An Aussie real estate agent’s thoughtless post has exposed how much they are willing to let tenants spend on rent.
In a Facebook group dedicated to property managers, an anonymous member asked their fellow agents if they still use the 30 per cent theory to evaluate if someone can afford a rental property.
“Are property managers still using the 30 per cent of income affordability for a property?” they asked.
The 30 per cent rule is that people shouldn’t be spending more than 30 per cent on their rent but the rule is becoming increasingly difficult for tenants to follow because of soaring rents in Australia.
According to Proptrack, rents in most capital cities in Australia have risen drastically in 2023.
The only cities where rent hasn’t gone up across the board are Hobart and Canberra, but every other city has seen a considerable increase.
Rent in Sydney has risen by 18 per cent, followed by rent in Melbourne, which has increased by 14 per cent.
Rental prices in Brisbane have ballooned by 12 per cent. An overall 11 per cent increase has hit renters in Adelaide, prices in Perth have jumped by 15 per cent and rent in Darwin has increased by 4 per cent.
Not to mention that the cost of living crisis has led to inflation hitting 7 per cent, and wage growth has only risen by 3.8 per cent in 2023.
Aussies are being hit financially at all sides, and the response to the 30 per cent question has revealed that agents have decided to factor out that ideal.
A fellow agent replied and shared they are “flexible” and instead rely on previous ledgers rather than income to determine if someone can afford to pay a yearly lease.
Another agent explained that they were seeing a “slow down” in quality applications and now considering people paying more than 40 per cent of their wages on rent.
One agent said that most of their tenants were now spending 40 per cent on rent, but they wouldn’t allow a tenant to pay more.
Meanwhile, another agent divulged that if a tenant is looking to pay more than 30 per cent of their income, they check their previous rental history to see if they are able to afford it but saw no problem with it if they had a good record.
Easily, the most confronting message was from an agent who explained they had pensioners paying 50 per cent of their income on rent.
“I’ve got some pensioners paying 50 per cent and others paying a higher percentage than that who have paid more than that in previous properties. I pay more attention to the ledgers these days.”
While another agent chimed in and said they don’t worry about percentages and instead go off their rental history.
“I think this is where a tenant ledger is worth more than a per cent,” they claimed.
The anonymous poster took on this feedback and thanked everyone for their input.
“I think I might go up to 40 per cent if they have good references and ledgers,” they shared.
Aussie real estate agent Braden Walters said, ultimately, it is a “moral” decision that agents must make.
“It comes down to the individual and comes down to the agency’s standards and as an agent, you have to live with yourself when you think they are overextending,” he told news.com.au.
Mr Walters pointed out that often the decision is based on what the landlord is pushing for and agents are just trying to appease their clients.
“The landlord might be pressuring us to get $900 a week and it is a hard position to be the agent in the middle,” he said.
The result?
“Sometimes people do push down their morals because it is so hard,” he admitted.
The seasoned real estate agent explained that it is also important to remember that wage isn’t the only factor to determine if someone can afford a rental.
Some people might have a low income but have $200,000 in savings and so a ledger can help paint a more realistic picture of what people can afford.
Ultimately though, Mr Walters pointed out that he believes renters still have the power in the situation.
“The person renting has the final say,” he said.