Cause 3: Fairness and equity issues associated with site rent increases

Market rent reviews are a major reason home owners experience unpredictable and unsustainable rent increases. Home owners cannot estimate the financial impact of market rent reviews when purchasing their home, and market rent review increases are more volatile than other bases for increase. The preparation of the market valuation for a market rent review has subjective elements and many factors which can create upward pressure on site rent. Park owners appoint and pay for the registered valuer which can lead to the perception that valuations are not independent.

In the 2022 survey, approximately 76% of respondents said their site agreement allowed market rent reviews and 61% of these home owners were unhappy with how their last market review was conducted. Almost three quarters of those who were unhappy said it was because the market valuation made inappropriate comparisons with other residential parks, while 61% said that site rent had increased by an excessive amount, and 44% felt that the process to dispute a market rent review was too complex or intimidating.

A review of 22 market valuations submitted by home owners found many reached conclusions with evidence that may be contestable, and there were significant differences between home owner procured and park owner procured market valuations.

Other increase bases may also increase site rent at unsustainable rates, and some bases, such as CPI+X% will consistently outpace fixed sources of income such as the age pension. However, these bases are more transparent, providing prospective home owners an opportunity to factor declining affordability into their purchasing decisions.