No winners in Australia's private rental system

The private rental system is failing both tenants and property investors, new analysis has found. 

Research by LongView and PEXA found the private rental system was not providing affordable or secure housing for tenants, nor attractive returns for the majority of investors.

The analysis found 60 per cent of all property investors would have profited more by investing in superannuation, with those poor returns typically linked to underperforming properties.

While the researchers recognised this wasn't a "perfect comparison", with some investors investing in property for cash flow purposes, the analysis found most investors would be financially better off if they stuck their money in a balanced superannuation fund.  

LongView executive chair Evan Thornley also said property investors often find renting out properties more complex, stressful and risky than originally anticipated.

"It can be much more time-consuming than expected, with a range of unanticipated maintenance costs," he said.

These concerns, he said, were leading to half of all investment properties exiting the rental market within five years, forcing renters out of their homes and back into the rental market.

PEXA chief executive officer Glenn King said instability was one of the reasons Australia was one of the hardest places to be a renter. 

"The biggest problem is insecurity. Long term leases are rare, and renters live with constant uncertainty about whether they will have to move," he said.

More than 35 per cent of renters had moved three or more times in the past five years and 21 per cent of all tenancies had been terminated by the landlord.

The report also found poor housing affordability was also keeping more households in the rental market for longer, and rental increases were outpacing pensions and welfare benefits despite keeping pace with median wages.

The paper, which is the second in a three-part series that will conclude with some possible solutions, argued the "system" was the problem and the landlords-versus-renters dynamic was a "false battle". 

"The status quo creates problems for both renters and landlords," Mr Thornley said. 

"Solutions to these challenges need to create a greater separation between the needs of individual landlords and individual tenants, to create a system that works for everyone."