Need to know
- RentTech platforms such as realestate.com.au's Ignite as well as tApp, Tenant Options, Snug, and 2Apply collect data that goes well beyond what's necessary to evaluate a tenant's suitability
- Prospective tenants are forced to give away excessive personal data that may then be used to exclude them from a rental property
- CHOICE is calling for better protections for people who rent as third-party RentTech platforms increasingly dominate the market
Finding a place to rent has long been a difficult and stressful experience in Australia. For many, the proliferation of RentTech is making it even harder.
The increasing use of RentTech is making it easier for landlords and rental agents to screen prospective tenants, allowing them to use algorithmically-driven data to narrow down applicants.
It's great for rental agents, but not so great for vulnerable renters who find themselves on the wrong end of the algorithms that are can determine who does, and doesn't, win a tenancy in a tough rental market.
Algorithms used to weed out applicants
Many RentTech platforms (including online rental applications and rent payment apps) collect information that goes well beyond what's needed to assess a tenant's ability to pay the rent, including nationality, education, professional qualifications, personal interests and information harvested from social media platforms.
In the case of online rental applications, some of the technology already in use is programmed to filter through the data and arrive at what the platform determines are the best prospects.
It's a process that leaves people who rent at the mercy of automated decision-making over which they have no control.
More ways to discriminate
In many ways, online rental applications circumvent existing tenancy laws, effectively serving as a tenants check, in much the same way as tenant databases or 'blacklists'.
The difference is that there are legal restrictions surrounding tenant databases. In every jurisdiction except the Northern Territory, you can only end up on one if you breach the terms of the lease or end up owing more money to the landlord than your bond will cover.
RentTech applications are subject to no such restrictions, giving rental agents and landlords more tools to discriminate among applicants. You can't be placed on a blacklist, for instance, for exercising your rights and taking a rental dispute to a state tribunal, yet some online applications ask if you've taken such a step.
The implication is clear: applicants who have done so will likely be passed over in favour of those who don't complain.
When real estate agents are assessing all the applications, they're running a risk assessment over the whole group, and they're deciding who represents the least risk, essentially
Tenants Union NSW CEO, Leo Patterson Ross
Leo Patterson Ross, CEO of Tenants Union NSW, says the RentTech platforms ask so many questions so rental agents can quickly weed out certain applicants.
"When real estate agents are assessing all the applications, they're running a risk assessment over the whole group, and they're deciding who represents the least risk, essentially." Ross says. "That usually means highest income, most stable employment and so on. But they're getting so many applications that they're finding more and more ways to cut down the pool of people who they actually have to consider."
"So the more they ask about different aspects of your life and get you to fill out the form, the machine can just sort of say to the real estate agent, you don't need to worry about looking at 80% of these people," Ross continues. "That's really what's happening. The amount of information that's asked for is used mainly for the purpose of excluding you from finding a home."
"The machine can just sort of say to the real estate agent, you don't need to worry about looking at 80% of these people." – Leo Patterson Ross, CEO of Tenants Union NSW.
RentTech platforms designed to help landlords, not tenants
Dr Sophia Maalsen, a senior lecturer in urbanism at the University of Sydney, has worked with tenants' unions around the country to both measure the harms of rent payment platforms and online applications and see how they might be reformatted to help people who rent.
Like Ross, Maalsen says these tools are about making it easier for landlords and agents to rule out certain prospects, whether or not the information they process is accurate.
The problem is that it creates a profile of you that can be stored for future use, and it doesn't account for human factors
Dr Sophia Maalsen, senior lecturer University of Sydney
"Part of the problem is that these platforms are primarily designed to help landlords rather than tenants," Maalsen says. "So there's no one from a renter's perspective applying oversight or insight into how these apps actually determine your fitness as a renter. They also put up an extra barrier in terms of communication channels. You're not having direct person-to-person contact. The website or form doesn't give you any follow-up details, for instance, if you need to talk to a rental agent."
Both rent payment apps and online applications build tenant profiles, Maalsen says, based on loosely gathered information.
"The problem is that it creates a profile of you that can be stored for future use, and it doesn't account for human factors. So one week you might be late on your rent because your employer had a problem with their payment system, but that penalises you as a bad tenant. They build a profile of you that may not reflect reality. And that same level of scrutiny isn't applied to your landlord or agent. The power ratio is lopsided."
What's your score?
Given the built-in flaws of assessing a renter's suitability via an automated system, the use of scoring for prospective tenants is one of the more troubling aspects of RentTech platforms.
It provides the rental agent with a quick snapshot of whether the applicant is right for the property, but the data behind the score may not tell the whole story.
The rental application platform Snug, for instance, includes a Match Score partially based on the renter's profile. Snug CEO Justin Butterworth told us the company "does not disclose the proprietary details of the algorithm" that comes up with the score, leaving people who rent at the mercy of a system in which they have no agency.
In a recent CHOICE national survey, 5% of renters said they'd received a score from a rental platform
Butterworth says the score is "transparent and interactive as renters add their information to their Snug profile and application form," but the renters would have no say about which information the bot is looking for to improve their scores.
In a recent CHOICE national survey, 5% of renters said they'd received a score from a rental platform, while a further 6% said they didn't see their score but were told one was used to determine their suitability.
A tenth of renters aged 18–34 received a score, while another 11% of them were told a score was used.
There's also the question of how long your data is held. When we asked REA (owner of realestate.com.au and RentTech platform Ignite, as well as seven other real estate websites) about the way they use data provided by people seeking a rental property, we were told that an applicant's data would be deleted after a property is leased.
But the statement is inconsistent with one of REA's selling points – convenience. Once your REA data is entered into your profile, it is retained so that the next time you apply for a property you won't need to re-enter it.
How your profile is built
It isn't just the information you provide when you apply for a property that can influence your score. RentTech companies capture information from potential tenants right from the first enquiry, adding to the data set as the application process proceeds and then building on it as any new applications are made. The data may become part of your profile.
This has the potential to facilitate discrimination in a way that isn't possible in an analogue rental world and may disadvantage tenants in the future.
A sore lack of regulation in this market means these automated decision-making systems could increase barriers and discrimination for people who rent, and potentially exclude them from housing
CHOICE consumer data advocate, Kate Bower
"Automated decision-making systems are becoming an increasingly common part of rental application systems," says CHOICE consumer data advocate Kate Bower. "A sore lack of regulation in this market means these automated decision-making systems could increase barriers and discrimination for people who rent, and potentially exclude them from housing. There's an urgent need for a federal inquiry into automated decision-making to look at how these systems are harming consumers."
While a power disparity has always existed between landlords, real estate agents and prospective tenants, the introduction of RentTech has made the imbalance even more lopsided. The screening and decision-making technologies make the already difficult conditions of a tight rental market even more difficult.
In addition, the algorithms used to award tenants a score that allows them to be shortlisted for a property are opaque and difficult to challenge. This makes it almost impossible for prospective tenants to understand the rationale behind decisions or do anything to improve their chances.
Stock images: Getty, unless otherwise stated.
