Podcast: Rents rise, clubs bet the house on flats

Surprise, surprise! What started off looking like a barren day on the pod-front, right at the end of the school holidays,  turned out to give us a lot to talk about.

First of all, there was the fact that apartment rents are rising three times faster than house rents, and what that could mean for inner cities with both tourists and overseas students on their way back in droves.

We also touch on the implications of that and what our various governments could and should be doing about all that in this column.

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Then we discuss a Tenants Union report about the discovery that private rental landlords are taking disputes with tenants to tribunals twice as often as tenants are challenging their landlords, and why that might be.

Is it because landlords are more likely to be sinned against than sinners? We don’t think so – it’s a lot more complicated than that.

Then we look at why sports and social clubs are queuing up to have their airspace and spare land turned into high-rises. And is it such a bad thing?

And finally we ask if it’s OK for strata committees to insist that owners are identified when they make a complaint.  Is it a case of victim and whistle-blower naming and shaming?

All that and more in this week’s Flat Chat Wrap.

If you enjoyed listening to this podcast (or reading the transcript), please share it with your friends using the social media buttons on this page.

TRANSCRIPT IN FULL

Jimmy  00:00

One of those days, when we looked at the news, or had to think about the podcast, and thought ‘oh, we don’t have anything to talk about,’ and then we had a quick look and there’s actually quite a lot.

Sue  00:11

It’s always the way, isn’t it?

Jimmy  00:12

It always is. So we’re going to be talking about how rents are going up. We’re talking about tenants and landlords taking each other to NCAT (or not). We’re talking about buildings going up above sports clubs, and whether you should be named and blamed, if you complain. I’m Jimmy Thomson, I write the Flat Chat column for the Australian Financial Review.

Sue  00:36

And I’m Sue Williams, and I write about property for Domain.

Jimmy  00:39

And this is the Flat Chat Wrap.

[MUSIC]

Jimmy

So rents are going up?

Sue  00:56

Yes, absolutely. So there’s new reports coming out, last week, and this week, all about unit rents for the September 2022 quarter. And it’s interesting, because house rents are going up hugely and unit rents are going up quite a lot, as well. I mean, as we know, during COVID, lots of people favoured houses, rather than units, but unit rents are really catching up quite quickly.

Jimmy  01:18

Yes, I heard a bit about it on the radio this morning, and they were saying that a lot of overseas students are coming back, and overseas workers are coming back. But I think they said there was a record number of visa applications from overseas students, wanting to come here.

Sue  01:33

So that’s really going to increase demand for units and so there’s going to be even more pressure on rents really, because vacancy rates are already incredibly low. So it’s going to be very hard for many people, I think, looking for apartments to rent.

Jimmy  01:48

Absolutely. I just cast my mind back, to all the stories we had a couple of years ago, about how people would overfill their units; you know, cramming in a dozen students, into the one space. I remember one of the stories was about a studio flat, which had a lofted sleeping area. So you’ve got the ground floor, and then up behind it, a sleeping area, but it only takes up half the width, so that it still shares the light from the window. And people were just getting joiners in, to fill in the floor.

Sue  02:25

Oh my god!

Jimmy  02:26

So they had, you know, a false floor, so they could cram more people into them.

Sue  02:33

It’s like that movie where they had seven-and-a-half levels.

Jimmy  02:37

But this, they would put a mattress across the washing machine and dryer and sink in the laundry, and that was somebody’s bedroom. And the amazing thing was, a lot of these were overseas students… A lot of them had been contacted in their home countries, by agents, who would go to their parents and say “oh, we will look after all the accommodation for your kids when they’re in Sydney, or Melbourne, or wherever,” and then, the kids would be absolutely appalled at what they found here. But they never complained to their parents, because they felt that would have brought shame on their parents.

Sue  03:15

And as well, their parents are probably sacrificing a lot, to send their youngsters here as well, to study, so they don’t want to mess it up, in any way. Oh, how horrible!

Jimmy  03:25

So these agents would go back to the same parents, for the next couple of kids to come along and say “oh, you know, your first boy or girl did so well with me and they’re so happy; I’ll take the other ones’ too.” You know, just kept the cycle going.

Sue  03:39

Oh, it’s horrible, isn’t it really?

Jimmy  03:41

And then there were the stories about landlords (heavies), demanding sex from young female students, just to give them somewhere to live. They’d still have to pay rent, obviously.  So you know, this is the future; this is what is on the horizon right now, because we have failed to provide enough housing.

Sue  04:05

Yes, that’s right. And it’s interesting; this last quarter, houses went up by 1.6% rents… Units went up. 4%. That’s a huge difference. So now that you have to pay, for a unit; a median kind of price, for a unit, is $520 a week. That’s a lot of money, isn’t it? Over half $1,000.

Jimmy  04:32

That’s a really interesting way of looking at it.

Sue  04:35

Over $2,000 a month. I mean, that’s a hell of a lot of money, for students to find (well, for anybody to find, really).

Jimmy  04:43

I mean, the economics are such that, you know, an apartment of that size (maybe a two bedroom apartment), could accommodate four students, and they could afford to pay $125 a week, okay? But, as a friend of ours said “oh, you try turning up, when you’re a bunch of students, who want to share a flat to a local landlord and say ‘oh, we are four Asian students; we want to share your flat.”‘ They wouldn’t even get in the door. It’s hard enough for people who are already here to get rentals. You know, you’re just reading stories about people turning up to get a rental property and they discover there’s another 30 people, or quite often, the landlords don’t even reply to their applications.

Sue  05:33

And they often turn up and then are forced to offer like, $50 more, to try and get the tenancy.

Jimmy  05:40

This is why the rents’ going up by 4%.

Sue  05:44

And when you kind of think, there are so many families in there as well; you know, families with kids, looking for places to rent and trying to squeeze the whole family into a one bedroom apartment, or a two bedroom apartment, where really, they would need much more space normally, but they just can’t afford the space.

Jimmy  05:59

In the same week, we read Anthony Roberts, the Planning Minister, has rejected an application for a fancy apartment block down at Barangaroo. And his reasoning seemed to be that ordinary Australians would not be able to afford to buy in this place, in a million years.

Sue  06:18

Which is an extraordinary thing to say, isn’t it, when you look at the rest of Barrangaroo?

Jimmy  06:21

It is, for a right-wing member, of a right-wing political party.

Sue  06:26

And he is very much in favour of developers, really.

Jimmy  06:29

But I wonder what is actually behind this? They’re not going to put affordable housing down at Barangaroo anytime soon, are they?

Sue  06:38

No, but you kind of think well, there is an election in the offing and it’s not a good look, to have such an acute housing crisis and then having luxury apartments being built,  in a space where the height level was meant to be much more restricted than they wanted it. And also, there’s so much opposition against it, too. I used to exercise at Observatory Hill; there used to be a little group of us, we used to it all exercise there. You’ve got these amazing views of the harbour and it would have really impeded those views. You know, from a really important Sydney landmark, that would have been shocking.

Jimmy  07:14

But you know what? It’s government doing, apart from sitting around wringing their hands and saying “oh, you know, it’s really difficult. There’s a supply chain stuff, and we’ve got all these people coming in, and we want all these people to come in and we’ve got all these tourists coming in for Airbnb rentals, but we want that, because that brings money in and we need the money…

Sue  07:33

Local councillors are doing something, aren’t they? Lots of local councils are now arcing up about Airbnb and the other short-term platforms and saying “please investors, put your houses, put your apartments on residential lets, because we just need them; people need them.”

Jimmy  07:49

But, as I said in my column in the Fin Review this weekend… I mean, people who are investors in property, basically look around them, and they feel stupid if they don’t have their properties on Airbnb, because you can make four or five times as much, during the summer.

Sue  08:08

Yes, if they’re in certain locations.

Jimmy  08:10

I don’t know how big an impact that is. I mean, what we need to be doing, is building more houses; building more apartment blocks. We’ve got to get rid of the NIMBY thing for a start. You know, people who are living in suburbs, where they all live in their little cottages, and they don’t want big buildings near them. Well, you’ve had it pretty good for a while, but people need places to live. People in your community; they’ve grown up in your community, they’ve gone to school in your community, they go to the church in your community, and they can’t afford to live in your community, because when they grow up, there’s nowhere for them to live.

Sue  08:46

Yes, and as well, they kind of have to realise that there are huge advantages to living in areas of medium, or high-density. We live in a really high-density area and it’s a fantastic! There’s lots of amenities around. There’s parks, there’s shops, there’s cafes, and there’s lots of things that come with lots of people being in the same place. And probably, I think a lot of people will always look on the negative side and don’t look on the positives, because there are huge positives to having big apartment buildings around you. I mean, obviously not overshadowing you, and it has to be well-planned and the ground plane has to be extremely well-designed, but it can be a fantastic way to live.

[MUSIC]

Jimmy  09:31

Another aspect of this, is the relationship between the landlord and the tenant. This was highlighted in a story in the Sun-Herald this morning, where the Tenant’s Union’s Leo Patterson Ross has pointed out that  70% of complaints to NCAT about rentals, are from the landlords and only 30% are from the tenants. Now, a lot of these are eviction notices…

Sue  09:58

Because people can’t afford to pay the rent.

Jimmy  10:00

Because they can’t afford to pay the rent. He actually pointed out, that there isn’t enough government support for tenants, but there also isn’t enough government support for landlords, whose tenants can’t afford to pay the rent. And, you know, it’s a two-way street. I mean, Leo is a pretty smart guy, aand he realises that landlords are not all evil, Rachman types (if that means anything to anybody, who remembers London in the 1960s). I actually saw that somebody wrote something recently about the landlord, and he said he was a real ‘Rachmaninoff type.’ Oh right, he’s a composer; how nice!

Most landlords are reasonable people, who just want a reasonable return for their investment and they don’t want any hassles and they don’t want their property to be destroyed and most tenants are quite happy to fulfil their part of that arrangement. The problem is, when they lose their jobs, or they’re not getting paid enough, or all their other costs are going up, as they are; the cost of living is going up. And the one thing that would fix this for a lot of tenants, certainly, would be more choice in places to live. But to get back to the thing about going to NCAT… One of the reasons that landlords take their tenants to NCAT is because they’re not paying their rent and they threaten to evict them, but it turns out (according to this article), that in most cases, they end up coming up with a payment plan. So it’s a kind of last-resort thing.

Sue  10:05

But why would it be such a last resort? You know, if tenants have problems paying rent, then property managers always say “look, tell us as soon as you’re having difficulties, and we can work out a payment plan, we can work out a way.” Because most landlords (as you say), are quite reasonable and they don’t want to lose good tenants. They want to make sure their tenants can be happy and can fulfil their obligations.

Jimmy  12:02

But I think what you’re missing out in that, is that it’s not a relationship, often directly between the landlord and the tenant; there’s often a rental agent in there.

Sue  12:14

The rental agent should be proactive and the tenant should  feel very confident, about approaching the property manager.

Jimmy  12:23

Well, they should, but the property managers; sitting there, going “oh, I’ve got this person who’s lost their job or whatever… They’ve fallen off their Uber Eats delivery bike, or whatever and they’re saying they’ll get me the rent in a couple of weeks, and they still haven’t come up with the rent. Meanwhile, I’ve got 30 people banging on my door, saying ‘I want to get an apartment in that building, or in that area…’ The easiest thing for me to do, is get rid of the people who won’t pay their rent, take the rental money out of their bond and put somebody in, at a higher rent.” So that’s partly the problem.

As we say, most landlords, we believe, are reasonable people…Rental agents are the real weak link in this whole situation. What the government needs to do, is build more houses for people, or flats for people to rent. Government should just say “here’s some government land; let’s build some flats. We’ll sell them on at the end, but we’re going to take the risk of building the buildings.” But the trouble is (ideologically, certainly), the Liberal government couldn’t even tolerate the idea, of building social housing. It so goes against the grain for them.

Sue  12:23

I mean, one small industry, which is getting bigger, is the build-to-rent sector, which offers a lot of hope, for a lot of people. Although, those rents are often a bit higher, but at least they offer security of tenure and they offer really good facilities and great quality apartments, because they want people to stay there for the long term.

Jimmy  14:00

Well, there’ll be an escape valve… You know, they’ll take the pressure off the lower end of the market. The people who can afford to spend a bit more, and who want the security of tenure; they’ll move into those apartments when they’re built. But when are they getting built? I mean, are they being built now and how long is it going to take?

Sue  14:17

They are, but you know, it’s a growing sector, but it’s not as big as it should be. I mean, it’s much more advanced in the US and Europe and in Britain, but here it’s only just kind of starting, really. Hopefully, in a few years’ time, the build-to-rent sector will take up a much larger proportion of rentals.

Jimmy  14:36

And the reason it’s progressing in Europe and America faster than here, is because they don’t have this stupid idea that somehow, renting a property is a sign of failure.

Sue  14:46

That’s right. People want to rent because they want to spend their money on other things. They might want to spend it on a business…

Jimmy  14:54

Or they want flexibility. I mean, one of the worst things in apartments is that you buy an apartment in a building, and it turns out that all your neighbours are idiots. But you’ve bought; I mean, if you want to move, you’ve got to sell again… You’ve got the whole stamp duty thing; it’s not an easy thing to do. Whereas, a lot of people who are renters will go “hey, these people around me are idiots and horrible. In six months, my lease is up. I’m gonna go and live somewhere else.” So there are advantages. Okay, when we come back, we are going to talk about something that’s kind of related and that is, how a lot of sporting clubs are selling or using their airspace, to build apartments. That’s after this.

[MUSIC]

Jimmy 

And we’re back. Sue, this weekend, we read that South Sydney Juniors Club (which is a very successful club in the eastern suburbs, down Randwick way), have just been given permission to double the height of their apartment block that they’re building above their club. Now, this is part of a trend that you’ve been following quite closely.

Sue  16:08

Absolutely. Because there’s lots of social clubs and sporting clubs around Sydney, that struggle to be able to support themselves, really. You know, they might have an ageing membership, or there’s lots of other competition from regular clubs and commercial operations for the dollar. So lots of them; their facilities are maybe crumbling a little bit, and their buildings aren’t being maintained very well. So lots of them now are selling their ground to developers and in return, the developers help them refurbish their clubs, or give them a bit of space within the development, to keep going. And at the same time, they’re able to get some of the revenue from the apartments being built, as well. I mean, it’s a real win-win because some of these clubs have really fabulous positions. I mean, the one last year that caught our attention was the Waverley Bowlo. I think Mirvac is building an under -55’s development there, but they’re keeping the bowling ground there.

Jimmy  17:02

Is it under-55’s, or over-55’s?  Under-55’s is called Club Med!

Sue  17:12

Over-55 housing, and they’re also refurbishing the club and keeping the ground there and giving them much better facilities. So that’s hopefully going to be a success story. And I mean, you look at the West Tigers Leagues Club. I mean, that’s been a disaster for a long time in Rozelle, that big building. The New South Wales Government said that they needed it, as their ‘dirt dump’ for the Western Harbour Tunnel. They finally decided that they don’t need it any longer, so after 12 years of the club being shuttered, the original developers, who wanted to develop apartments… I think something like 160 apartments above the club, have now been given permission to proceed and they’re building a retail centre there and a town square. I mean, a big $400 million development, but it’s been on hold for all these years, partly because the New South Wales government kept saying “oh, yeah, we need it.” And then finally, they say “we don’t need it,” and now the developers could well sue the government for loss of income for all these years.  So that’s kind of a bit of a disaster in many ways, but hopefully, it will be a brand new beginning for the club, too.

Jimmy  18:17

But there was also issues there, that Victoria Road, which goes past that club, from the Anzac Bridge, through past Drummoyne… It was a horrendously busy road, anyway and people were saying, if you’re going to build a block of apartments here, it’s just going to be a nightmare (as has happened elsewhere in Sydney, in the inner west). But I think these tunnels; the dirt from which they were going to dump there, will actually ease a lot of the traffic on that road. It could be  quite a smart development.

Sue  18:52

Yes, absolutely. I mean, it’s not new. I mean, do you remember Harold Park; the old harness racing club? I mean, that  obviously became the big new housing development there.

Jimmy  19:06

And people that we know who live there, really like it.

Sue  19:10

Absolutely! But it’s kind of gaining momentum now. I think clubs are thinking “well, actually, this seems to be working for lots of people; let’s give it a go as well.” At the moment, we’ve got the City Tattersalls Club, in the Sydney CBD, and that’s having a 50-storey tower with 240 apartments above it. That’s going ahead at the moment, and there’s golf clubs, which have had apartments built…

Jimmy  19:32

Golf clubs are another; a whole other issue. People invest in golf clubs, and then they discover that the golf course is common property, which when they’re investing there, they’re told “hey, you’ll be a part-owner of the golf course.” They go “great!” And then the maintenance fees and the landscaping and all that… And meanwhile, the original developer is off on the horizon, looking for their lost balls.

Sue  20:02

There are some success stories there, but there are also some disasters, as you point out. There are some specialist brokers now, who come in and help clubs to negotiate those deals, because they recognise that, you know, for the uninitiated, they can be terrible pitfalls. And so they come in, and they provide expertise and allow them to kind of work with developers, to hopefully, mutual advantage, really. And of course, we’ve got Scomo’s own club, the Cronulla Sharks… We’ve got the Woolooware Bay development there as well, which is incredibly popular. Every new stage that comes up, sells out, very, very quickly.

Jimmy  20:40

So it’s all going down at the club.

Sue  20:42

I know. There’s the Bondi Junction club going on. You know, there’s so many going on now and that’s going to be a good new source of housing. And obviously, those clubs; the people who buy apartments around those clubs, they’re going to be able to hopefully, become members of those clubs as well, to try and help rejuvenate the clubs, too. Especially if you’re over-55 and looking to live in a bowling club.

Jimmy  21:06

The constant clatter of bowls…

Sue  21:08

The creaking of knees.

Jimmy  21:12

A lot of people would quite like that. I do remember somebody who’d worked in the civil service in London, and his office was being moved to Glasgow. He called up one of his mates, who was one of the early people to go there and he said “what’s it like up there? What’s it like in Glasgow?” He’d never actually visited. He said “oh, it’s good. We’ve got this great big six-bedroom house.” He said “the only thing is the swearing; the constant swearing from over the fence,” and the guy said “oh, what’s wrong? Is it a pub car park, or something?” He said “no, it’s a golf course.” When we come back, we are going to talk about something that’s driving somebody barking mad.

Sue  21:58

If you can hear that;  if you could even hear a dog barking in the distance!  Oh no! This is so much pressure every time, Jimmy! You never warn me! Can’t you just tell me in advance?

Jimmy  22:01

Or more to the point, parking mad. That’s after this.

[MUSIC]

Jimmy 

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[MUSIC]

Jimmy 

Sue, here you are, once again; strata guru… I’m  just interested in your opinion and your wisdom on this. So somebody has written to us and said like many buildings around, residence in her building treat visitor parking as spare parking for their extra cars. Even though the bylaws say residents are not allowed to park in visitor parking… Even though their development approval from the council will say ‘this is visitor parking, not resident parking,’ residents park there. It happens everywhere. This person has written to us and said that she has complained to her committee, her strata committee, many times about this and now, the strata committee has said ‘we are not accepting anonymous complaints anymore. If you want to complain about this, you have to put your name on it, so we can put it in the minutes, that you have complained.’ And she is saying, Great! Now I’m gonna get my car keyed, or whatever.

Sue  23:50

But that’s kind of ridiculous, because when somebody makes a complaint, it’s not really going to be anonymous to the strata committee, is it? They’re going to know who it is. So they know it’s authenticated. They don’t need to name the person and put them in the minutes at all. It just seems to be spiteful, really?

Jimmy  24:06

Oh, absolutely and one suspects that somebody on the committee is one of the people who’s doing the illegal parking.

Sue  24:13

That’s quite a possibility.

Jimmy  24:15

A couple of people have written to the forum and said there is absolutely no law, that requires your name to be provided, when you make a complaint to your committee. It’s different if you go to NCAT. If you go to Fair Trading, you’ve got to put your name, but within the committee; within the community, people can make anonymous complaints.

We’ve had this here, where we had the argument about naming and shaming and blaming people, and it’s ridiculous, you know, because it is used… I was gonna say ‘judiciously;’ it is used in injudiciously, randomly, that there are some people who will make complaints and you don’t get their name and other people make complaints and they get the name and address, blood group and phone number.

I think, there should be a blanket law, that says unless it’s for specific valid reasons, internal communications should maybe, give the lot number, to validate the complaint (because nobody knows what their lot number is.) I know the lot number of our parking space, because it’s easy. I actually don’t know the number of our apartment, and we’ve lived here for 20 years. So, put the lot number in, to validate the complaint. Don’t name people; that is just bullying. It’s just a form of bullying. I think that’s one of the things that they should change in strata law, not that they seem very interested.  or not that they seem very

Sue  25:51

Well, there’s another review of strata law coming up, isn’t there?

Jimmy  25:52

Is there?

Sue  25:53

Yes, I think so.

Jimmy  25:54

Is anybody paying any attention to it?

Sue  25:56

I don’t know about that that really.

Jimmy  25:59

Has anybody seen any proposals, that we can express opinions about?

Sue  26:04

No.

Jimmy  26:05

So I’m thinking it’s not coming anytime soon. It won’t be up before the next podcast. All right Sue. I know you’re rushing off to do other things now. Thank you, for making time to come and talk to us and giving us the benefit of your wisdom.

Sue  26:22

Well, I don’t think I displayed much wisdom there, did I really, because I just said what I thought and then you just put me to rights.

Jimmy  26:30

I agreed with you.

Sue  26:31

Oh, did you? No, you said about the anonymous lot number, which was a much better idea, really.

Jimmy  26:36

I just put the icing on your cake. Thank you again and thank you all for listening. We’ll talk to you again soon.

[MUSIC]

Jimmy 

Thanks for listening to the Flat Chat Wrap podcast. You’ll find links to the stories and other references on our website flatchat.com.au. And if you haven’t already done so, you can subscribe to this podcast completely free on Apple podcasts, Google podcasts, Spotify, Stitcher, or your favourite podcatcher. Just search for Flat Chat Wrap with a W, click on subscribe, and you’ll get this podcast every week, without even trying. Thanks again. Talk to you again next week.