Peak housing bodies are calling for nationally consistent rental laws to crack down on bidding wars putting pressure on tenants in a shrinking market.
Victoria, Queensland and Tasmania have introduced reforms to ban rent bidding – the process of negotiating the price of a rental by advertising a property within a “range” or without a fixed cost.
But in New South Wales, the Australian Capital Territory, the Northern Territory and South Australia, there is no legislation against the practice.
Guardian Australia found dozens of instances of listings including price ranges or “from” rates on major real estate websites, with some agents listing disparities of $150 for in-demand properties.
Of 49 properties listed on rent.com.au by one agent, six listed a fixed price, 26 quoted a price range and 17 advised prospective tenants to “contact the agent”.
Among them was a three-bedroom Cabarita home quoted between $1,500 and $1,650 a week and a four-bedroom Strathfield home quoted between $950 and $1,100 a week.
A spokesperson said the agency introduced price ranges “when the market was terrible” to avoid tenants missing out on properties.
“In some cases the highest price does not always secure the property,” they said. “We will never recommend our clients select a bad application with terrible rental history even if they are prepared to pay more than someone else.
“At the end of the day market forces will always dictate what rent the landlord can secure.”
National Shelter chief executive, Emma Greenhalgh, said encouraging bidding was effectively putting rental properties up for auction in a desperate market. She has been lobbying the federal government for the adoption of a national legislative framework on renting.
“Looking for a rentals is incredibly tiring and highly emotional … it’s ridiculous a discrepancy of $150 can be asked for,” she said.
“The more consistency you can have with rental legislation nationally the better – for tenants and property owners.”
The federal minister for housing, Julie Collins, said she had “facilitated new conversations” between her state and territory counterparts about their approaches to addressing rental affordability.
The president of the Real Estate Institute of Australia, Hayden Groves, said listing negotiable prices was “normally unnecessary” but rents should be determined by “fair and open” market processes.
“If the open market is willing to pay the higher end of the advertised range then it’s appropriate the owner has the option to accept that rent,” he said.
But the Tenants’ Union of NSW chief executive, Leo Patterson Ross, said a rent auction wasn’t a way of determining accurate market value when prospective tenants were under extreme stress.
In Sydney, dozens of listings cited negotiable prices – including a one-bedroom studio in Summer Hill between $225 and $295, a two-bedroom Double Bay apartment from $600 to $675, a one-bedroom flat in Mascot “from” $710 week and a three-bedroom house in Redfern between $1,200 and $1,320 a week.
“Someone who is desperate and scared of being made homeless is an anxious person. The rent they’re willing to pay is not a fair market value when it’s inflated,” Patterson Ross said.
“We have to look at regulatory mechanisms. We need to have transparent pricing – it shouldn’t be an auction process because people will continue to miss out on a home.
“It doesn’t work to have a competitive way for people to access essential services.”
Patterson Ross said introducing rent ranges could indicate uncertainty about market price or “manufacture an auction or bidding process” whereby agents “gamed” listing platforms so the property was displayed more broadly.
“That’s where it’s unconscionable,” he said. “The problem is there’s no way to tell the difference when you’re participating.”
‘People are begging for properties’
In the ACT, a number of reforms have recently been proposed to improve the territory’s tenancy laws including prohibiting solicited rent bidding.
Tenants will still be allowed to offer rental amounts above advertised and landlords will be able to agree to accept voluntary higher offers.
Similar reviews are under way in the Northern Territory and South Australia, with rent bidding one of the items under consideration. No such review is in place in NSW.
A NSW Fair Trading spokesperson said rent bidding was legal however landlords or agents couldn’t advertise a rent amount they weren’t willing to accept or falsely represent a higher offer had been made.
Legislation adviser for the Real Estate Institute of South Australia Paul Edwards said rent bidding was happening “hugely” amid an affordability and accessibility “crisis”.
One active listing showed a two-bedroom flat in Adelaide priced between “$450 and $570” a week – a $120 margin.
“We’re hearing tenants offer $100 more, we have 50 to 100 tenants turning up at opens,” Edwards said.
“The problem is the dubious practice of agents ringing other tenants that applied. You’re getting into a rental auction which is still technically legal.”
The chief executive of the Real Estate Institute of New South Wales, Tim McKibbin, said he’d regularly witnessed open houses where prospective tenants were offering up to $200 extra rent a week on the spot to secure a home.
“People are begging for properties and there’s nothing to give them,” he said. “Week on week there are more people selling than buying, the crisis has become more acute.”
According to property analysts SQM research, the national rental vacancy rate fell to 0.9% in August, the lowest it’s been since 2006 at the same time prices have reached record highs.
Antipoverty Centre spokesperson Kristin O’Connell said broad regulatory reform including ending no-grounds rental evictions, introducing rent caps and restricting negative gearing were needed to address the strain on tenants.
“People are entering the housing market under the greatest strain possible,” she said.
“Housing has become a luxury … people are having to go without other basic necessities to keep shelter.”
