Rent bidding ban has backfired, say RE agents

iStock-1215849671-1.jpg

Renter now think they have to offer more, thanks to publicity around ban

The NSW Government’s ban on agents from engaging in ‘rent bidding’ has backfired, as tenants are not only now more aware that they can offer above the asking rent, they are increasingly doing so because they believe they must.

In New South Wales and some other states, agents cannot suggest tenants offer above the asking rent in order to secure a rental property.

However, “demonstrating the ill-conceived nature of the ban,” says the Real Estate Institute of NSW (REINSW), landlords can directly ask tenants to present their best offer, and tenants can proactively do so too.

Since the ban on agents and all the publicity it generated, many more tenants are offering above the asking rent.

REINSW Board Member and Senior Property Manager at Leah Jay, Michelle McLean, says the most significant increase in rent bidding since the Government’s announcement is occurring at the lower end of the market.

“We are seeing tenants competing for properties at the cheaper end of the rental market becoming increasingly desperate in their attempts to secure a home in an environment of such tight vacancy. They are pulling out all the stops and, in many cases, leaving themselves ever more vulnerable,” Ms McLean says.

“In the Newcastle market, for instance, the lower end of the rental market can be loosely defined as up to $550 per week. It’s tenants vying for properties at around this mark who we’re finding are most likely to offer more than the asking rent, and it’s these people who can perhaps least afford to.

“These tenants may be competing for rental properties with owner-occupiers looking for short term living options, perhaps while they renovate or build, and who are typically better placed to outbid more desperate tenants.

“The situation will remain perilous until the Government gets serious about providing more housing for people in the lower socio-economic demographic,” she says.

REINSW CEO Tim McKibbin says singling out agents for blame in the context of an election campaign led to the vote-grabbing announcement that failed to understand the problem – and could therefore never be a solution.

“When politics is prioritised over policies, ceremonial moves like banning rent bidding for agents too often end up backfiring on consumers,” Mr McKibbin says.

“Banning agents from asking above the advertised rent has had no impact, as rent bidding was always driven by desperate tenants. But with increased awareness of the practice, more tenants have become switched on to the idea of offering over and above the asking rent.

“REINSW-member property managers across the state report that instances of tenant-driven rent bidding are increasing, because tenants know that they not only can, but in many cases, they must offer more up front.

“By the end of the week, we should have some clarity as to which party will lead the state for the next few years. We implore whichever party that might be to dispense with short-sighted, ill-conceived, vote-attracting policies and work with industry on a real and tangible suite of measures to address the housing crisis,” he says.

For a simple, guaranteed solution to the rent bidding problem, listen to this week’s Flat Chat Wrap podcast.

Newsletter

To subscribe (for free) to our weekly Flat Chat newsletter, bringing you links to our  latest posts, just click HERE.

Flat Chat Strata Forum Current Page

  • Creator
    Topic
  • #67968
    Jimmy-T
    Keymaster

      The NSW Government’s ban on agents from engaging in ‘rent bidding’ has backfired, as tenants are not only now more aware that they can offer above the
      [See the full post at: Rent bidding ban has backfired, say RE agents]

      The opinions offered in these Forum posts and replies are not intended to be taken as legal advice. Readers with serious issues should consult experienced strata lawyers.
    Viewing 3 replies - 1 through 3 (of 3 total)
    • Author
      Replies
    • #67998
      Manta
      Flatchatter

        Tenants have always been aware that price of rent like any commodity is negotiable and have never been backward in submitting lower offers to the greedy landlord in a “normal” market. Are these the same tenants complaining now?
        I don’t agree with the blatant auctioning that is reportedly happening but short of rent controls that’s how the market works.

         

        #68026
        86_strata
        Flatchatter

          Agree totally, @Manta.  I know of a number of uni students who left share houses during COVID because rents in snazzy inner Melbourne apartment blocks were half of what they were in 2019 with the absence of International students.  A 2 bedder 20th floor apartment was $300/week during COVID.  Unbelievable value.  So-called greedy landlords were hurting.  Those in Melbourne lucky to have tenants were giving rent holidays, lowering rent below what was contracted, basically doing anything to keep their tenants happy, in part because the Victorian government’s main line was that landlords were greedy and could afford to give money away and ‘let’s make every single regulation or practice favour tenants over landlords’.  And tenants certainly did take advantage.  Now the tables have turned.

          Unfortunately, the pivot from COVID has been exacerbated by the effect of those who chose to upsize and can no longer downsize (where can that second TV and extra couch go?).  The market is distorted, and demand for larger properties is far higher than it should be as a result.  This is where we are today. A sad reality for all.

          #68028
          Jimmy-T
          Keymaster
          Chat-starter

            As I said on this week’s podcast, the solution is simple.  the landlord has to fix the rent when they advertise the property.  They can go down but they can’t go up and this can be checked restrospectively (if need be) against the registered.  The landlord can then get what they think the property is worth and if they ask too much, lower the amount.  It would also avoid tenants “bidding” more than they can really afford just to get a foot in the door.

            The opinions offered in these Forum posts and replies are not intended to be taken as legal advice. Readers with serious issues should consult experienced strata lawyers.
          Viewing 3 replies - 1 through 3 (of 3 total)
          • You must be logged in to reply to this topic.

          Flat Chat Strata Forum Current Page

          Flat Chat Strata Forum Current Page

          scroll to top