Rent bidding has been an increasingly pervasive phenomenon in Sydney’s increasingly competitive rental market.
As the state’s housing shortage woes continue and rental prices continue to soar in Sydney and across New South Wales, the trend of paying ‘overs’ at rental inspections to secure a property has become all too common.
In this article, we’ll take a look at the state of rent bidding in NSW, the legislation that is designed to protect renters and the broader housing market, as well as the role that real estate agents play in safeguarding the rights of renters and fairness in the market.
Table of contents
- What is rent bidding?
- What is the rent bidding law in NSW?
- Is it illegal to offer more for a rental property in NSW?
- Real estate agent’s role in upholding rent bidding laws
What is rent bidding?
Rent bidding, typically a practice that is reserved for a completive rental market or a property that is deemed to be ‘under-priced’ in the market, is when prospective tenants offer higher amounts of rent for an advertised property in order to secure the rental. Whilst ‘bidding’ for a property is the norm in the property buying market, bidding for a rental property is seen to be an unfair strain on the market and pushes housing affordability, particularly for low-income earners, further into the red.
It’s important to note that offering a sum greater than the advertised price for a rental property is not illegal. However, practices that aim to solicit higher rental prices such as a low advertised price to create false demand, and soliciting higher amounts are legislated against in NSW.
What is the rent bidding law in NSW?
Soliciting rental bidding in New South Wales is a violation of the Property and Stock Agents Regulation 2014 and the Real Estate Institute of NSW Code of Practice. Real estate agents, assistant real estate agents, or online rental providers cannot solicit rental offers above the advertised asking price for a property.
In a move to stop rental bidding, the NSW state government implemented new laws back on 17 December 2022 that added new protections against rent bidding by requiring all rental properties to be advertised with a fixed rent amount and prohibiting agents from inviting offers higher than the advertised rent.
Is it illegal to offer more for a rental property in NSW?
It is not illegal for tenants to voluntarily offer more than the advertised price for a rental property in New South Wales. However, it is prohibited for real estate agents to solicit or ask tenants to pay more than the advertised amount for a property with a fixed rental price.
The new regulations passed in December were added to the rules of conduct for agents in NSW with penalties of up to $5,500 for an individual and $11,000 for a company found to be in breach.
The changes to the law aim to prevent agents and landlords from pressuring tenants into bidding on property and ensure fairness and transparency in the already competitive housing market.
Real estate agent’s role in upholding rent bidding laws
Real estate agents play a critical role in maintaining the fairness and integrity of the rental property market in New South Wales. To uphold fairness and avoid rental bidding, real estate agents must:
- Avoid suggesting or eliciting higher offers at any point during the application process.
- Advertise rental properties at a fixed rate that does not promote rental bidding
- Advertise properties with a clear fixed price that eliminates avenues for negotiation. This includes eliminating vague language or terms that may encourage renters to offer more than the advertised price.
- Let prospective tenants make their own decision if they wish to offer a price greater than or less than the advertised amount.
- Not influence prospective renters into a false sense of urgency to solicit a greater amount than what is advertised on a property.
- Report any practices that they witness from other agents or their company that are in violation of NSW rental bidding regulations.
- Agents play an important role in educating tenants about their rights under NSW regulations when it comes to rental bidding and fairness.
Arguably the most important point when it comes to rental bidding is providing advertised prices that are consistent with the market. For renters, one of the biggest gripes comes from properties that are advertised well-below market value in order to attract competitive demand at rental inspections that force rental bidding. For real estate agents, discouraging rental bidding means researching and understand the ever-changing market trends to ensure that properties are consistent with suburb-values, property type values, and consumer demand.
Real estate agents and property managers play a key role in ensuring that the market remains fair and accessible by upholding the rights of tenants and ensuring that there is not an added layer of undue pressure in an already competitive market. And while negotiation in property purchases is a key element of real estate, there are strict laws and legislations around rental bidding in NSW.
For agents to properly understand their role in the NSW rental market as well as how changing legislation can affect them, it’s essential to stay up to date with the latest developments through ongoing training and education. And as NSW’s (and Australia’s) leading real estate training provider, our selection of real estate courses in Sydney and NSW have got you covered.