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Key points

• Rick Gned has been looking for a rental without luck. 
• He’s now considering offering six months rent in advance to secure a rental property.
• Tenants are finding they need a competitive edge, offering more rent or rent in advance to ensure they can find somewhere to live.

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Rick Gned has applied for about 50 rental properties in Melbourne and has been rejected from all of them.

After being forced to leave his Carnegie rental late last year, the 50-year-old moved in with family in Gippsland and commutes about six hours a day to his job in professional administration in Melbourne’s inner east.

Rick Gned is on the train during his long commute to work.Credit: Joe Armao

He is considering offering six months’ rent in advance to secure a home closer to work.

Gned is among the Melbourne tenants who feel they have little choice but to offer to pay rent in advance to lift their application to the top of the pile.

Some have been paying up to 12 months in advance as Melbourne’s rental vacancy rate languishes at a tight 1 per cent, according to Domain data. A healthier vacancy rate would be about 3 per cent.

Melbourne’s median unit asking rent soared 22 per cent to $500 a week over the year to June, while house rents rose 13 per cent to a median $520 as household sizes fell amid the work-from-home shift, immigration picked up, and new building activity did not keep pace.

It’s generally illegal for landlords to ask for more than one month’s rent in advance in Victoria, but not for tenants to offer it, experts say, leaving renters like Gned stuck.

“I am getting up early, getting home late and just falling into bed to sleep and doing a house search on top of that,” Gned said.

“Until I find a place in Melbourne I’m pretty much commuting six hours for my job.

“There’s no work in Gippsland I can find at the moment, everything is in Melbourne, so I have to commute.”

Gned feels he has to offer advance rental payments to lift his application to the top of the pile.Credit: Joe Armao

Gilly McInnes has already offered six months rent in advance on behalf of her son and his girlfriend for a rental in Ferntree Gully.

Her son is on a disability pension, his girlfriend is on Newstart. They have always been able to pay the rent.

The couple received a notice to vacate their Box Hill rental and applied unsuccessfully for 40 rental properties.

McInnes, who is retired, and her husband Rod, who is still working, tried to help by putting their name on the applications. It didn’t work.

“Somebody had said to me, ‘oh I know a friend who said they’d pay the rent some time in advance’ and I just said to Rod ‘what can we do? Can we pay six months in advance for them?’

“We’re now down to our bare bones, but we offered it,” she said. “A few hours later, suddenly friends were getting calls for references and all that sort of stuff, and they [agents] had rung to say they had got the property.”

Samma Real Estate’s leasing consultant Paula Tran said competition for rental properties in the inner city and inner east was driving tenants to offer six months rent up front to stand out.

“Some people are willing to offer more rent, or six months in advance and the landlords usually say ‘yeah’,” Tran said.

“Quite a lot of people turn up to opens, young people who already live in the area but the owners are selling their current rentals.”

Tenants Victoria lead community education lawyer Ben Cording had heard instances of tenants offering up to 12 months’ rent in advance.

Problems arose if they had to break the lease early, as they were not always being paid back the extra rent in a timely manner.

“If you break your lease a few months in, after paying 12 months in advance, the real estate agency is just sitting with that money in their trust account getting interest – it’s outrageous,” Cording said.

“It’s a landlord’s market, so that means these laws are really easy to subvert because it’s not the rental provider or agent that’s soliciting or making the offer, it’s the renters going: ‘I need a competitive edge’,” Cording said.

He said the loophole could be fixed by amendments to the law.

Real Estate Institute of Victoria chief executive officer Quentin Kilian acknowledged offers of rent in advance had ramped up in the tight market but did not believe that extra legislation was needed.

“I think the reality is if you continue to legislate in 12 to 18 months we could have a very different market, where there are too many rentals and rents are falling,” Kilian said. “Then we have legislation we don’t need.”

Competition is tough for tenants looking for a rental in the inner-city suburbs.Credit: Chris Hopkins

Tenants were responsible for lease break costs including rent until a new tenant was found, but then the extra cash should be repaid immediately, he said.

“I’d like to think they are not withholding the money provided they have met their requirements and another tenant has been found,” he said. “It’s logically incumbent upon the agency or the landlord if it’s a private lease, to release the funds.”

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