Has NSW’s rent bidding ban backfired?

However, the Real Estate Institute of NSW (REINSW) explained tenants, now alert to the fact they can offer above a property’s market rent, are doing so in droves “because they believe they must.”

Michelle McLean, REINSW board member and senior property manager at Leah Jay, revealed rent bidding between tenants occurs most often at the bottom end of the market as tenants are “increasingly desperate in their attempts to secure a home in an environment of such tight vacancy.”

As a result, she detailed how “they are pulling out all the stops and, in many cases, leaving themselves ever more vulnerable.”

Citing Newcastle, where the bottom end of the market is loosely defined as $550 per week, she explained, “It’s tenants vying for properties around this mark who we’re finding are most likely to offer more than the asking rent.”

This is despite these people being those “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.”

Until the state government — fighting for re-election at the upcoming state government — gets serious about providing more housing for lower socio-economic individuals, Ms McLean warned that “the situation will remain perilous.”

REINSW chief executive officer Tim McKibbin explained the current climate is created when “politics is prioritised over policies” and described “ceremonial moves” such as banning rent bidding as “too often backfiring on consumers.”

He declared: “Banning agents from asking above the advertised rent has had no impact, as rent bidding was always driven by desperate tenants.”

“With increased awareness of the practice, more tenants have become switched on to the idea of offering over and above the asking rent.”

As a result of the government’s ban on informing tenants of their options, Mr McKibbin explained REINSW-member property managers are reporting an increase in tenant-driven rent bidding.

With the first NSW state election in four years around the corner, he implored, whether Liberal or Labor secures power come the end of the week, the future government must “dispense with short-sighted, ill-conceived, vote-attracting policies and work with industry on a real, tangible suite of measures to address the housing crisis.”

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