Here comes the new wave of student over-crowding

The news that the Chinese government has decreed that students must have in-person tutoring for their degrees to be recognised means approximately 40,000 of them will soon be flooding back to Australia.

And that has added a renewed sense of urgency to the challenge of housing those that are on their way let alone the homeless population we already have.

Just this week we heard that Brisbane’s official student accommodation is full to the brim even with student accommodation rents matching private leases, and we know that rents in other major cities are soaring while availability is tanking.

This presents some moral dilemmas for the conscientious investor.  There are opportunities, no doubt, to cash in on the boom in demand and drought in supply but nobody wants to see the overcrowding and exploitation of a few years ago (apart perhaps from the human slugs who perpetrated it).

To refresh your memory, students were being crammed into unsafe and insecure flats where, for instance, laundry recesses doubled as bed spaces and studio “lofts” were extended out to create unsafe and illegal second floors.

Action by local authorities and state governments curbed the slumlords to some extent but not as effectively as the arrival of covid-19. When the virus hit and lockdowns bit the problems receded like the tide before a tsunami.

That tsunami is on its way now and, assuming you don’t want your property to become part of the next wave of exploitation, what can you do? And how can you make sure it isn’t happening in your block?

In NSW, strata schemes can pass by-laws restricting the number of occupants in an apartment to two adults per room (with allowances for members of the same family).  Other states may have variations on this or none at all, counting on by-laws on noise and use of common property to police over-crowding.

You might want to ask your strata committee what precautions are in place to protect your block. Well-publicised problems with one or two official tenants then giving access to their friends and multiple sub-tenants have created problems in the past.

Some inventive renters by-passed the lack of security fobs by attaching a mobile phone to the electronic entry key in the flat.  Just ring the number and in you go.

Some blocks have installed sophisticated facial recognition identity systems so that if the picture accessed on the computer when the key fob is used doesn’t match the face on the entry system’s camera, you can’t get in.

That works fine until you pick up your partner’s key when you nip out for a bottle of milk.

As far as your own investment property is concerned, you need to be aware of “head tenants” who rent the flat as if they are going to live in it then cram it full of bunk beds, planning to have four or more students in all the bedrooms and living areas.

You will need to count on reports from friendly neighbours to make sure you don’t become a slumlord by proxy and a standard tenancy agreement will allow you to evict the head tenant if they are breaching the terms of their lease.

However, one of the best ways you can protect your own interests may be to become part of the solution rather than the problem.  Put some student-friendly furniture in your flat and contact your nearest university’s accommodation provider or advertise it on a flatshare website such as flatmates.com.au or Flatmate Finders.

It may be a bit more of a hassle, but the potential rewards – both financially and morally – could be well worth the effort.

An edited version of this column originally appeared in the Australian Financial Review.