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The Guardian - AU
The Guardian - AU
National
Michael McGowan

Rent bidding is still the curse of Sydney tenants despite new laws. How can it be stopped?

A for lease sign is displayed in front of a house in Sydney
In the lead up to the NSW election there has been a growing acknowledgement by political parties about the electoral influence of tenants. It has helped make the rental crisis a key issue. Photograph: Paul Miller/AAP

Real estate company Viewey wrote to its mailing list last week about an apartment in inner Sydney that had just been let for $175 above the original asking price.

Despite “very recently” being leased for only $600, the one-bedroom apartment in Camperdown had been listed for $650. After only one viewing, the agency wrote, it decided to bump up the asking price to $675.

By last weekend, the company says it received 31 applications from would-be tenants. On Tuesday, it received an offer of $825.

“So you’ve heard the rental market is hot at the moment … But how hot is it exactly?” the company said in its email.

“This is only one example of many.”

The increasingly tight rental market and spiralling prices have put the rental crisis at the centre of many people’s minds in recent months, and Viewey’s principal, Nicholas Viewey, concedes the company has been “smashed” over the email.

But, he insists, the email was not “bragging”, but simply a reflection of what’s happening in the Sydney rental market; “a way of showing how the market is going at the moment,” he says.

Viewey says the property is not an example of rent bidding, as the $825 offer had been made voluntarily by the tenant. He insists agents are largely reacting to market conditions.

But he concedes that tightness in the market means agents are often adjusting the asking price on properties based on demand. He says his agency recently listed a property in Redfern that had previously been leased for $600.

Within two weeks, the agency received 71 applications, and it was eventually let for $750.

“It’s sad, I rent and I have friends who rent. I have one friend who has been looking actively since December and applying each weekend and hasn’t been able to get one,” Viewey says.

In the lead up to the New South Wales state election this month, there has been a growing acknowledgement by political parties about the electoral influence of tenants. It has helped make the rental crisis a key issue ahead of the poll.

On Friday the premier, Dominic Perrottet, made a landmark promise to ban no-grounds evictions in the state, albeit using an as-yet undefined “reasonable grounds” model, and only for tenants on rolling lease.

The government also announced increased notice periods for the end of fixed-term leases by 15 days and made it possible to negotiate leases of up to five years. It has pledged to follow Labor’s commitment to introduce a rental bond rollover scheme, one of a suite of policies the opposition has released in the lead up to the poll.

Both parties have also sought to address rent bidding. In December Perrottet introduced new regulations banning agents from soliciting bids above the asking price for a lease.

Labor says it will ban secret rent bidding if it wins power, while also introducing legislation to force agents to give all applicants a chance to match offers if a tenant bids more than the listed price.

Tenants outbidding one another

However, there is concern the changes have – and will do – little to address rising prices. On Friday the Guardian reported that, despite the new regulations introduced last year, no real estate agent has been fined for rent bidding. That’s despite multiple complaints and hundreds of warnings being issued.

But there is also nothing to stop tenants outbidding one another on a property, as in the case of the Camperdown apartment.

For those in the rental market, the difficulties are all too apparent. When 19-year-old Jordan Anderson began searching for a rental last year, he quickly found that most of the options were well out of his price range as a student at the University of Sydney.

Anderson grew up in Avalon, on Sydney’s northern beaches, and was often travelling up to two hours each way to get to university. When he looked into the availability of student accommodation, he quickly realised it was not possible.

“It was just well out of my reach [so] I started looking with a friend and we probably spent about three months all up trying to find somewhere,” he says.

“I was pretty anxious about it because we were working against a deadline and a lot of the time the real estate agents wouldn’t even respond to our applications.”

The opaqueness of the rental market means Anderson will never know whether he was being outbid on properties – something Labor says it will change – but he’s heard stories of desperate tenants offering over the asking price in order to secure a place.

“Even cases where it’s only $20, it’s not a huge amount of money, but it’s the principle of that being something in existence, just that the process of rent bidding being validated as a means of acquiring a place,” he says.

Unfinished business

Leo Patterson-Ross, the head of the Tenants’ Union of NSW, says the only way to tackle forms of rent bidding is to introduce laws to make the listing price non-negotiable.

“Tenant-initiated rent bidding is often the site of more bidding because renters have been trained and they know it’s a potential tactic and they’re desperate, they’re trying to find a home,” he says.

“Our preferred approach is to say [that] what you get is the advertised price is. It should be on the tenancy agreement. Then you can check it as a regulator but you can also check it as a tenant.”

Patterson-Ross says the changes announced by premier on Friday mark an “historic concession” among all three major parties in the state that “rented homes have to be stable homes”.

“That principle is clear from the language being used, but the unfinished business is in the way fixed-term agreements work,” he says.

Without ending no-fault evictions on fixed-term properties, Patterson-Ross says, the state could experience the same issues faced by Queensland after it introduced its own no-fault reforms.

In some cases, Queensland real estate agents have been encouraged to issue tenants with a notice to leave at the same time as they are offered a new lease as a way to circumvent the laws.

“That would undermine the intent of the reform if it’s left alone [because] you would also see people being shifted on to fixed-term leases,” he says.

“It would be a real shame given that consensus does exist at the moment.”

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