Crossing the generational gap: part 2

Rightly or wrongly, Generation Y has a reputation for being lazy, spoiled and apathetic. So when it comes to leasing a property to someone in this demographic, it’s no wonder so many property managers are reluctant to entrust them with their client’s property.

Last year, the McKell Institute conducted a study and found that a generational gap had opened over homeownership in Australia. “This cohort is increasingly renting or even, quite unlike previous generations, now exhibits a trend towards living at home with their parents for longer,” the report read.


The report claims that  rst time buyers are getting older, with buyers on the  first rung of the property ownership ladder now in their mid-30s.

As of 2008, only 38 per cent of Australians under 35 owned their own home, compared to 44 per cent in 2001. But living at home is not an option for some people in their twenties, so a huge amount of renters are seeking accommodation with no rental history.

“To get into a rental property, most
people need a good track record on their ledger,” said Darren Hunter from Leading Property Managers of Australia(LPMA).

“And when young people come in, they’re always very enthusiastic – they always answer yes to a question about paying rent or taking care of the property. But the younger we get in that bracket, the more of a risk the tenant sbecome.”

EARNING YOUR STRIPES

Property managers have to work in the best interests of their client – the landlord – which can cause friction when knocking back anb applicant because they have no experience.

“Taking on a person with no track record is a risk,” Mr Hunter explains.

“You’ll always get the young applicant who says, ‘How can I have experience if no one will rent to me?’ and the response you need to give is ‘that’s not my problem’.

“It’s harsh, but you need to follow that up by saying ‘I understand your situation, but I can’t take such a risk with someone else’s investment; this isn’t my property’.”

Mr Hunter suggests pointing them in the direction of a private landlord who may take them on face value during an interview.

Dee Gow’s company, Gow Property, is located near the University of Western Australia in Perth. She believes property managers need to be stern with youngrenters.

“We’re certainly harsher on them, but we understand that everyone has to start somewhere,” she says.

“If they’re a first time renter we say, ‘This is the start of your tenancy history: stuff up now and it will follow you for the rest of your days. Do the right thing and you’ll be fine’.”

Derinda Dyt, property manager team leader at Stanley & Martin in Albury, NSW thinks that sometimes you can tell when it’s worth taking a chance.

“Everyone deserves a chance, especially first time renters,” she says. “We believe that if they are shown how to rent a property the right way from the beginning, they will treat the property with respect and will end up
with a great rental reference for the future.”

According to 2011 Census data, besides mining boom towns such as Emerald in Queensland, Albury has the highest percentage of people aged 18 to 26.

SHARED HOUSING

Just mentioning shared houses is enough to make Ms Gow shudder.

“What you tend to find is one person will rent a four-bedroom home, and even though they’re not allowed, they will sublet the rooms,” she says. “We’ve just had an example of that and we’ve had to terminate the tenancy because she was advertising on Gumtree.”

Avoiding tenants subletting to their friends is tricky, as property managers aren’t allowed to barge through the front door whenever they like, so Ms Gow keeps an eye out for telltale signs.

“We usually pick up on it when someone calls and asks to have the bond changed over.

When we start digging and asking why they want the bond changed over, we  find out that Bob has moved on and Mary has moved in,”she explains.

“That’s when we ask them to submit an application form to make sure they’re suitable to continue the lease.”

Unofficial tenant transfers can be a nightmare for property managers, saysKate McErvale, from Nelson Alexander
in Perth. One in four on her rent roll is a university student.

“Sometimes these aren’t kept up to date and the property manager isn’t sure who is living in the house,” she says. “ The bond, which is lodged under one person, gets passed around unofficially and eventually causes problems.”

Mr Hunter believes that shared housing isn’t just bad in terms of changing tenants, but also from practically every other standpoint in property management.

“There’s lots of Indians with no chiefs in shared housing,” he said.

“Common issues are high wear and tear, cleaning issues, gardens not being maintained and cars parking on lawns. From experience, the more males you throw in the mix, the more wear and tear you will find.”

According to Mr Hunter, there are only two ways to deal with shared housing applicants.

“Educate your tenants. But most property managers prefer the second option, which is to stone wall them. We
don’t rent to them because we know what the result will be,” he says.

Another issue with shared housing is the payment of rent, according to Ms McErvale.

“A lot of the issues are part-payments, because sometimes up to four or  five different tenants are paying
the rent,” she explains.

“As a result, during the signup process we suggest that one person takes leadership of the rent.”

Ms Gow makes it a condition on the lease that all rent must be paid from one account to avoid situations like this.

“We have a clause in our lease saying we don’t accept split payments,” she says.

DEVELOPING RESPONSIBILITY

But when young people aren’t breaching their contract, their enthusiasm and willingness to learn is second
ton one.

“Generally, tenants in this age bracket are  fine with their rent payments as they have taken this into
consideration prior to leasing the property,” Ms Dyt says.

“Most of them are working and supporting themselves or are at university and have the support of family.”

However, affordability is still an issue for many young renters, who Mr Hunter feels are restricted to the worst
type of accommodation for a young person.

“Most people in that demographic want high density units, because that’s what they can afford. And automatically the first thing you think about is noise,” he says.

“People with loud music can be an issue, but not as bad as the tenant’s friends who come and go from the
property at all hours of the night.”

Ensuring that the tenants are aware of their responsibilitives and what they can be held accountable for
is vital in the approval process.

“When they’re about to move into a unit I say to young renters, ‘You can make as much noise as you like
(and you can see their eyes lightup)... “…as long as no one else can hear you’.”
Educating  first-time tenants seems to be the best way to avoid undesirable outcomes, with Ms McErvale
spending upwards of half an hour sometimes.

“A lot of them are first time renters … so we sit them down and go through the lease and our expectations as
agents,” shesays.

“If we’re still unsure when we’re looking at the application, we will get the parents to guarantee them and
to have at least one parent on the lease.”

Mr Hunter agrees that this is a great method, but suggests property managers take it one step further.

“I’d sign up the mum and dad as tenants,” he suggests.

“We don’t call them guarantors. Although we understand what that means – at tribunal things can get very hazy. Forget about guarantor – the parents are the tenants, and we give them permission to sublet to Junior.”

THE AFTERMATH

Our property managers agree there are numerous issues when it comes to young tenants, but the vacating process is the worst.

Ms Dyt believes a lifetime of living at home has rendered a large proportion of Gen Y physically incapable
of cleaning a home properly.

“Some people of this age don’t understand the way a property should be presented and lack the skills to clean a house fully,” she says.

“We send them an outgoing inspection checklist, which goes through all of the things they need to do prior
to vacating the property. We complete an inspection with them present so we can point out what the issues are, and then  finally if the property is still not up to scratch, we send in a cleaner or gardener to  finish the job.”

Condition reports can be contentious at the best of times but in a property that has been shared, sublet and
divided, they can be a nightmare.

“In shared houses, the original tenants signed the initial condition report but by the time you reach number
two or three, you  nd they had no idea what the condition of the original property was,” says MsDyt. “When it comes to refunding the bond, they say ‘It was like that when we got here’.”