Monday, May 1, 2017

Caveat Rentor - Tenants as consumers Part 1

Last month Jessica Irvine, senior economics writer for The Age and the Sydney Morning Herald, delivered the Ruby Hutchinson Memorial lecture hosted by the ACCC and Choice. It is worth listening to the whole speech as Irvine addresses the need for changes in housing, childcare and disability care. Today however, we'd like to extend and explore one of the most important lines of Irvine's speech.

"Renters are consumers too. They're consuming a service and they're getting a very poor one in many cases"

Jessica Irvine is absolutely correct - renters are consumers. However, a large part of the problem with our renting laws is that they consider renters to be just like other consumers. This means the legislation makes assumptions about relationships between landlords and tenants - as service providers and consumers - that lead to really unfair situations.

Part of the reason renting isn't like other consumer transactions is the scarcity of the service being offered. If you need some food, or some clothes, or white goods, you have many alternatives and probably a range of products to choose from. It is a rare grocer who only has one banana on the shelf, but tax data tells us about 70% of landlords only own one property, and 90% own two or less.

You might say "but there are over a million landlords, which means there must be over a million properties in the rental market - how can that lead to scarcity?" Even if we take all the properties as a whole, they are not all in the same place, of the same configuration, or the same quality. Remember the last place you rented? There is only one property like that property in the world. Whereas you could go to a competitor of your nearest white goods store and find another fridge just like the last one you looked at, you can't do that with a home.

The other factor is the importance of the service. It's much easier to make do when some of the food in your fridge goes bad, or you get a really bad rip in a pair of jeans, than it is getting by without a home. For instance, you have the right to a refund for a fridge if it's faulty. The shop or manufacturer might give you a new one (just like the old one), or the cash value of the entire purchase price so that you can go and buy a new one. This is true regardless of whether you bought it last week or 6 months ago. If your rented property is faulty you don't get an exchange or a full refund, because the landlord knows two things. First, there isn't another home in the warehouse for them to simply hand over. It will be significant effort on your part to find a new home. And second, you would generally rather stay in the faulty home than sleep on the street.

In many ways this is why our tenancy laws are so inadequate. Assumptions are made about the way parties interact which assumes a regular consumer - business relationship, and that all is required of the law is to "balance the interests" of these parties. But landlords are not like other businesses. They generally only own one or two rental properties, so they are not transacting with their "consumers" with much regularity. If they're really churning through tenancies they might be transacting on average once every six months or so, but given most tenancies last for at least couple of years it's likely to be far less frequent than that. They have no concern for branding, or public relations because they have so few interactions. They are not concerned about moving product because they don't really have much of it to move. They know their "consumers" need it so they don't even really need to promote themselves as a "business". Even their agents - who do provide a service but not for tenants - are more concerned about how landlords perceive them because of the low number of interactions compared to potential "customers".

Added to this, consumers in the private rental sector don't even have the same ability as other consumers to enforce their rights.  Imagine going to fast food restaurant, like McDougall's and they refused you service because one time you took their competitor, Starving Jill's, to the Tribunal for serving a mouldy burger. Bizarre yes? But this is exactly what tenants face:

Ultimately, we need tenancy laws that recognise that tenants are consumers, but at the same time that renting your home is a special kind of consumer service. Renters are consumers, but at the same time, they are families, workers, and community members. The inadequacy of the service is in large part due to the failure to recognise this dual role - which doesn't exist when you buy a new fridge or choose to eat a different type of apple. Changing this will mean having the courage to stand against the claim that the property owner's investment decision is more important than the tenants' home.

We also need to rethink the assumption that a landlord is not "in business" for the purpose of the Australian Consumer Law. There is need for a bit of guts to stand against the sad puppy-dog eyes of investors who are only too happy to receive the benefits of negative gearing (a tax deduction for making investment in your business), but not submit themselves to the consumer protection that should come along with it.

1 comment:

  1. Parking Management Software
    online parking software
    Cloud based parking solutions

    Web Parking Software- The Elite Software Solution for Condominiums and Apartments:
    If you are worn out browsing the web just to search for the superb software solution that is creatively developed, designed and intended for condominiums and apartments, worry no more since Web Parking Software is the best option that you should try and consider. Web Parking Software will greatly help you to convert your unorganized parking management into an easy and quick online management system. In addition to this, Web Parking Software has the ability to keep track of all maintenance people, guests, tenants and registrants and at the same time they have the potential to assign parking and allow them to login to update and manage their vehicles.
    Aside from this, there are also various level permissions and access that will allow managers, registrants and even HOA members to manage all aspects of parking. Web Parking Software is considered as one of the best web based software system that was built to manage all your parking related tasks online. With the existence of help of Web Parking Software, management companies can easily add their residential properties and all their tenants, occupants and registrants from every building to the system. Once you decided to avail the services of Web Parking Software, you can be sure that you will have a full control on your apartments and condominiums without worrying for any hassles and difficulties.
    With Web Parking Software, you can be sure that your apartments, condominiums and other business establishments are secure and safe and at the same time they are in the right hands. Furthermore, Web Parking Software has competent, reliable and professional management team that has vast expertise, understanding and knowledge in the field of providing such services to all their respected clients. Since Web Parking Software is web based, any decent computer with compatible browser, Safari, Firefox and Internet Explorer will do. Apart from this, Web Parking Software has Android and iPhone support that you will definitely love.
    When it comes to their service free, you don’t need to worry since the basic service of Web Parking Software is absolutely free. Web Parking Software works great for housing tracks, townhouses, condominiums, apartments and almost all kind of organization where a management acts to manage a building. Majority of their clients who already tried and avail their services are all amazed and satisfied with the quality of their web based parking software. On the other hand, Web Parking Software will keep their tenants and occupants connected to what is happening. With the help of Web Parking Software, you can be sure that your residential and commercial properties are safe and secure all the time.
    There is no other web based parking software that can beat the excellence of Web Parking Software and this is one of the top reasons why more and more people want to try and avail their services. If you want to know valuable information and details about Web Parking Software, don’t hesitate to visit their website at and rest assured that they will be glad and pleased to help you in solving your parking problems and issues.


Please keep your comments PC - that is, polite and civilised. Comments may be removed at the discretion of the blog administrator; no correspondence will be entered into. Comments that are abusive of individual persons, or are sexist, racist or otherwise offensive will be removed, so don’t bother leaving them.