All’s fair in love and war – but unfortunately not always in the residential renting game.
Anyone who’s found themselves on the hunt for a rental property has probably – unknowingly or knowingly – at some stage been subject to ‘rental bidding’, which is sometimes also called a rental auction.
So what is rental bidding and how does it work? Let us explain.
Just like an auction apartment for rent in district 2 If you were to head along to a property auction this week, you’d see bidders trying to outdo each other in order to secure the home they want.
Well, it happens in the rental market, too, just not as overtly or transparently.
With rental bidding, prospective renters offer an agent over and above the advertised price for a rental property, in an attempt to sway the landlord to select them as the preferred tenant.
If more potential tenants are prepared to make higher offers, the agent may facilitate several bids from a number of parties in order to extract the maximum rent for the landlord.
Who drives rental bidding?
Those who oppose rental bidding might say that landlords are mostly to blame for promoting and encouraging the practice of rental bidding.
But in reality, it’s almost always renters who are behind the tactic.
Some Australian cities have rental vacancy rates of less than 2%, and desperate tenants will do almost anything to get into a home. With that level of competition, there will always be a number of tenants prepared to offer a bit extra on top of the price being quoted if it means they no longer have to worry about finding somewhere to live.
I know I’ve done it, and most renters with the means to give themselves a leg up over the competition would, too.
How much is offered? A 2016 Consumer Affairs Victoria report estimated that one in five tenants offer to pay more than the advertised rent, and some are offering as much as $100 per week extra in order to jump the queue where you can rent an apartment in district 2
Is rent bidding legal? While rental bidding certainly creates an unfair playing field, technically it’s not illegal for landlords to accept bids from renters who approach them.
It IS illegal in Queensland for landlords to initiate rental bidding by advertising a price range, asking for offers or openly advertising the process as a rental auction, however there is nothing to stop them accepting offers from prospective tenants who approach them with one.
Crackdown coming in some states That said, in other states the practice of rental bidding could soon be at least partially curtailed.
In Victoria, rental bidding has been targeted as one of a number of changes to rental laws that are expected to be introduced this year with the aim of making things fairer for tenants.
The changes will ban rental bidding, however it’s likely that it will still occur and it will be difficult to police.
The rise of apps
There’s an app for everything these days, and rental bidding hasn’t missed out. A number of rental bidding or rental auction apps are already live in Australia, or are on their way.
Among the better-known apps that are huge overseas are Rentberry, which allows tenants to submit offers to landlords, along with LiveOffer and Rentwolf, which do similar things.
Their impact on the Australian market is not yet clear, however in a tight rental market they’ll almost certainly find an audience here.