The “Australian dream” devastated by housing black market: Report

Professor Allan Fels launches “Fringe Dwellings: The vendor finance and rent-to-buy housing black market” – High res for download here.


Struggling Aussies are losing their life savings to black market housing operators spruiking dodgy property deals. A new report shows the devastation caused by risky vendor finance and rent-to-buy property deals and calls for law reform and a ban.

The deals are most commonly recognised by distinctive handwritten posters offering to buy or sell houses and listings on buy/swap/sell websites.

Professor Allan Fels today launched Consumer Action Law Centre’s report Fringe dwellings: The vendor finance and rent-to-buy housing black market.

“These black market housing schemes promise the Australian dream of home ownership without a bank loan,” said Gerard Brody, Consumer Action CEO.

“The operators in this industry target people who are locked out of the housing market. Compared to a mortgage, these deals are high-cost and extremely risky. We’ve seen people left much worse off – financially ruined and under unbearable stress.”

The report details the stories of people who paid tens of thousands of dollars towards deals that never ended in home ownership. Some people were able to recover some money with the help of lawyers while others have lost their life savings and ended up in significant debt. Some people are still fighting with the hope of getting the money they’re owed.

“These deals are pitched as an easy way to buy your own home without a mortgage, but when they come undone, we see how complicated and dangerous they really are. As Australia faces big questions about housing affordability, it’s vital that we crack down on these black market operators wrecking the Australian dream,” said Gerard Brody.

Key points

  • Vendor finance and rent-to-buy deals are pitched at people who can’t get a mortgage, often because of their income, savings or credit history.
  • Buyers take a big gamble on vendor finance and rent-to-buy – they don’t legally own the property and typically pay much more than under a regular mortgage.
  • When things go wrong, buyers have no guaranteed way to get their money back.
  • The legal framework is complex and inadequate – legal protections for buyers vary depending on which state a buyer is in, the type of documents they signed and whether or not the person they did a deal with falls under consumer credit laws.

Consumer Action is calling for:

  • A ban on rent-to-buy deals, which are high risk and offer no benefits to buyers.
  • Law reform to ensure that all vendor finance buyers are protected under the National Credit Code.
  • Protection of buyers’ money in the same way that home deposits are protected in regular home sales.
  • Restrictions on access to the First Home Owners Grant, to make sure public money is not sunk into deals that never result in home ownership.

The report is available for download here, Photos available for download are:

Professor Allan Fels launches reportDanger sign – Rent to buy signs – House under construction with fallen port-a-loo – Rent-To-Buy sign up on a pole

Quotes attributable to Gerard Brody

“What we’re seeing here is the perfect storm. You’ve got struggling Aussies who are told they can finally own their own home. You’ve got an industry operating outside the mainstream property market. And you’ve got a complex legal framework that isn’t adequately protecting hopeful homebuyers.”

“These schemes operate on the fringes of the property market and of the law. We need law reform to end the damage these schemes are doing to people’s lives.”

“There are serious gaps and uncertainties in the law when it comes to these deals – people are in a much worse legal position than if they were a renter or a regular home buyer.”


Available for comment:

  • Vendor finance buyers
  • Gerard Brody, CEO, Consumer Action Law Centre
  • Susan Quinn, Senior Policy Officer, Consumer Action Law Centre
  • Carolyn Bond, consumer advocate (after 3.00pm 10 October)
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