The changing face of tenants

I have been asked by a lot of people lately what tenants are doing, who are they...etc.

These are my thoughts:

SOCIAL TRENDS IN AUSTRALIA
Australians are becoming more prosperous, we are living longer and our family units are getting smaller. We are more ethnically diverse.

It seems the traditional Australian family made up of mum, dad and the kids is on the wane, with fewer than 40 per cent of families now fitting that description.

Other big changes include an increase in lone parent families, a rise in the number of couples without dependent children and a jump in the number of households that consist of just one person.


In addition the number of people per household continues to decline.

Between the last two censuses the average number of residents per household fell from 2.61 to 2.57 persons per household, which translates to around 135,000 extra households.


While the number of people per house is falling, the size and quality of houses is increasing.


Nine out of ten two parent families with young children live in a separate house with an average of four bedrooms. The average number of children in those households is 2.16.


Traditional families are demanding more living room than ever before.

The average floor area of new houses has increased by around 50 per cent, from 162.2 square metres in 1984-85 to 247.4 square metres in 2005-06.



TENANT TRENDS
Tenants, like the general population come from many walks of life, different countries, different cultures, different professions and they approach tenancy with vastly different attitudes to traditional tenants of years gone by.

Renting is no longer a dirty word.

Similar to what’s been happening in European countries for many years more and more people are choosing to rent long term.

With housing becoming more and more unaffordable people are consciously deciding to rent rather than buy and invest their money elsewhere.

The real costs of buying a house now in most cases far exceed the price to rent the exact same house-without all the hassles of ownership.

More Transient

With many people now employed on a contract basis renting rather than buying for the period of their contract makes sound economic sense.

These ‘contractors’ generally seek properties of a high standard close to their place of work.

Rent a Lifestyle

Many tenants, particularly singles without the commitments of children, are now seeking what is known as lifestyle properties.

Generally in expensive inner city areas, with a modern look and feel and close to their place of work and amenities such as cafes, restaurants, bars and shops.

Additionally, families that have been transferred through employment don’t want to lower their lifestyles either. Most seek the same type of dwelling they are leaving behind.

Preferably of good quality, good size with modern fittings and ideally located near good schools, shopping facilities and entertainment.

Quality

More tenants are looking for better quality properties than ever before.

With the huge increase in the number of new properties in South East Queensland many tenants are choosing to rent a new or near new property at a higher rent than a dated run down ‘shack’ with old and tired features.

These new estates and apartment blocks have lifted the bar in terms of rental properties and landlords with older properties looking to attract these quality tenants should consider improving their offering.

Tenants can also be Investors

Buying close to lifestyle factors is not always financially possible, particularly for singles, but renting in those areas is.

Today many people rent where they prefer to live and then purchase an investment property in more affordable areas.

Household Amalgamation

An emerging trend is the amalgamation of ‘household’ combinations. For example two parties looking to rent a larger house for $500 than two smaller properties at $340 each. It makes financial sense and there are other lifestyle/family benefits as well.



IMPLICATIONS FOR LANDLORDS
One thing is clear, as population increases, as life expectancy increases, as the growth in single person households increases and as the number of persons per dwelling decreases the demand for tenancies will grow.

Is your property pitched at your ideal market?

Renting a property is no longer the domain of students and the not so well off.

The ‘typical’ tenant concept simply doesn't exist anymore.


It’s now become a lifestyle/work choice.

Well educated high income professionals be they singles or with a family have joined the rental market in big numbers.

They are seeking well located properties with modern features and are prepared to pay for them.

Landlords need to reassess the type of tenant they hope to attract to their property and make the necessary changes.

Landlords can no longer expect to attract higher rents and better tenants with dated properties and a lack of inclusions such as air conditioning, insulation and dishwashers.

The transient nature of tenants does not mean lower expectations.

Many tenants want a ‘home’ not just a place to live.

Tenants want flexibility in their leases to match work commitments.

More Property Developer stock has raised the bar in terms of quality and location at competitive prices.


Tenants now have a greater choice and Landlords need to keep themselves up to date with what’s happening in their neighbourhood.

Leaving maintenance unattended and the property in general disrepair will force tenants to look elsewhere.

Landlords need to consider what they can do to their property to make it more desirable to a broader range of prospective tenants.

Landlords with larger properties need to assess what they can do to attract the ‘family’ or ‘amalgamated’ household market. On the other hand, landlords with units closer to the city should consider updating the interiors with modern fittings and fixtures and could consider installing washers/dryers and fridges.


IMPLICATIONS FOR PROPERTY MANAGERS
Property managers more than ever need to be forward thinking in their approach. They need to be able to add value to the transaction and provide landlords with up to date information about what is happening in the market as well as be able to advise their owners about what they can do to their properties to make their properties more appealing to a broader market.

Regular and timely communication as always is still paramount to the process.

Property managers need to be accessible to both landlords and tenants at times that suit. Out of hours and 7 day availability ensures that issues are dealt with immediately and properties are rented without delay.

Being proactive and responsive to the needs of both landlords and tenants will ensure low vacancies and happy tenants.

Access to landlord information 24/7 via the internet keeps owners informed about the financial aspects of their property while tenants need to be able to apply for properties and pay their rent online.

And finally property managers need to be accountable to both owners and tenants. Property managers take on huge responsibilities for both their owners and their tenants. Owners entrust them with a large part of their financial future whereas for the tenant the ‘tenancy’ is their home and must be treated with respect.

Lu

 

What an interesting post Lu - good times for investors who keep up with the trends then. Would be interested to hear whether people agree with these predictions?

 

Hi Lu

Makes for interesting reading- appreciate your thoughts. Would love to see if you could dig up some stats regarding rental numbers compared from 10 years ago to see if more Australians are renting vs buying.

 

Hi Jacques,

I will and add to this forum. I have started a new business in property management in Brisbane at the moment so time on the computer is a lot less than it was.

If you need any property management questions (Qld) answered - let me know.

Regards,

Lu