New laws needed to protect renters from data-hungry PropTech

New AHURI research investigates the increasing use of property technology (PropTech) in Australia’s rental sector, and its implications for renters’ rights.

Study lead Dr Sophia Maalsen said with a third of Australian households renting and PropTech’s role in housing access increasing, understanding its influence was essential.

“PropTech is already utilising artificial intelligence and automated decision-making to rank which applicant should get a rental,” Dr Maalsen said.

 

“In the social rental sector, automated screening is used to identify the most vulnerable applicants and decide where applicants land on property waitlists.”

As at February last year, researchers identified 57 rental PropTech products operating in Australia, including platforms with tenant risk evaluation, algorithmic ‘matching’ processes and tenant databases – sometimes referred to as ‘tenancy blacklists’.

Dr Maalsen, a senior lecturer at The University of Sydney, said the data PropTech portals collect and process had raised concerns among regulators and advocates about data security, over-collection, privacy and discriminatory outcomes.

Data commonly collected by rental application portals included identity documents (passport, driver’s licence), employment and financial details (payslips and bank statements) and references, including checks against tenant databases and blacklists.

“One real estate agent we interviewed said consulting these databases when selecting tenants was expected,” Dr Maalsen said.

Data collection often went further, with a survey of application forms finding one had approximately 50 data fields, including lifestyle-related insights.

“Applicants may be unaware they are being vetted by PropTech,” Dr Maalsen said. “How applications are sorted and scored remains opaque, and the weighting of characteristics is unknown – creating a ‘black box’ effect.”

Lessons from overseas

Dr Maalsen said international studies showed how invasive PropTech could become.

“Australia is different to the likes of the US, where institutional landlords manage large portfolios, but with domestic trends suggesting PropTech is laying the groundwork for this kind of hyper-growth, it’s worth taking note of lessons learnt abroad,” she said.

In the US, 9 of 10 landlords bought tenant reports, which were supplied by more than 2000 companies that compiled insights through data scraping, public and criminal records, and data brokers.

A Canadian company gathered social media and other intrusive tenant information, and in the UK a tenant screening service carried alerts for applicants ‘new to country’ or who used ‘high risk language’, suggesting bias against migrants and activists.

“These applications hid decision-making behind firewalls,” Dr Maalsen said.

Researchers also looked overseas for ways PropTech could be better regulated and found the EU’s General Data Protection Regulation and Artificial Intelligence Act, and similar developments in other countries, could inform Australia’s approach.

Australian PropTech at a crossroads

Dr Maalsen said rental data had not been commodified to the same level in Australia, and researchers didn’t find the same level of questionable behaviour.

She said whether Australia avoided such situations hinged on regulatory changes restricting what personal information can be collected and how it is used, as was being considered in NSW, and passed in Victoria last year.

The research found digitisation had outpaced regulation, current regulatory frameworks were no longer fit-for-purpose, and many real estate agencies and PropTech platforms were not subject to the Privacy Act due to its exemption for small businesses.

In the social housing sector, where data collection also included wellbeing assessments, support needs, rental arrears and incidents tracking, the research recommended more rigorous data governance practices and independent evaluation.

Dr. Maalsen called for periodic reviews of rental data protection and full implementation of National Cabinet’s 'Better Deal for Renters’, which committed to standardise rental application forms, impose data retention limits and regulate data collection practices.

PropTech’s benefits

Researchers found PropTech had created efficiencies and conveniences for landlords and tenants, including streamlined application processes and communication.

Real estate agents reported PropTech helped with data compliance, and in the social housing sector, PropTech was considered useful in identifying the most in-need tenants.

“PropTech’s here, and there are benefits, but its potential risks and harms demand collaboration between government, industry and advocates,” Dr Maalsen said.

The research was undertaken for AHURI by researchers from The University of Sydney, University of New South Wales, Monash University and University of Melbourne.