31%) incomes was renting informally from friends and family due to constraints accessing formal pathways into the PRS.
Low-income individual renters live in both low-income and moderate-to-high income households and move frequently. Existing household measures of housing affordability stress conceal more widespread affordability problems of individual access to the PRS and the necessity of forming household groups to manage high rents.
The need for direct and ongoing private rental support above that of Commonwealth Rent Assistance (CRA) will persist for a large proportion of private renters. Analysis of the Household Income and Labour Dynamics in Australia (HILDA) data reveals that more than half (55%) of low-income individuals in a low-income household who are renting privately remain in this household group over a five-year period.
Informal pathways into the room-rental sector can provide timely access for low-income renters compared with renting out whole dwellings. Regulatory responses across the informal PRS must balance potential impacts on supply while also ensuring greater protection and recourse for those increasingly reliant on this pathway to access and live in private rental accommodation.
The policy challenge ahead is to ensure that informal living arrangements are not long term, and that more sustained assistance to move into affordable, secure and adequate rental arrangements is available.
There is growing opportunity to expand and institutionalise a supported pathway into the PRS via community agency intermediaries. A viable supported pathway into the PRS will require increased and sustained government investment in and regulation of the community sector. It also requires appropriate incentives for landlords to provide a mix of rental options and set their rents to be comparable with social housing rentals.
"We often see in the 'rogue pathway of last resort' tenants are overcrowded in small apartments, where landlords convert living areas into sleeping space in order to increase rental returns. These tenancy arrangements are highly exploitative and typically violate tenants’ rights, particularly their safety." — Dr Sharon Parkinson, Swinburne University.
AHURI Final report no.302
Australian Housing and Urban Research Institute (AHURI) 2018