Need to know
- In a national CHOICE survey, 41% of people who rent said they were pressured to use a RentTech platform such as Ignite, 2Apply, Snug, tApp and others
- RentTech platforms demand excessive personal data from prospective tenants who are given little choice but to provide it
- CHOICE is calling on the Federal Government to urgently commit to privacy reforms to protect renters from the risks created by rental technologies, among other recommendations
In recent years the home rental application process has increasingly been taken over by third-party rental platforms that have the potential to harm people looking for a home in a number of ways.
In effect, the private businesses behind these RentTech platforms are using data-crunching algorithms to decide who gets to find a place to live. Tenants are faced with the choice of giving up excessive amounts of personal information or not being able to apply.
Now CHOICE has released an in-depth report that paints a chilling picture of how much tougher the rental market has become with the introduction of RentTech platforms such as realestate.com.au's Ignite as well as 2Apply, Snug, tApp and others.
CHOICE research uncovers serious consumer harms
"Finding a home as a renter is already an incredibly difficult, draining experience. Our research found third-party rental platforms are taking advantage of people's basic need for a roof over their heads to collect excessive data and profit," says CHOICE consumer data advocate Kate Bower.
"People who rent deserve a guarantee that their personal data is safe and isn't being used to exploit or harm them. Unfortunately, our research found that renters are seldom granted this assurance."
The four main problems with RentTech
The report At what cost? The price renters pay to use RentTech highlights four consumer problems in the sector.
1. Lack of choice
In a national CHOICE survey, 41% of renters said they felt pressured to use a RentTech platform to apply for a place to live, an imposition that may make life easier for landlords and rental agents but that can expose renters to harm.
In the midst of a cost-of-living and rental housing crisis, people who rent shouldn't be footing the bill for RentTech they don't even want
CHOICE consumer data advocate Kate Bower
Meanwhile, the RentTech businesses pass along processing costs to the users of these platforms and give themselves wide latitude on the data they collect and what they use it for – without doing nearly enough to guarantee the security of this personal information.
2. Data insecurity
Applying for a rental can require extensive amounts of personal information such as identity documents, employer and tenancy references, and proof of income, so naturally many renters in our survey were concerned about the data privacy and security risks of RentTech platforms.
Six out of 10 people who rent said they were uncomfortable with the amount and type of private information requested in their rental application. With large scale data breaches at Optus, Medibank and Latitude Finance in the last year, along with smaller breaches at real estate agencies, LJ Hooker and Harcourts, the need for stronger consumer protections is urgent.
3. Added costs
As if forcing people to sign up for RentTech platforms wasn't enough, renters can end up paying processing and administrative costs as well as stiff fees for late payments.
"Third-party rental platforms are for-profit businesses which often force or pressure tenants to pay additional fees, including fees to pay rent, penalties for failed payments, and even the costs of their own background checks," says Bower.
"In the midst of a cost-of-living and rental housing crisis, people who rent shouldn't be footing the bill for RentTech they don't even want."
4. Invasive technologies
Third-party rental platforms provide landlords and real estate agents with tools to screen prospective tenants based on their income, employment status, lifestyle, and other criteria and renters have few legal protections from exploitative and unfair automated systems.
"Automated decision-making systems are becoming an increasingly common part of rental application systems. A sore lack of regulation in this market means these automated decision-making systems could increase barriers and discrimination for renters, and potentially exclude them from housing," Bower says.
The case for reform
CHOICE is calling for Federal and State Governments to take the following steps to ensure renters are protected from the risks created by rental technologies:
- Reform the Privacy Act to ensure Australia's privacy laws are up to date and fit-for-purpose for consumers.
- Conduct a federal inquiry into automated decision-making.
- Legislate an economy-wide ban on unfair trading practices.
- Modernise state and territory residential tenancies acts to tackle RentTech harms.
"As the risk of data misuse and data breaches continues to grow, so too does the risk to consumers. The government needs to act quickly and strengthen Australia's privacy laws to ensure they are fit-for-purpose and protect consumers effectively," says Bower.
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