How real estate agents have been sucking on the teat of the property investment boom

The rise of small scale real estate agents dabbling in property management goes hand in hand with the increase in mum & dad investors in Sydney. The Yellow Pages list almost 900 property management companies for greater Sydney alone.

While property management officially requires a TAFE IV certificate, you quickly realise that it attracts a bunch of barely literate individuals, often very young, that bring no qualifications to the table other than their sheer determination to bully tenants.

Other requirements for the job include: Ability to ignore phone calls and emails, blissful ignorance of the Residential Tenancies Act, and fierce loyalty to their clients.

In one agent’s words, “tenants’ sole intention is to wreck the property”, and “who should have seen the number of times that a tenant put a hook on the wall”. Shocking indeed.

Another property manager boast on his website that he has “10 years of experience with problem tenants”, experience that left him ill equipped dealing with university educated renters on six-figure salaries. His behaviour ultimately netted him a letter from the lawyer and a complaint to Fair Trading about misconduct.

Malpractice starts from the moment of applying for a property

Real estate agents often deliberately ignore the word of the law. Did you know that it’s illegal to charge two-weeks rent in advance as a holding deposit? Only one week is permitted under the Residential Tenancies Act. The practice is so wide spread in Sydney that we only realized recently that it is illegal.

Another area, arguably a grey area, is the practice to include a background check in tenant databases against applicants. As you have given consent, it’s not against the law. But surely it’s a practice that’s putting the tenant at a disadvantage and according to media reports, the data held in these databases is sold to third parties without your knowledge.

Perversion of the point system

On the note of applying for a property, a process now commonly managed through real estate agents, I realized how the point system they use has become more and more invasive. Older paper forms sometimes still have the old point system where to reach 100 points, you have to provide ID and proof of income. Fair enough, I would want to establish the identity of my tenant as well and know that they can afford the rent.

The newer property managers have perverted his point system by reducing the value of each document provided. If your drivers license only counts 10 points, and payslip 5, you can do the math how many documents you have to provide to just get past the box ticking stage of the property application.

These documentation requirements apply in addition to providing two professional and two personal references, your job and rental history for the past 10 years, evidence of your savings, not just income and all sorts of other documents that contain highly confidential information about your life and financial situation.

Apart from the invasion of privacy (I would love to have a quarter of that information to do a check on my future ‘landlord’!), the practice poses serious questions about data security with the information being held by small 2-3 person businesses without professional data protection or data privacy policy.

Frequent inspections are an invasion of privacy

Real estate agents like to schedule an inspection every three months, the maximum number allowed under NSW law. I heard of an older lady who has been renting her place for a decade. She had an inspection every three months during these ten years. Surely the first inspection establishes that a tenants is keeping a property clean and in good state.

Frequent inspections are more than an inconvenience, they are an invasion of privacy. Especially when announced with short notice, under threat to enter the property without you being present if you’re not in a position to drop everything. You then take half day off work to welcome your agent for a 5min walk through. They will report back to their clients how amazing they are at managing their property and keeping checks on the tenants.

Delay tactics serve the owners

Property managers are very good at ignoring tenants’ request for repairs even if it means renters are roasting in 40 degree temperatures with faulty aircon, having no hot water for over a week or no light for 8 months. This means they are doing a good job as they have delayed expenses for their masters.

Agents will go to great length to ignore emails and phone calls. They use a combination of delay tactics including the standard response of ‘having to check with the owner’, only partly addressing faults, and disappearing on annual leave, in the hope that tenants give up. After all, the condition report they filled in themselves states that everything is in perfect condition.

They also see themselves as gatekeepers and often refuse to pass on requests for repairs, modifications and rent negotiations to the owners. This has become more apparent during the COVID-19 crisis with people asking for rent reductions or deferral but is from my own experience not limited to the pandemic, but another strategy to serve their clients at the expense of tenants' rights.

If you need another reminder of real estate agents' disrespect for the law, just look at how they encouraged renters to dip into their superannuation to pay their rent, a practice so wide-spread yet completely illegal that the government watchdog ASIC had to come out and warn the real estate industry that this carries a 5-year jail term (related media coverage).

We need more rights for renters

Tenants are paying customers who have a right to be treated with respect. We need properties to be managed as a professional asset in a rule-based system. We need an accessible and transparent complaint process to report dodgy agents. These reports should also go to the owners so they understand how their choice of property manager affects their own financial fortunes. Especially now that renters will be voting with their feet in a market with falling rents.

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