Unlawful and lawful discrimination: how the selection process disadvantages some private renters

This piece was originally published in the Parity edition 'Tenancy and Tenancy Reform in Troubled Times: Covid-19 and Renting'. Parity is Australia's national homelessness publication. 

Guest blogger Bronwyn Bate is a PhD Candidate at the Urban Research Program, Western Sydney University

In the absence of any legislated right to housing, or rules and guidelines such as waiting lists or criteria determining housing priority (as is the case in public housing), the decision to accept or reject a tenancy application, in the private rental market, is essentially “competitive”. It sits solely in the hands of the landlord, and, in many cases, the real estate agent, who provides expert advice to the landlord (1, 2). This puts some tenants at a disadvantage when trying to rent a home.

Despite this, proposals for reform of residential tenancies legislation in Australian states and territories, rarely consider legislation that impacts a tenant’s ability to actually secure a rental property. Emphasis in recent reform processes around key tenancy legislation in the various jurisdictions across Australia has focused on establishing greater rental security for tenants currently living in a rental property, in particular around reforms to remove ‘no grounds’ or ‘no reason’ evictions.

These legislative changes are important, but it is also important to consider the ways tenants can be better protected from discrimination during the rental application process. If we want to make private rental more accessible, and as importantly, more secure and sustainable to those experiencing, or at risk of, homelessness we need to also assess the ways some tenants are at a greater risk of being excluded from the private rental sector. 

Discrimination in the Australian private rental sector

While Australian tenancy legislation varies between States and Territories, generally, it is unlawful for real estate agents and landlords to discriminate in the provision of rental housing on the grounds of a tenant’s age, disability, race, sex, sexual orientation, marital status, pregnancy or responsibilities as a carer (3, 4). If a tenant feels that their application for a tenancy has been declined, or they have been treated less favourably, by a real estate agent and/or landlord based on any of these grounds, they can make a complaint to the relevant agency within their state or territory.

Despite tenancy legislation designed to protect tenants from discrimination, a considerable number of tenants still experience discrimination when applying for a rental property. Further to unlawful discrimination, there are also other types of discrimination which are considered lawful. For example, an Australian survey of private renters, commissioned by Choice, National Shelter and the National Association of Tenant Organisations (5) found that 50% of tenants have experienced discrimination in the private rental sector. This includes discrimination on the basis of: pets (23%), receiving government payments (17%), age (14%), being the parent of young children (10%), being a single parent (7%), race (6%), needing to use a bond loan (5%), gender (5%), disability (5%) and sexuality (2%). This suggests first, discrimination in the Australian private rental sector is widespread. Second, there is a need to re-examine what is considered to be unlawful discrimination in the private rental sector.

Lawful discrimination, particularly with regards to pet ownership and receipt of government payments, is significant. The Choice et al survey results reflects other research suggesting that securing privately rented accommodation is particularly difficult for pet owners (6) and low-income households (7, 8). The difficulties for low-income households to secure a rental property is expected to worsen as casualisation in the workforce continues to grow (9).

Discrimination exists on a spectrum and can be overt or subtle. This makes concepts around unlawful and lawful discrimination during a tenant’s search for a rental property complex. For example, a tenant who doesn’t receive a call back from a real estate agent based on their name being “non-Anglo” is one way that real estate agents discriminate against tenants (10) (11). Another form of discrimination occurs during the application and selection process. During the application process, the real estate agent and/or landlord assesses the risk of any potential applicant, with the aim of choosing the best possible tenant (based on all applicants received). The aim here is not to choose a suitable tenant for the rental property but the “best” tenant. This places some tenants at a disadvantage when applying for a rental property, making them subject to the bias of landlords and real estate agents, particularly in a high demand private rental sector, where real estate agents and landlords have significant choice over prospective tenants (12) (13) (14).

A study by Short et. al (15) examined the ways real estate agents assessed the risk of prospective tenants during the application process. The two most important qualities a real estate agent look for are a tenant’s ability to pay the rent on time and their ability and/or willingness to take care of for the rental property. Certain tenant characteristics that signal an inability to pay the rent on time or an inability to care for the rental property are seen as “risky”. Short et. al (16) state that “being on a low income was the principal and overarching factor” which real estate agents considered to be risky. Other factors included:

• Unemployment
• ‘big’ families; sole parent families
• domestic violence
• marital breakdown
• shift from home ownership to private rental
• Aboriginality and specific ethnicities
• physical incapacity
• aspects of ‘presentation’.

Similarly, through an analysis of articles on leading online Australian real estate sites www.realestate.com.au and www.domain.com.au, my research (17) argues that a tenant’s ability to impress the real estate agent matters. My research identifies six aspects of interactions between the real estate agent and prospective tenant that affect their chances of securing a rental property.

1. creative thinking – for example, bringing cupcakes to a rental inspection.
2. established relationships – a previously established relationship with the real estate agent or landlord can improve a prospective tenant’s chances of securing a rental property.
3. flexibility – prospective tenants should remain flexible about their lease length and the cost of their rent.
4. honesty – prospective tenants are encouraged to be honest with their agent about their lifestyle.
5. making an impression – prospective tenants should dress appropriately and be on time for inspections, engage with the agent and present an easy-to-read, error-free application form.
6. responsibility – positive reference/s from previous agents and/or landlords help demonstrate a prospective tenant’s responsibility.

Through these interactions, tenants can highlight their desirable characteristics while downplaying their undesirable characteristics. The ability to make a good impression on the agent, however, is largely based on a variety of factors that place some tenants at a disadvantage. For example, factors such as English proficiency and the ability to “dress to impress” are often a reflection of economic and cultural capital. Similarly, the ability to demonstrate responsibility appears significantly harder for people with no previous rental history such as younger people, newly arrived migrants and people who are re-entering the private rental sector. My research highlights how Australian real estate sites present the issue of tenants securing rental housing as an individual problem as opposed to recognising the larger systemic issues of housing shortage in Australia.

Lastly, Curry’s (18) research points to the ways rental application forms have the potential to “trigger implicit bias” among landlords and real estate agents and the need for a standardised rental application form that limits the amount of information a landlord and/or real estate agent can legally request from a tenant, reducing the potential for bias during the tenant selection process. However, Short et. al. (19) argue that while some level of “transparency” may be achieved through the rental application form, there are no guidelines around how landlords and/or real estate agents decide from two equally qualified applicants. This is unlike public housing where rules and guidelines such as waiting lists or criteria determining housing priority apply.

Revising the selection process – how can legislation stop personal biases from creeping in?

Discrimination in the Australian private rental sector is a widespread and ongoing problem. While there is Australian tenancy legislation to protect the rights of tenants against discrimination when applying for a rental property, the above research suggests legislation alone is insufficient as a strategy for addressing unlawful discrimination. Further strategies are also required to address other forms of discrimination, which although “lawful”, are not necessarily equitable or ethical and are clearly restricting many renters’ ability to secure a home. There is a need to reassess the application and selection process and the ways this process reinforces disadvantage in the Australian private rental sector. Future policy reforms should include:

• More transparency in how landlords and real estate agents determine the “best” applicant for a rental property. Rather than assessing applicants against each other (leaving room for personal biases to creep in), assessing each applicant individually, based on their own merit, would be a better approach. Further research into how and the best way this can be done is needed.
• More education for real estate agents and landlords about appropriate practices when assessing tenancy applications, including education about discrimination and the various ways discrimination manifests in the private rental sector.
• The need for states and territories to develop a set of regulations (and/or a standardised rental application form) outlining what information can, and cannot, be requested from tenants by landlords and real estate agents when a tenant applies for a rental property. Some small steps have been taken in Victoria to place greater restrictions on what information landlords and real estate agents can ask for (see the Victorian RTA summary of changes). However, these changes are minor. One possible reason for this is because, as mentioned above, the emphasis for recent changes in Australian tenancy legislation have focused on establishing greater rental security for tenants whilst currently living in a rental property and have not focused on the experiences of tenants in the search and application process.
• Further research into the types of discrimination within the private rental application process is also needed.

It appears that the dominant view among policymakers, landlords and real estate agents is that the landlord should be provided with extensive information to be able to choose the “best” applicant for their rental property. However, as renters and advocates have long wondered, how are landlords and real estate agents making decisions when they have two or more equally qualified prospective tenants? Further, when private rental housing is the only option, what happens to those applicants who aren’t the “best”?

Endnotes

1. Bate B 2020, ‘Rental security and the property manager in a tenant's search for a private rental property’, Housing Studies, vol.35, no.4, pp.589-611.

2. Short P, Seelig T, Warren C, Susilawati C, Thompson A 2008, Risk-assessment practices in the private rental sector: Implications for low-income renters, AHURI Final Report No.117, Melbourne: Australian Housing and Urban Research Institute.  

3. ‘Chapter 2b: Applying for a tenancy’, New South Wales State Library, <https://legalanswers.sl.nsw.gov.au/tenants-rights-manual-practical-guide-renting-nsw/applying-tenancy#:~:text=Applying%20for%20a%20tenancy,and%20licence%20numbers%20and%20photographs>.

4. ‘Anti-Discrimination NSW and NSW Fair Trading on tenancy issues’, Anti-Discrimination New South, <https://www.antidiscrimination.justice.nsw.gov.au/Pages/news-articles/adb-nsw-fair-trading-tenancy-issues.aspx#:~:text=Under%20the%20Anti%2DDiscrimination%20Act,motel%20rooms%20and%20commercial%20premises>.

5. CHOICE, National Shelter, National Association of Tenants' Organisations 2017,  Unsettled: Life in Australia's private rental market, <https://www.sheltersa.asn.au/wp-content/uploads/The-Australian-Rental-Market-Report-Final.pdf>

6. Power ER 2017, ‘Renting with pets: A pathway to housing insecurity?’ Housing Studies, Vol.32, no.3, pp.336-60.

7. Short P, Seelig T, Warren C, Susilawati C, Thompson A 2008 op cit.

8. Kemp PA, 2011, ‘Low-income Tenants in the Private Rental Housing Market’, Housing Studies, Vol.26, no.7/8, pp.1019-34.

9. Curry S, 2019, ‘The Renter’s Journey: A consumer-centred approach to understanding the dynamics of Australia’s private rental market’, Consumer Policy Research Centre, <http://cprc.org.au/wp-content/uploads/The-Renters-Journey_Full-Report_FINAL_27Feb19.pdf>  

10. Ibid.

11. Nelson J, MacDonald H, Dufty-Jones R, Dunn K, Paradies Y, 2015, ‘Ethnic Discrimination in Private Rental Housing Markets in Australia’, In: Rogers D, Dufty-Jones R, editors. Housing in 21st-Century Australia: People, Practices and Policies, Surrey, Ashgate; 2015, pp. 39-56.

12. Short P, Seelig T, Warren C, Susilawati C, Thompson A 2008 op cit.

13. Bate B, 2020, op cit.

14. Curry S, 2019 op cit.

15. Short P, Seelig T, Warren C, Susilawati C, Thompson A 2008 op cit.

16. Ibid. p.2

17. Bate B, 2020, op cit.

18. Curry S, 2019 op cit. p.67

19. Short P, Seelig T, Warren C, Susilawati C, Thompson A 2008 op cit. p.2