Landlords have found an insidious way of circumventing a ban on soliciting offers above a advertised rental price – they can simply wait for potential tenants to make an offer.
The loophole allows NSW property agents to still receive more money than the advertised listing as they do not break the law enacted last December.
The state government had tried to regulate the rental market and make it fairer for tenants by banning “rent auctions”.
A prospective tenant may still bid higher than the offer, as long as the landlord or real estate agent does not direct them to do so.
Landlords have found an insidious way to circumvent a ban on soliciting offers above an advertised rental price – they can simply wait for potential renters to make an offer (pictured, people are queuing to view a rental property).
The loophole is being used by people desperate to secure a roof over their heads in the tightest rental market in more than a decade.
The rental vacancy rate in the greater Sydney area fell to 1.4 per cent last month and lines of people queuing to view properties have doubled.
Rent increases in mainland states in the last 12 months
Condition Monthly increase Annual increase
WA $180 $2,160
QLD $177 $2,124
VIC $169 $2,028
SAT $158 $1,896
NSW $142 $1,704
But even offering a premium on the advertised price is no guarantee of a lease – there’s always a chance someone else will offer even more, resulting in auction-like conditions.
One of those whose offer to pay more hasn’t worked so far is Ryan Donachie, who has toured more than 20 rental properties around Bondi Beach in the past month.
He and his partner are looking for something under $1,000 and have regularly found 20 or more people viewing.
Although they offer to pay up to $25 a week over the asking rate and are willing to pay rent for several weeks in advance, they’re still looking.
“I imagine others are doing the same, but there are so many applicants that it seems first come, first served,” he told the Sydney Morning Herald.
Leo Patterson Ross of the NSW Tenants’ Union said the new law had had some impact but had not achieved its aim of curbing the price.
“It’s really solidifying an auction-like approach to things that’s quite alien to how we handle other essential services,” he said, adding that it “plays on people’s desperation” to allow agents to take higher rent offers.
In the two years to December 2022, advertised rents rose by an average of 9.6 per cent in capital cities and 10.3 per cent in regional areas, the Reserve Bank of Australia reported.
The NSW Government’s Fair Trade Department has stepped up enforcement of the new laws, screening listings and sending staff on inspections that can issue on-site fines to landlords who charge more than the advertised price.
A legal loophole allows NSW estate agents to get more money on a rental as they don’t break a law introduced last December if someone makes the offer without being asked (stock image).
Fair Trading said it had looked at 12,000 online ads since the law was changed in December and found about 1,000 of them to be in violation of the law.
Although they were authorized to do so, no fines have been imposed so far, but “letters of awareness” about the law have been sent to more than 300 agents.
With the primaries for next Saturday’s NSW state election already underway, opposition parties are using the state’s rent crisis as a potential vote winner.
Labor wants to ban secret rental offers, with increased offers to be disclosed to all applicants so they have the opportunity to adjust them.
The Greens are demanding a total ban on renters – the advertised price should therefore be the required one – and also an immediate freeze on rents and a rent brake in the country.
According to census figures, home ownership in Australia has fallen from 70 percent in 2006 to 67 percent in 2021.
The fall was even more dramatic for young people. In 1971, 64 percent of 30- to 34-year-olds owned their own home, but by 2021 that figure will be down to 50 percent.
Among those aged 50 to 54, home ownership fell from 80 percent in 1996 to 72 percent in 2021.
What to do if your landlord tries to raise your rent
1. Before accepting an increase, compare other rental prices in your area. If you feel a raise is too high, ask if it can be lowered or negotiated. If not, you should look for something cheaper.
A rental sign is pictured in front of a house
2. Be aware that there are local laws that landlords must abide by when increasing your rent. If the proposed increase does not comply with your rental agreement and local laws, it may not be valid.
3. Always allow agreements to be in writing as they will protect you in the event of ongoing disputes. If discussions are in person, always send an email to summarize what was said.
4. Decide if it’s worth paying rent or if moving would save you money. Keep in mind that there are often costs associated with a move, such as B. Relocation, cleaning and power cut-off fees.
