Understanding Rent Bidding - A Guide for Property Owners
Our comprehensive guide will help you understand the rules around Rent Bidding in Australia.
A Guide to Rent Bidding Practices in Australia - Everything You Need to Know
Rental bidding has gained a lot of attention in the Australian rental market in 2023 due to some of the lowest vacancy rates on record. In an effort to protect tenants and promote fair and transparent rental processes, many regions have implemented bans on rental bidding. But what exactly is it, how does it work and what are the laws around it?
What is Rent Bidding?
With vacancy rates at an all-time low, rent bidding has become a popular way to secure a property in Australia. The term 'Rent bidding' describes the practice of where tenants offer higher amounts of rent than the advertised price to be accepted for a property. This can benefit landlords and property owners who can charge more but could also put some tenants at risk of being taken advantage of.
Rent bidding creates a highly competitive environment for tenants, forcing them to offer higher rents than they can afford. This can lead to financial strain and reduced affordability, particularly for low-income tenants. Additionally, the bidding process favours tenants with more financial resources.
The practice is seen as controversial and is mostly prohibited as it can distort the rental market by increasing rental prices. Property owners or agents may be incentivised to set lower advertised rents to attract more bidders, expecting the final price to surpass the initial offer. This inflationary effect can contribute to housing affordability challenges and make it more difficult for tenants to secure suitable rental accommodation.
Who's behind Rent Bidding?
Contrary to what many might think, the main drivers of rental bidding aren't primarily landlords or agents (although we know there are still a few shady practices happening around the industry). Surprisingly, it's often renters themselves who are taking the lead and using this strategy.
In certain cities where vacancy rates have plummeted to less than 2%, tenants who are desperate to find a home are ready to go to some lengths to secure one. With the crazy competition, renters have found themselves willing to go above and beyond the quoted price, all to ensure they can finally put an end to the stress of hunting for a place.
Rent Bidding Rules in Different States
Rental bidding rules vary across different states in Australia with most banning the practice. In regions where rental bidding is prohibited, landlords and agents are restricted from disclosing whether a higher bid has been submitted or from urging a tenant to increase their payment to gain a competitive advantage.
As a property owner, it is important to familiarise yourself with these laws so here is an breakdown of each state:
Australian Capital Territory (ACT)
Rental bidding is prohibited in the Australian Capital Territory. The recent changes to the Residential Tenancies Act 1997 will prevent landlords or real estate agents from asking prospective tenants to offer more in rent than what is advertised and they must now advertise a property with a fixed rental price. However, tenants can voluntarily offer amounts above the advertised rent and landlords/agents can accept higher offers in that case.
Visit the ACT Government website for more information.
New South Wales (NSW)
Rent bidding is prohibited in NSW. Anyone including a real estate agent, assistant real estate agent, landlord or digital rental application provider, cannot solicit or invite an offer of rent that is higher than the advertised price for a residential rental property. A landlord or agent must also include a fixed price on advertisements for residential rental properties. They can no longer be advertised within a price range, or with text such as 'offers from' or 'by negotiation'.
You can visit the NSW Fair Trading official website for more information.
Northern Territory (NT)
In the Northern Territory, rental bidding is not explicitly banned. However, landlords must ensure fair competition and transparency when engaging in rental bidding practices andmust make sure that any representation they make is accurate and not misleading.
The Northern Territory Government's website offers information on rental bidding rules in the NT.
Queensland (QLD)
In Queensland, rent bidding is prohibited and properties must be advertised at a fixed price. A prospective tenant can offer more than the advertised rental amount and the property manager/owner may accept their offer but they must not proactively tell rental applicants to offer over the advertised rental price and encourage them to outbid each other.
You can visit the Residential Tenancies Authority website offers detailed information on rental bidding rules in Queensland.
South Australia (SA)
Rent bidding was recently prohibited in South Australia and landlords and agents must comply with the new requirements relating to rent bidding, advertising premises at a fixed amount and protecting tenant information from 1 September 2023.
The new laws will ban rent bidding, prevent any third-party which is facilitating applications, from rating or assessing an applicant based on an offer of higher rent, protect tenant information; and
once supporting regulations come into operation, prohibit landlords from requesting certain information of prospective tenants. A penalty of up to $20,000 will apply or $1,200 expiation fee.
Visit the South Australian Government website for more information.
Tasmania (TAS)
Rental bidding is banned in Tasmania. Property owners or agents must advertise rental properties at a fixed price. Properties must not be advertised as ‘Expressions of interest’ in rental brackets such as rent being between two amounts (eg $100-150 per week) or rent being ‘from’ an amount. Owners or agents must not invite people applying to rent the property to make an offer to rent the property for more than the advertised amount.
The Consumer, Building, and Occupational Services website provides information on rental bidding rules in Tasmania.
Victoria (VIC)
New rental laws came into effect in 2021 and rent bidding is prohibited in Victoria. Rental providers (landlords) and estate agents can only advertise or offer rental properties at a fixed price. They are banned from inviting rental bids or soliciting offers of rent higher than the advertised price.
The Consumer Affairs Victoria website provides comprehensive information on the changes to rental bidding rules in the state.
Western Australia (WA)
Rental bidding is not explicitly banned in Western Australia as of publishing this article. However, there has been a proposal to ban the practice under WA’s new tenancy laws.
Visit the Department of Mines, Industry Regulation and Safety website for more information on rental bidding rules in Western Australia.
Navigating Offers as a Property Owner
Understanding the rules and regulations governing rental bidding is essential for you and your prospective tenants. After all, everyone wants to ensure they're playing by the rules! Here are a few tips for navigating the applications process and offers from prospective tenants:
✅ Familiarise yourself with the rules in your state
Familiarise yourself with the rental bidding laws and regulations specific to your state. Each state in Australia may have different guidelines or restrictions regarding rental bidding. Refer to the official websites of your state's governing body for comprehensive information on rental bidding laws.
✅ List a realistic rental price
Set a realistic rental price to help ensure the process is fair for everyone involved.
✅ Be fair and transparent
It is important to remain fair and transparent throughout the application process. Be honest with prospective tenants about what you are looking for in a tenant and why.
✅ Ensure the tenant can pay the rent they offer
It is important to verify that the tenant can pay the rent they offer. Ensure that tenants provide proof of their financials before renting the property. This will help ensure you get a reliable tenant who can pay their rent on time.
✅ Create a written agreement with successful tenants
Finally, you should create a written agreement with successful applicants to ensure the rent is clearly agreed to. This document should contain all the details of the rental agreement and any clear rules you have set regarding the bid parameters. A contract ensures that both parties are aware of their rights and obligations.
RentBetter Helps You Stay Compliant.
RentBetter is an innovative platform that helps property owners find tenants without the need for a Real Estate Agent. One of the benefits of the platform is the ability to connect relevant information about your property throughout the management process so if your tenant has applied to your property and you have received the application via RentBetter, then you can click one button to generate a pre-populated lease.
Each state and territory has their own regulations, and the platform includes the recommended lease agreement in each location to ensure you are compliant. You will enter the specific terms of your lease, and then send a copy to your tenants to digitally sign on RentBetter. It's quick, easy and done in just a couple of clicks.
Get Started on RentBetter today and see how simple managing your own property really is.
