NSW now bans rent bidding…what does this mean?

As the rental market gets tighter in many areas, renters start to wonder what it takes to get the keys in their hands and their foot in the door.

Rent bidding has become a popular road for many people desperate to get into a property. But what exactly is rent bidding and is it even legal in your state?

Australia’s rent bidding system is a system in which potential tenants compete against each other by bidding on the price they are willing to pay for a rental property.

Overall, the rent bidding system in Australia has been a controversial topic, with some viewing it as a fair way to determine rental prices and others viewing it as unfair and potentially harmful to tenants.

In Queensland and Victoria, the law does not prevent an applicant from offering a higher price. It does, however, prevent agents and landlords from asking tenants to make an offer or advertising a rental property without a price.

As of 17th December, the practice will be illegal in New South Wales beginning amid the ongoing rental crunch.

Premier Dominic Perrottet said, “rent bidding will be banned across the state later this week to aid tenants struggling to secure a home.”

He further commented:

“It’s time to put an end to this practice and give more people security and certainty so they can plan for their future.

The search for a rental property is tough enough without it turning into a bidding war that pushes people beyond their comfort level.”

Where do we go from here?

Well, properties will no longer be listed with a price range or detail that the price is negotiable, however, tenants will still be able to offer more than the advertised rent.

Under the changes, the practice will be outlawed through urgent changes to regulations under the Property and Stock Agents Act 2002.

The department of Fair Trading will be checking listings to ensure properties have a fixed price and if an agent suggests that a tenant should offer more than the advertised price, the tenant can report them to Fair Trading who will issue a fine of up to $5,500 for an individual and $11,000 for a company.

Minister for Fair Trading Victor Dominello said the reforms struck the right balance between the interests of renters, landlords and real estate agents:

“It can be very distressing for prospective tenants who have submitted a rental application only to be told to increase their offer to improve their prospects of securing a property.

From this weekend, agents will be prohibited from inducing a prospective tenant to offer an amount higher than that advertised for the property.

Further, real estate agents cannot advertise a property unless it specifies the rent payable for the property.”

Rent Bidding in Victoria

The regulations in Victoria stipulate that rental properties must be advertised at a fixed price, and Residential Rental Providers (landlords) and agents cannot request or solicit rental bids.

However, RRPs and agents can accept a rental bid if it is offered unprompted by a prospective renter.

Further, rental providers and agents must only offer a property for rent at a fixed price. In Victoria it is unlawful to:

• advertise a property for rent with a price range, including ‘price plus’ advertising.
• request or solicit bids for rent.

And if an applicant offers more than the advertised amount the rental provider or their agent must be careful to not fall into the trap of rent-bidding by contacting other applicants and telling them a higher amount has been offered or by asking if they are willing to offer a higher amount.

By Leanne Jopson
Originally published by Property Update