The Australian housing market is shifting, with recent research showing 59% of renters never expect to own a home. While homeownership has long been the national dream, this growing cohort of ‘forever renters’ points to a future where long-term renting is a way of life.
This is good news for property managers, who now have an opportunity to build a more sustainable, predictable business.
Why Australia is trending towards lifelong renting
Affordability is the most obvious driver in people giving up on the idea of homeownership. According to the Australian Housing and Urban Research Institute (AHURI), over half of private renters say they can't save enough for a deposit, and nearly 60% don't believe they’ll ever be able to afford to buy. While people still want to own a home and understand the value of it, the reality, in the current market at least, is the imbalance of supply and demand, making it an impossibility.
Beyond financial constraints, renting is increasingly a lifestyle choice. From younger Australians priced out of ownership to retirees downsizing into rental properties, the profile of renters is expanding. In capital cities, for example, the number of older renters is rising. Meanwhile, ‘rentvestors’ are redefining the notion of property investment by renting where they want to live and buying in more affordable locations.
International trends
While home ownership is still seen as a rite of passage in Australia, long-term renting has been the norm for decades in many parts of Europe. In Germany, for example, around 50% of the population rents long-term. In Switzerland, it’s closer to 60%.
In these countries, renting is well-regulated, tenant rights are strong and longer-term leases are common. These models demonstrate how a different approach to renting can lead to better renter/owner relationships (not to mention more sustainable property management businesses).
Leveraging the potential of lifelong renters
If you're managing a rent roll, this trend towards long-term renting presents practical opportunities to grow your footprint, stabilise your revenue, boost your reputation and reduce churn. Here are some strategies to consider:
Target renters who are likely to stay for the long term
Older singles and couples tend to stay in the same place for longer. Tailoring services for this demographic, for example, by creating more accessible properties, sticking to a clear and reliable maintenance schedule, or ensuring the property is an easy distance from local amenities, can attract loyal renters. A consistent, long-term renter means fewer vacancies, more predictability and reduced turnover costs.
Offer long-term leases
Traditional six or twelve-month leases may no longer fit the market as it evolves. Longer-term agreements provide security for both the property owner and the renter. They also allow your team to build stronger relationships with occupants, which in turn reduces the likelihood of disputes and disagreements. In markets where renter protections are improving, this is a logical evolution.
Invest in renter experience
With more people seeing rental properties as their permanent home, expectations are higher. Property managers who offer prompt communication and seamless interactions will stand out. A positive experience increases retention and encourages renters to treat the property as their own, which benefits property owners as well.
Support your renters
Not all long-term renters are financially constrained. Some are rentvestors or downsizers with property assets elsewhere. They expect a high level of professionalism from their property managers. Treating renters as valued clients rather than transient occupants is essential as people settle in for the long term.
Strategise with your property owners
Having good renters is important, but you need property owners as clients as well. Seek to add value to these clients by providing outstanding customer service and helping them find ways to expand their portfolio. This can be achieved through partnerships with financial planners and brokers, and by sharing regular information about investing.
The future is ‘two-tenure’
Australia’s housing system is evolving into what researchers are calling a ‘two-tenure’ future – one where renting and owning exist side-by-side as valid long-term choices.
For a property management agency, this shift is an opportunity to tap into an exciting client base. Consider how you can establish your brand as the leader in this area and start setting new standards which will set you up as the provider of choice for ‘lifers’ who will call their rental property home for many years to come.
