Universities use loophole to evade renter protections for students

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Key points

• In NSW, there are 31 students per bed, Victoria has 17 students per bed and Queensland 14.
• Victoria has the largest purpose-built student accommodation (PBSA) sector in Australia. There were 26,100 purpose-built privately owned student accommodation beds in Australia by October last year.
• Of those beds, 74 per cent were for international students and 26 per cent are for domestic. This doesn’t include on-campus colleges, says Property Council of Australia executive director Torie Brown.
• Only 10 per cent of international and domestic students live in PBSA.

Universities and Australia’s biggest student housing provider are using a loophole in legislation to avoid tough laws designed to protect renters.

Victoria’s Residential Tenancies Act gives renters protections including regulated rent increases, eviction safeguards and the assists asking for rent reductions.

But lawyers and student advocates say exemptions in the act – designed to recognise the historical relationship of on-campus colleges with universities – are being applied to corporate housing providers leasing apartments to thousands of international and domestic students.

Lawyers acting for students in both Victoria and NSW say they see too many cases where on-campus private housing providers evade tenancy laws because of their formal affiliation with a university.

In the past decade, the number of apartments built solely for students in Australia have more than doubled as the nation’s reliance on overseas students to fund the university sector has ballooned.

The sector has been turbocharged this year by the return of more than 283,000 international students to Australia since February, as the nation’s reliance on its fourth-biggest export surpasses pre-pandemic levels.

But the influx of students has put greater pressure on the housing market.

The University of Melbourne Student Union legal service said that as students have returned, rental disputes have also risen.

Isabelle Butler, a senior lawyer at the legal service, said issues repeatedly arose for international students around the exemption from Victoria’s tenancy laws that some universities get for properties they lease.

Students facing issues in housing exempt from the tenancies act can only complain to their university or use consumer laws, which can take months to resolve and mean few students take this route.

Butler said many leases with university accommodation tied rent payments and contract breaches to a student’s enrolment record.

“If they stop paying their rent or some kind of dispute occurs, they can be threatened with not being allowed to re-enrol, which can have really significant consequences for international students who can have their visas cancelled.”

Butler said the exemption should be removed from the 1997 act, which was put in place long before universities and private providers were landlords on such a large scale. “It’s not fit for purpose in today’s world when you have unis and huge commercial providers making a profit – why should they be exempt? They are businesses.”

Australia’s biggest private provider, UniLodge, manages 30,000 beds on and near universities across the country. It has a formal affiliation to provide accommodation at the University of Melbourne, La Trobe and RMIT universities, among others.

The company remained profitable during the pandemic despite its occupancy falling, by continuing to manage buildings for universities and by dropping rents to attract more local students. Last June, UniLodge posted a $6.6 million after-tax profit, up from $5.2 million the year before. Its 2019 after-tax profit was $6.04 million.

International student Jordan Alber last year rented a small $350-a-week apartment at the University of Melbourne’s Lofts on Swanston Street, Carlton. UniLodge manages it for the university.

The New Zealand-born screenwriting masters student found the room while overseas but miscalculated his expenses. When he tried to break his contract, Alber, 32, was told he couldn’t.

“One of my arguments was, ‘I’m going to drop out because I can’t afford the contract’. They didn’t give a shit.”

Alber said he was told: “[A] contract’s a contract.”

It took three months for him to be released from the contract, but the pressure led to him deferring his course.

The Lofts are exempt from the Residential Tenancies Act. If Alber had been in accommodation governed by the act, he could have paid a break fee or applied to the state administrative tribunal for a rent reduction.

A spokesman for the University of Melbourne said it worked closely with UniLodge to manage its accommodation, and to ensure residents were aware of university policies and processes, and support services relating to rent payments. Students could receive financial aid, counselling and well-being services.

An email to Alber, though, shows little support on offer after he asked to terminate his lease.

The university’s student accommodation team told him it could not waive his lease conditions, and instead wrote: “We encourage you to find a replacement student for your room so that your liability for accommodation fees can end on the day the replacement student starts paying for your room … The replacement student must be a postgraduate student of the University of Melbourne in order to be eligible to live at The Lofts.”

UniLodge chief executive Tomas Johnsson said the majority of the company’s privately owned and operated student accommodation was, unlike The Lofts, covered by the Residential Tenancies Act.

“UniLodge legally complies with all the relevant regulations as applied under the various regulatory mechanisms in place across the country,” he said. “Individual student circumstances … can be addressed by welfare programs, payment plans and other arrangements.”

Johnsson said UniLodge took student wellbeing seriously and had worked hard during the post-COVID period to provide a welcoming environment. “In those instances where we may have fallen short, our teams are motivated to improve further.”

Youthlaw senior lawyer Stephanie Pashias said greater clarity was needed about which student accommodation providers were exempt from the act. “It’s extremely confusing for students.”

Federal Education Minister Jason Clare said he was aware that finding suitable accommodation was increasingly challenging for international students.

NSW has a similar tenancy act to Victoria. Sean Stimson, a senior solicitor at Redfern Legal Centre, said its international student service regularly saw accommodation contracts linking enrolment to housing, which authorised the education provider to withhold academic results or graduation and block access to classes until outstanding rent was paid.

Stimson highlighted the case of a Pakistani international student, who, due to health issues, deferred his studies and returned to Pakistan. When the student tried to end his lease with a different purpose-built student accommodation provider, it told him his proposal would be considered. But when the student returned to Australia three months later, he was told he needed to pay thousands of dollars in rent arrears.

During the dispute process, the student got a letter from his education provider saying he could not enrol in his course because of the outstanding accommodation fees – which meant his student visa was at risk of cancellation. The legal service helped him negotiate a lower payout, but Stimson said this interlocking of education and accommodation costs should not be allowed.

The Victorian government did not respond to requests for comment by deadline.

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