The NSW Government’s ban on agents from engaging in ‘rent bidding’ has had a counterproductive impact, according to the Real Estate Institute of NSW (REINSW), as tenants are not only now more aware that they can offer above the asking rent, they are increasingly doing so because they believe they must.
In New South Wales and some other states, agents cannot suggest tenants offer above the asking rent in order to secure a rental property. However, demonstrating the ill-conceived nature of the ban, landlords can directly ask tenants to present their best offer, and tenants can proactively do so too.
Since the ban on agents and all the publicity it generated, many more tenants are offering above the asking rent.
REINSW Board Member and Senior Property Manager at Leah Jay, Michelle McLean, says the most significant increase in rent bidding since the Government’s announcement is occurring at the lower end of the market.
“We are seeing tenants competing for properties at the cheaper end of the rental market becoming increasingly desperate in their attempts to secure a home in an environment of such tight vacancy. They are pulling out all the stops and, in many cases, leaving themselves ever more vulnerable,” Ms McLean says.
“In the Newcastle market, for instance, the lower end of the rental market can be loosely defined as up to $550 per week. It’s tenants vying for properties at around this mark who we’re finding are most likely to offer more than the asking rent, and it’s these people who can perhaps least afford to.
“These tenants may be competing for rental properties with owner-occupiers looking for short term living options, perhaps while they renovate or build, and who are typically better placed to outbid more desperate tenants.
“The situation will remain perilous until the Government gets serious about providing more housing for people in the lower socio-economic demographic,” she says.
REINSW CEO Tim McKibbin says singling out agents for blame in the context of an election campaign led to the vote-grabbing announcement that failed to understand the problem – and could therefore never be a solution.
“When politics is prioritised over policies, ceremonial moves like banning rent bidding for agents too often end up backfiring on consumers,” Mr McKibbin says.
“Banning agents from asking above the advertised rent has had no impact, as rent bidding was always driven by desperate tenants. But with increased awareness of the practice, more tenants have become switched on to the idea of offering over and above the asking rent.
“REINSW-member property managers across the state report that instances of tenant-driven rent bidding are increasing, because tenants know that they not only can, but in many cases, they must offer more up front.
“By the end of the week, we should have some clarity as to which party will lead the state for the next few years. We implore whichever party that might be to dispense with short-sighted, ill- conceived, vote-attracting policies and work with industry on a real and tangible suite of measures to address the housing crisis,” he says.
Residential vacancy rate percentage
The REINSW Residential Vacancy Rate Report is based on the proportion of unlet residential dwellings to the total rent roll of REINSW member agents on the 15th of each month. Carried out monthly, the research – a survey of REINSW member agents conducted by Survey Matters – collects the total properties on agency rent rolls, the number of properties that were vacant on the 15th of the month, and the postcode in which a majority of agents’ rental properties are located. The suburb-level rates reported by agents are weighted based on ABS Census 2016 Dwelling Characteristics. The April 2022 report is based on survey responses covering 100,804 residential rental properties.
article by reinsw.com.a