This week the NSW Government announced it would introduce legislation to ensure renters are offered convenient, fee-free options for paying their rent.
The announcement is just one of a number of state and territory reforms aimed at addressing issues arising from the use of rental technology platforms.
In recent years, these platforms and the landlords who use them have come under fire for violating tenant privacy and charging extra fees. Practices like “rent bidding” have already been banned across Australia, but governments are now starting to look at other harmful practices facilitated by new technologies.
Addressing these issues is long overdue, and much more needs to be done to ensure rental tech platforms actually benefit consumers.
Expanding Industry
A variety of digital technology platforms are being used to facilitate the use, trading, operation, and management of real estate assets. A well-known example is AirBnb, a technology platform that connects hosts and guests to facilitate short-term rentals.
The Australian real estate technology industry is expanding rapidly: in 2023, there were more than 478 products, startups and established companies, ranging from marketing tools to data analytics platforms. This is up from 188 in 2019.
Some of these companies offer services that are typically designed for use by renters, real estate agents, or landlords.
A key selling point of rental technology platforms is their ability to streamline a variety of processes: For renters, these technologies are touted as a quick, easy, and efficient way to apply for a property, request maintenance, and pay rent.
If designed well, these platforms can certainly offer convenience, but many people have expressed frustration with rental tech companies that pressure renters into paying expensive background checks, collect too much personal data, and use opaque algorithms to “score” applicants.
These platforms can also be difficult to use for people who have difficulty accessing or using technology, making it harder for them to access essential services.
Some 41% of renters report feeling pressured to use a third-party rental technology platform when applying for a property, and 29% said they chose not to apply for a particular rental property because they didn’t trust the rental technology platform, suggesting that the use of these technologies may in some cases deter applicants rather than attract them.
Additional charges
More than 30% of Australians rent their homes, a figure that continues to grow as rising rents put homeownership out of reach for an ever-increasing number of people. Rising rent prices and an overall increase in the cost of living have put many renters under considerable financial pressure.
Given this, it is concerning that some renters are finding they have no choice but to use rental tech platforms that charge fees for processing rent payments.
For example, renters who use a popular platform called Ailo typically charge between 0.25% and 1.50% for automated rent payments, depending on the payment method. As a rough estimate, a household paying the average weekly rent (AUD627 per week) every two weeks could expect to pay an extra AUD81.51 to AUD489.06 each year.
As required by law, Ailo offers a fee-free option for paying rent, but it’s extremely inconvenient: renters have to enter new bank details every time they make a payment.
The fee-free options offered by other rental tech platforms are similarly inconvenient, which involve paying rent with cash at your local post office.
For renters who are required to use rent payment platforms, this could mean spending extra time and effort every time they pay rent to avoid paying extra fees.
Some renters have no choice but to use rental technology platforms. Jono Searle/AAP
The NSW government already requires rental agents to offer fee-free rent payment methods (other states and territories have similar protections enshrined in law), but key to this week’s announcement is a commitment to ensure that these fee-free methods are actually useful, which will hopefully close legislative loopholes that allow rental tech to unfairly profit at the expense of renters.
While a draft bill has yet to be released, these reforms may encourage renters to return to proven payment methods such as bank transfers and avoid rental tech payment platforms altogether.
Effective Enforcement
Introducing laws that allow renters to pay rent in a convenient, fee-free way is a no-brainer. The next step is to ensure that these laws are effectively enforced.
To achieve this, regulators must have sufficient resources to carry out compliance and enforcement activities that ensure leasing and rental technology companies comply with these protections.
Beyond these reforms, much more work needs to be done to ensure renters are effectively protected from a range of harms created or exacerbated by rental tech platforms.
Issues such as discrimination and unfair treatment through rental technology platforms require further attention.
A key challenge for governments and regulators will be keeping up with technological advances so they can identify and address issues as they arise.
Correction: This article has been amended to reflect the fact that Ailo requires renters to enter details for each payment, rather than month-to-month as originally stated.