‘The wild west’: New headache for home-hunters in a tough market

Key points

  • Third-party rental databases have become commonplace when applying for a lease.
  • There are concerns around how much information is collected, what it is used for and where it is stored.
  • Experts say renters should be able to opt out of using the platforms. 

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Renter Nick Duncan spent three weeks looking for a rental with his partner in Sydney, and he was struck by how much information he needed to hand over in the hopes of securing a lease.

“The market is so hot … We felt like if we wanted to get a place we had to abide by all the rules and provide everything that was asked,” Duncan said.

Nick Duncan felt he had no option but to fill in exhaustive online rental applications, and he believes he was one of the lucky ones with many renters in more vulnerable positions. Credit:Edwina Pickles

Handing over copious amounts of information has become part of securing a roof over one’s head, and personal details are often stored in third-party rental databases – one-stop shops that let tenants apply for multiple properties via one online platform.

These platforms allow real estate agents to manage applications, and increasingly offer agents extra services such as tenant-paid background checks that purport to offer a better chance of securing a home.

Duncan, along with many other renters, have growing concerns around the rental application process, and experts are warning of overreach and risks to data security.

“I have no idea how that information is being used. It’s just part of the application process. You just check the box and hope for the best,” he said. “You really have no other choice if you want a rental.”

There are growing concerns about how much information is collected from renters when applying for a home to lease.Credit:Nikki Short

UNSW Institute for Cyber Security director Nigel Phair said renters were ultimately powerless, which was unusual compared to other circumstances where consumers could choose to opt out.

“The renter has no power in the relationship,” Phair said. “When we have data privacy laws they should have a degree of power. They should be able to opt out.”

Phair thought the third-party rental databases were ripe for data harvesting.

“There is no rule governing, outside of the notifiable breach scheme, that a real estate agent should only collect XYZ.

While one software provider of these rental databases said they had security measures in place, cyber experts questioned why the information is collected in the first place.Credit:Peter Rae

“It’s a really unregulated market. It’s the wild west. It’s terrible. It’s stressful.”

Beyond verifying 100 points of identity, it was unnecessary for the industry to be asking for any more information, Phair said.

“You don’t know where the data is being held, how long it is being held, or whether it is being sold to third parties.”

A spokesperson for InspectRealEstate, the software provider that owns 2Apply, said each agent could customise their forms according to their requirements, and their property owners’, to assess a renter’s suitability.

The spokesperson said they had a range of cybersecurity measures and did not sell information, but added it was up to agents whether renters had to use the service or not.

But Phair said while the company had good cybersecurity measures, it was to protect the platform rather than the data itself. He said the question remains: “Why is so much information being collected in the first place and where it is stored and what are they doing with it?”

Chief executive of another third-party rental platform, Snug, Justin Butterworth, said the company automatically deletes sensitive information and documents at 60 days, adding data on its platform is encrypted, two-factor protected and stored in Australia, and Snug does not sell renter data.

Tenant groups are also concerned about overreach, such as 2Apply’s tenant-paid background checks as a way for renters to improve their chances of securing a lease.

Tenants’ Union NSW chief executive Leo Patterson Ross said the database companies served real estate agents’ interests.

“The trade-off is that tenants have given up their data and allow it to be used, most of the privacy policies say a third party can sell [the data],” Patterson Ross said.

“But if that permission is coerced it’s not really consent.”

Tenants were paying the price, he said, for a competitive proptech industry that mines different data points to offer agents new ways of assessing the risk of renters, such as Snug’s scoring system.

Snug’s Butterworth said the company’s research shows property owners value affordability, good references and longer-term tenancies, which is why start date and lease term are prioritised in the Snug Match Score.

Tenants Victoria lead community educations lawyer Ben Cording said it was a major concern that renters are forced into applying for a rental through competitive online databases.

“Renters have every right to be concerned they are forced into contributing these data onto these mega-platforms and rental providers,” Cording said.

Cording would welcome a review into the legislation to make sure online rental databases are covered by existing privacy laws and rental laws.

Real Estate Institute of Australia president Hayden Groves said it was up to agents, not tenants, to check their suitability for a rental.

“We caution member agents not to rely on these [platforms] as a panacea of solving the choosing of the tenant process. That’s your job as the agent, it’s not up to the tenant,” Groves said.

“The agent needs to discern how much information they need to collect and what is necessary for the application. The more you collect, the more risk.”

He said it was the state real estate institutes’ responsibility to educate agents on their responsibilities.

The Australian Housing and Urban Research Institute has also highlighted the need for Australian governments to better protect tenants’ data such as keeping reasonable limits on data collection and ensuring transparency in its use to prevent discrimination and exploitation.

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