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17 December 2003

The Blacklist Shame

Prejudice, spite and inequality in the rental market.

UPDATE – December 24, 2003 – Regulations to be introduced in NSW in May next year will make it an offence for agents to blacklist tenants for matters other than serious breaches of their tenancy agreements. Tenants will have to be informed BEFORE they are listed. Let’s hope similar rules apply in other states.

Peter is intellectually disabled. He is also an independent and productive member of society. He has a job, handles his own finances and takes care of himself.

But Peter has a serious problem. He can’t find a home to rent. Whenever he approaches rental agencies, he is turned down.

Although no agents will say it openly, Peter has been placed on a computer blacklist. He doesn’t have a record as a bad tenant – he’s been listed for one reason – prejudice.

No one seems to know who placed his name on the database. No one seems to know the official reason for his listing. Peter and his helpers can’t find out, nor can they have his name removed.

Hundreds of thousands of Australians have been dumped on computer blacklists which are used by landlords and agents. People with physical disabilities often end up on the databases. So do women and teenagers escaping domestic violence. Community workers and social service groups report it is also common for people to be black listed because of their ethnic origin.

Being named on a tenancy database is a serious matter. It makes it impossible for families and individuals to find rental accommodation.

How does this happen? It’s simple – there are virtually no restrictions on the compilation of these databases. Run by private companies, they operate without specific laws governing their conduct.

One executive with a community care organisation, which acts for people with physical or intellectual disabilities, says: “The people we help get discriminated against because the real estate agents don’t like the look of them. The agents commonly say it’s the owners’ choice whether tenants are accepted or not.

“But we know many of our people are on blacklists. They might appear to have a poor history because they have an intellectual disability, they move around a lot and they’re often on a disability support pension. It’s almost impossible to get them into a property. It happens with every real estate agent we go to.”

He says women escaping a violent marriage are often blacklisted as a result of the actions of their husbands – because the women were joint parties to the tenancy agreement. Or the marital disturbances cause complaints by neighbours which result in the victims, as well as the perpetrators, being blacklisted as tenants.

There are no rules governing the operation of these databases. Any of the more than 30% of Australian households who rent their homes are potential blacklist candidates, because landlords and managing agents are able to list tenants without restriction.

Often the reasons for being blacklisted are petty or malicious. Tenants Unions say occupants who complain about their living conditions or dispute a bond settlement can be listed as a “get square”. Tenants who fall behind with their rent due to financial problems, or have unmowed lawns are listed. Sometimes agencies intimidate tenants with threats of being blacklisted if they don’t toe the line.

Michelle Marven of the Tenants Union of Victoria says tenants have been blacklisted for owing less than $50 or as a result of a minor disagreement with an agent. Marven says there is no proper investigation of the situation before the tenant is blacklisted. There is no requirement for agents to verify claims or provide proof. There is no requirement to even inform individuals they’ve been listed and sometimes renters don’t find out until years later – by which time it’s difficult for them and resolve the matter.

Some blacklisted tenants have discovered that information about them on computer databases is inaccurate or out of date.

“We know of tenants who had been on a database in Victoria for eight years and didn’t know because they’d been living interstate,” Marven says.

“There’s no clear process where people can have their names removed, except through agreement with the agent who listed them.”

If tenants want to find out whether their names are on databases, they must call a hotline with hefty per-minute charges. There are reports of tenants being placed on hold and eventually being charged $50 or more. The companies charge a fee to mail out information to blacklisted tenants.

Marven says the threat of being listed inhibits tenants from pursuing their rights under state tenancy laws.

Given that a third of Australian households are renters, the blacklist databases comprise a terrifying prospect for a significant proportion of our population. The Tenants Union of Victoria says 328,000 households live in private rental accommodation in the state – and they can all, potentially, be affected by un-regulated tenancy databases.

This situation defies the most basic tenets of our justice system – that everyone is innocent until proven guilty and that everyone accused of wrongdoing is entitled to defend themselves. These principles don’t apply to tenancy blacklists.

Tenancy databases have emerged in the last 10-15 years as a service to property investors and real estate agencies. They are run by private companies and usually operate by subscription: a landlord or property manager, as part of their checks on a potential tenant, can dial up the database via the Internet to find out if the person has been listed.

This allows landlords to avoid renting a property to someone with a record of causing damage or failing to pay rent.

Subscribers are also allowed to add to the database by listing tenants who have caused problems – or simply annoyed them. There are no controls are how or why this can be done.

The Australian Financial Review reported in November that there are more than two million records on rental tenants on the various computer databases.

Predictably, the Real Estate Institute of NSW has defended the blacklists. According to The Sydney Morning Herald, REINSW president Rowen Kelly said the databases were “an important safeguard for landlords” and that agents verified information before acting on it.

There are a number of the databases around the country but Sydney-based Tenancy Information Centre Australasia (TICA) is the most notorious. TICA claims to have hundreds of thousands of tenants on its computer blacklist.

Three years ago the Australian Competition and Consumer Commission (ACCC) took action against a Cairns real estate agency over its actions in connection with TICA. The agency, The Professionals Edge Hill, was compelled to provide court-enforceable undertakings over letters it sent to tenants, threatening they would be blacklisted on the TICA database unless they paid alleged debts. The agency admitted its actions included false and misleading statements, involved harassment or coercion.

The case inspired widespread media attention and claims from Tenants Unions that tactics like these were common in real estate.

Fortunately, there is now some hope for a fairer system. The Federal Government has initiated a national inquiry, which will look at the lack of proper standards controlling the way consumers are listed.

Persistent complaints about trivial, malicious and out-dated listings have influenced the decision to hold a national inquiry, which has a deadline of 24 December for submissions.

A number of the state-based tenants unions are recommending that the databases be banned outright – or at least be subject to strict controls under specific federal laws.

Michelle Marven says: “The bottom line is that tenancy databases should not exist. But as long as they do, there needs to be adequate legislation and regulation – and accountability for the actions of people who list tenants.”

She says tenants should be listed only via an order from a court or tribunal, with an independent appeals mechanism. Tenants should have the opportunity to rectify problems, such as rental arrears, before being listed. There should be time limits on listings and the right to compensation for tenants who are improperly or unfairly listed.

Queensland recently provided a lead through its Residential Tenancies Act. In Queensland, subscribers to tenancy databases have to operate within guidelines: for example, the tenant must be told they are being listed and the breach which caused the listing must be stipulated. But, to date, other states have not followed suit.

The final report from the federal inquiry is expected to be available in mid-2004. Hopefully, it will bring some sanity and justice to a situation which shames the real estate industry.

This article was researched and prepared for The Neil Jenman Group.

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