Thursday, October 11, 2018

Renters can't get no satisfaction - but we try and we try

This week the Bankwest Curtin Economic Centre published a new survey about the private renting sector. The survey reports some important but unsurprising results around the unaffordable and unstable nature of the sector. However it found some unexpected results and it is this which the authors concentrated on.

Let's dig in to these results, but first we invite you to keep in mind this line from the excellent English book of 2016 "The Rent Trap."

This goes a long way to explain how on one hand the survey found that "only" 6% of tenants reported their premises being in poor or terrible condition and 14% were unsatisfied with the experience of renting. On the other hand:
  • 35% reported the place needing maintenance internally,
  • 27% externally,
  • 21% of renters reported their properties were affected by mould, 
  • 30% had inadequate security
  • 12% reported their homes did not even have smoke detectors installed.

26% of those renting from a real estate agent reported either repairs only occurring after constant reminders, or never being carried out by the landlord or agent at all. The discrepancy between such poor results and the satisfaction level demonstrates the adjustment renters have already made to their expectations.

That so many were willing to still describe their relationship with their agent or self-managing landlord (69% and 81% respectively - a good moment for self-reflection from the real estate industry if they felt inclined!) as good or excellent says a lot about how little many tenants expect from the relationship. It also leads in to one of the big issues with the survey methodology - definitions. We could offer feedback on many aspects of the survey, but let's not turn this into a full review!

What is an "average" relationship with a real estate agent? What is a lease? 

Several parts of the survey with "surprising" results are based on language which is not necessarily universal.
An average or even a good relationship with an agent may mean different things to different people. Is an average relationship the colloquial, and largely negative usage? Is it what a person expects everyone else is experiencing, or compared to my previous, really horrible relationships? Or is it, as this scale suggests - a halfway point between good and poor? The different definitions may give quite different results. For some, a good relationship may simply mean they have not yet had a bad experience.

There is a very large drop-off from "average" ratings to "poor" and "terrible". People experiencing poor and terrible relationships are much more likely to have either been forced to move or chosen to move to avoid the relationship. So the current improved relationship masks a previous negative relationship. This would go a long way to explaining the high proportion of positive relationship. Unfortunately the researchers divide people into being forced to move or choosing to move. However, a move by choice does not appear to allow for a person who is informally forced to move because of a poor relationship, lack of repairs, or other issues. 

A lease is probably most commonly understood by tenants to be a formal written contract, and particularly a fixed-term contract. In a legal sense it refers to the temporary transfer of particular property rights from one person to another in exchange for rent. Respondents answering a question about renewing a lease might have been thinking of the fixed term, rather than leaving the home, which would change the way a person would answer the question. In many states it is routine for the fixed term to continue on into a periodic, continuing or non-fixed (language varies across the country!) lease whereas in Queensland almost all tenants are in rolling fixed term contracts.
Some of the questions around leases and decisions conflate the two and ask questions asking, for instance, why a lease was not renewed.  If a respondent was thinking of the initial written contract, again this may throw up odd results.

Are we satisfied?

In many ways, we are left with more questions than answers about the research. Digging a bit deeper into the data would likely do a lot to tease out the meaning behind the responses, but unfortunately it's not really available to do so. One key factor which would seem to have been relevant was responses from different income ranges. Unfortunately none of the responses (not even affordability!) did so. 
Satisfaction is a tricky thing to measure. It may have been better to concentrate on the measurable experiences - how many properties in poor repair, how many tenants left to deal with repairs themselves, how many moves tenants are forced into moves, both formally or informally. This gets away from language differences and would ultimately give a much clearer idea of the renting experience.

1 comment:

  1. I’m glad I wasn’t the only one who read that article and thought it didn’t make sense.
    I guess when the baseline is so low, people’s perspectives of good or even great are really relative.
    I know many tenants think cheaper rents (note I didn’t say cheap) mean that poor states of repair and issues like mould etc are to be expected. I was also curious about how many tenants said they knew their rights. It seemed very high.
    But hey, they highlighted the need for no grounds terminations to be abolished and that’s a great thing!


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