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AUSTRALIANS more than anyone understand the desire to own your own home. It’s your castle.

But property spruikers who prey on these desires, and leave The Great Australian Dream devastated, are on the rise and ripping people of their life savings in what a new report labels ‘The Black Housing Market’.

The Consumer Action Law Centre’s (CALC) report Fringe dwellings: The vendor finance and rent-to-buy housing black market, highlights the devastation caused by dodgy rent-to-buy property deals, and is calling for major law reform to protect consumers.

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

Rent-to-buy schemes see buyers, who cannot get a loan from the bank, enter into a tenancy agreement with a spruiker, where they are charged exorbitant rent under the guise of building equity in the home. The agreement also includes an option agreement which gives them the option to purchase the property for a specific price after an agreed period, generally two to five years. But this price can be more than $100,000 more than the market value of the house.

So at the end of the tenancy agreement, buyers are left unable to obtain finance for an overinflated property, and are left thousands of dollars out of pocket from paying excessive rent and fees.


These manipulative schemes are on the rise too, which prompted the CALC to publish the report.

“We have received increasing numbers of complaints to the centre over the last couple of years, and from our analysis we think we have just seen the tip of the iceberg,” Mr Brody told

“Looking at things like advertisements online for these types of schemes suggest that it may be very widespread.”

It’s also concerning that the schemes are moving closer and closer to metropolitan areas, being another indication they are becoming more prevalent and insidious.

“It does seem that it is focused on those growth corridors in metropolitan cities, so I definitely think that is concerning,” Mr Brody said.

“These sort of schemes are targeting people who are trying to establish a home and a life in a new property.”

The report noted that a decade ago the CALC — which is based in Melbourne — observed low-value, run-down housing in regional and remote areas of Victoria sold for inflated prices. Now, the market appears to have shifted to growth areas of outer metropolitan Melbourne.

On top of targeting buyers with a vulnerable credit history and preying on their desire to own their own family home, the schemes are increasingly targeting first home buyers too.

“First home buyers are a target for these property spruikers because they are able to get the first homeowners grant — and that goes to the property spruiker as a bit of profit,” Mr Brody told

The report noted that a key feature of these deals in recent years involved new housing, for which home buyers may be eligible for the First Home Owner’s Grant.


Chanaka Wijewardene is someone who knows the devastation these spruikers can cause way too well. He was conned into a rent-to-buy scheme by a charming spruiker, after he and a friend decided they would purchase a property together. Mr Wijewardene wanted to give his wife and three young children a secure life.

“He came across as very professional, very family-oriented and very caring, like he wanted to help people out,” Mr Wijewardene told

He entered into a three-year rent-to-buy contract which saw him hand over an $8,000 deposit and his $20,000 first homeowner’s grant.

“I got the letter from the State Revenue Office saying my first home buyers grant had been approved and the money had been transferred to my nominated account — which obviously wasn’t mine. I thought it was legitimate because the State Office was recognising this person. So I was quite happy.”

Mr Wijewardene was then paying just under $700 a week in “rent”, which he told didn’t seem exorbitant to him.

“I was paying mortgage equivalent payments. [The spruiker] said I was going to be paying that amount for three years, and we agreed on a certain price for the house when I signed up, which was inflated — which I know now.

“He said at the end of the three years the money that I was paying would come off the principal a little bit — most of it would go towards payments but some of it would come off the principal. It looked like a proper way of buying a house without going through the mainstream.”

After two years in the property, Mr Wijewardene’s friend wanted to move out after deciding to get married, prompting Mr Wijewardene to try and get out of the contract which he could now no longer afford.

Consumer Action Law Centre (CALC) CEO Gerard Brody launches  <span id="U614213077449DnE" style="font-weight:normal;font-style:normal;">Fringe dwellings: The vendor finance and rent-to-buy housing black market.</span>


Consumer Action Law Centre (CALC) CEO Gerard Brody launches  Fringe dwellings: The vendor finance and rent-to-buy housing black market.Source:Supplied

“[The spruiker] told me I was going to lose [my deposit and first homeowners grant] … I told him I couldn’t afford to stay and he asked me what I could afford. Then he said he could reduce my payment. I thought that was an alarm bell at the time. I thought how can he [reduce my payment]?

“Then I couldn’t get in touch with him for a long time, he would never answer or return my calls.”

This was when Mr Wijewardene decided to get legal advice. But now, six months later, he is still living in the house, unable to afford to move while the case is in the hands of the lawyers.

“I have already lost thousands of dollars. If you look at the first home buyers grant and my deposit, that is already $28,000. And it is a lot more than that,” he told

Mortgage broker John Manciameli, director of Hunterwood Solutions, said he looked into a seminar run by We Buy Houses almost a decade ago, but it left a bad taste in his mouth.

“In principal, it looked like a great idea, but it did raise a lot of concern for me as it could take advantage of lower-socio economic parts of society that perhaps aren’t financially literate,” Mr Manciameli told

The company We Buy Houses was accused by competition watchdog, the Australian Competition and Consumer Commission (ACCC), in 2015 of misleading consumers through its marketing materials, seminars and boot camps. The regulator instituted proceedings in the Federal Court which took place in August this year.

The company is denying all charges that it misled consumers.


The CALC is now demanding no tolerance law reform governing rent-to-buy schemes.

“We are saying that rent-to-buy schemes should be outright banned,” Mr Brody told

“They are really harmful in almost every situation. People are misled or taken advantage of by a property spruiker and there are protections under Australian consumer law, but often that is too late. They have lost their money and the property spruiker is nowhere to be found. It is hard to take action against them and it is very costly as well.”

Until then, Mr Wijewardene is hoping his story can stop other people from falling into the same trap.

“Seek legal advice before you sign the dotted line. I should have done that but with three little kids under five years of age, my wife can’t work and I am the only person that brings in an income.

“I’m really stuck at the moment. I’m 44 [years old] and I have no house.”  

8 October 2016
Julie Corderoy,