Consumer groups have called for New South Wales to outlaw rental bidding apps, warning they threaten to inflate Sydney’s already high rental prices.
Rental bidding apps like RentBerry are used by landlords to facilitate an auction between prospective tenants, driving up rental prices in competitive markets.
Several apps are either already active or have plans to enter the Australian market, prompting concern among some state governments. The Victorian premier, Daniel Andrews, last year promised a ban on rental bidding, while Queensland has existing prohibitions on such activity.
But the situation is opaque in other states, including in NSW, where the extremely competitive nature of Sydney’s housing market makes the apps an attractive prospect for landlords.
Consumer laws against misleading or deceptive conduct could potentially be used to clamp down on rent bidding, but critics say they are too vague to act as a deterrent.
On Tuesday, the international consumer group, SumOfUs, called for NSW to follow Victoria’s lead and commit to a ban.
The group’s Australian campaign director, Nick Haines, said the apps would fuel Sydney’s skyrocketing rental prices further.
“These apps are designed at their core to raise rental prices,” Haines said.
“An app that puts an already overheated and highly competitive market even further out of reach of average people is clearly not going to be for the benefit of consumers, and only really for the benefit of those app makers who are trying to cash in on this crisis.”
The Tenants’ Union of NSW has expressed similar concerns. The union’s advocacy and research officer, Leo Patterson Ross, said there does not appear to have been a strong take-up of the technology so far.
But Ross said clarity in NSW law was needed.
“A really clear line in the sand, that says it’s either acceptable or it’s not, would be really welcome,” he said.
The NSW innovation minister, Matt Kean, said the government would keep a “close eye” on rental bidding apps.
“This government is acutely aware of the pressure on renters – Sydney is a tough market at the best of times,” he told Guardian Australia.
“I will be keeping a close eye on these apps and any impact in NSW, and will take action if it’s required.”
Ross said rental bidding apps would clearly not benefit tenants.
“More broadly, we’re sceptical that rent bidding is any kind of good deal for tenants,” he said. “Largely because the way these apps operate is having the landlord set a price first, and having tenants bid up from them.”
“If they were genuine in wanting to see an auction-style process set the rent, they’d start at zero, and see where it went up to.”
The technology is marketed as an Uber-like tech disruptor for the real estate sector.
One app, Rentwolf, launched in July last year. Its founder Chris Martino said at the time that Rentwolf was designed to “increase transparency, not prices”.
“Rentwolf encourages renters and owners to focus on a broader value proposition which encompasses individuals’ profiles, proposed lease terms (length and move-in date) and the financial offer,” Martino told Fairfax Media.
“For owners, Rentwolf eliminates all listing fees and commissions, and automates the lease process and property management tasks, from accepting an offer through to digitally signing a lease and managing your property.”
