• Returning university students to put pressure on tight rental markets across Australia.
• Time to review and rebalance tenancy laws in favour of long-term rentals and landlords in Sydney.
• In Melbourne, there are 30 – 40 people at every property open.
• In Adelaide, international students returning to language schools and universities are set to put additional pressure on the South Australian capital’s tight vacancy rates.

Sydney, NSW (2 February 2023) With tens of thousands of students across Australia set to return to university by the end of February, the urgent hunt for accommodation is turning the screws on historic tight rental vacancy rates in many capital cities, according to leading real estate group, Raine & Horne.

Gerard Hill, Co-Principal of Raine & Horne Newtown, said vacancies in the long-term rental market in Sydney’s Inner West are off the charts. The Inner West is home to Sydney University, the University of Technology, and the Royal Prince Alfred Hospital (RPA), a major teaching hospital, which remains tight with vacancy rates well under 1%.

“We currently have less than 20 properties out of 1800 available for rent or about to become vacant, with as many as 30 groups at inspections.”

Mr Hill added, “We expect vacancy rates will be squeezed further as new and existing university students flood the rental market in February looking for mostly shared home-type accommodation.”

Time to rebalance tenancies laws in NSW

Mr Hill attributes the current rental market malaise to changes to the tenancy laws in NSW in 2020 that skewed them in favour of the tenants. At the time, the state government introduced new mandatory break fees to be paid by tenants breaking an agreement early. These rules include the following:

• four weeks rent if less than 25% of the agreement has expired.
• three weeks rent if 25% or more but less than 50%of the agreement has expired.
• two weeks rent if 50% or more but less than 75% of the agreement has expired.
• one weeks rent if 75% or more of the agreement has expired.

“Previously, tenants who wished to break a lease had to pay the rent until a new renter was found, but under the new rules, they can pay a few bucks and be out of the agreement.

“For many landlords, the higher vacancies risks created by these new rules encouraged them to put their properties into the short-term holiday market with the likes of Airbnb and Stayz, contributing to tight vacancies that are truly off the charts.”

Rental fever in Melbourne

Randolph Clements, Managing Director of Raine & Horne Victoria, says the rental market in Melbourne is at a fever pitch with vacancy rates around well under 2%.

“In Melbourne, we have 30 – 40 people applying for a single property, and with this level of demand, people are missing out,” Mr Clements says.

“This situation will be exacerbated by the return of students to our universities, whether in inner suburbs around the University of Melbourne, Monash, RMIT, La Trobe and the major TAFES. 

“This fever is catapulting demand because many tenants are unsure what is happening, and there is a fear of missing out (FOMO) in inner Melbourne rental markets. 

“Some parents are helping younger tenants with no rental history by offering to pay a slightly bigger bond. This money is fully refundable if the tenants look after the property.

“The bigger bond gives landlords more security, and it is a strategy that can push younger renters up the queue.”

International students to put the squeeze on Adelaide rentals

In Adelaide, students are starting to flood back to the city’s international language schools now that COVID appears to be in the rear vision mirror, as well as The University of Adelaide and the University of South Australia.

Trinity McNamara, Principal of Raine & Horne Adelaide City, says that vacancy rates in Adelaide’s inner-city suburbs are 2% and significantly lower in other parts of the South Australian capital.

He said, “If we had more properties to manage, there’s no doubt we would find tenants quickly in this market.

“That said, It will be a challenge for all these students to find accommodation, although there are some steps, they can take to give them an edge,” he said.

“The first step is to contact a professional property manager to see how they can be assisted to find a rental. It might help to involve mum and dad, especially if you’re a first-time tenant without any rental history.

Mr McNamara advises, “A written guarantee from parents can help push a younger prospective tenant up the queue.

“Also, treat attending a rental open for inspection like a job interview. Whether you’re an experienced tenant or a newbie, if you turn up from a worksite wearing grubby work boots and trudge mud and dirt through the property, it sends a message that you won’t look after the property.”

Adhere to the three Ps of persistence, punctuality and presentation

Maria Milillo, Head of Property Management, Raine & Horne Group, said a combination of persistence, punctuality and presentation will be critical in helping rental market contenders into a home.

“Regardless of market cycles, the return of university students will always squeeze rental vacancy rates in our capital cities and regional university towns.

“A combination of persistence, punctuality and presentation will be critical in helping prospective tenants into a home. There’s no escaping the fact you must wear out some shoe leather and inspect as many rental homes as you can.

“In this market, if you’re offered a property, take it immediately or you could miss out.”

Maria Milillo’s tips for beating the rental squeeze in 2023

1. Treat appointments with property managers like job interviews.
2. Be punctual and present professionally.
3. It helps younger people if mum and dad are with you at appointments, and/or they can offer a rental guarantee.
4. References from employers, university lecturers, schoolteachers, family doctors, or solicitors – especially past property managers or landlords – are essential.
5. Also, organise your paperwork, such as your motor vehicle licence and/or passport, as well as some evidence of your earning capacity, such as pay slips and so on, to make it easier for a property manager to assess your application.