Close this search box.

Residential Tenancies Act not built for student accommodation

Residential Tenancy Acts in Australia are diverse and individual to every state and territory, were mostly drafted decades ago and with one type of residential accommodation in mind, houses.

As Australia’s real estate industry has developed and evolved, these legislations have not kept up with the changing realities of new housing options.

That is the view of the purpose-built student accommodation sector, with Anouk Darling, CEO of Scape, recently raising industry worries about the “draconian” measures at the Property Council’s Property Congress.

Ms Darling stated that the acts were written for a “completely different cohort” and observed that students often enrol for a year in line with their semesters, which means that many students break lease before the end of the university term in November. With courses not resuming until February the following year, student housing is left with empty beds.

“Even though our building will be empty between November and February, we are precluded from having any other cohort other than a student available to us,” Mr Darling, who is also the Student Accommodation President, said.

“I think there needs to be a whole overhaul over the RTA,” she said.

Torie Brown Executive Director of the Student Accommodation Council, said Residential Tenancies Acts are designed for people living in traditional homes – where PBSA residents live in buildings made up of studios or shared apartments, with large communal spaces like gyms and laundries.

“RTAs simply don’t take into account how PBSAs operate – for example under RTAs in both QLD and Victoria state a landlord must not unreasonably refuse consent for a tenant to have a pet – even though I think we all agree that a studio in student accommodation is no place for a dog,” she said.

“Residents who live in PBSA are a young, often international cohort and highly mobile – which means stringent reference checks can’t be done for students like they can for traditional residential.

“For this reason, PBSA operators are more susceptible to non-payment of rent and lease abandonments, but still have to go through the same cumbersome bureaucratic systems as mum and dad landlords each time a lease is broken. By the time they are able to re-lease the room in question, it might be at the end of the school year which makes it harder to fill the room.

“My members are dealing with piles of legislation across states that simply isn’t designed to reflect the realities of PBSA – and it’s time for change.”

Scape, the largest student accommodation provider in the country, recently secured $1 billion in funding into its main fund from Canadian property giant Ivanhoe Cambridge.

Scape Core Program is the country’s largest such fund, with a portfolio of 27 institutions in Sydney and Melbourne totalling more than 13,000 beds. Scape oversees 16,000 beds nationwide, with another 9000 under development.

Prior to the announcement of the deal, Ms Darling stated that access to Australian capital is tough, but that there are also hurdles to international investment.

“There is stamp duty, then we have [the Foreign Investment Review Board] which slows down the process and charges more fees,” she said.

“It’s very, very punitive for foreign investors to invest with us, and yet being classified as alternative there’s also restraints within super funds in Australia around how much they have in this asset class.”

Despite this, she said there is a huge opportunity for growth.

In August 2022 there were 40,650 international student arrivals to Australia, according to the Australian Bureau of Statistics, an increase of 40,410 students compared with the corresponding month of the previous year.

The number of student arrivals in August 2022 was 26 per cent lower than the pre-COVID levels in August 2019, but levels are expected to increase in following months.

“There needs to be some understanding of helping Australia to future proof our economy and commercialise because these students also spend $4,000 per student, that’s equivalent of household spending,” Ms Darling said.

“You can imagine the secondary effects of these millions of dollars coming into the industry. That’s why it’s a $40 billion industry.”

more blogs