Controversial rule around rent bidding ditched by Minns government

A state government has backflipped after its attempt to stop a hated practice by real estate agents was set to make things worse.

The Minns government has backflipped on a controversial decision on rent bidding that advocacy organisation said would worsen the housing crisis.

The NSW government has announced it will “press pause” on a proposed law that would have forced agents to notify all applicants if someone offers above the advertised rent.

The proposal was met with opposition by advocacy groups who argued it would “legitimise” rent bidding and lead to “unintended consequences” in a rental market that is already stretched thin.

Vulnerable Australians are the first to miss out on rental properties when rent bidding takes place advocacy groups say. Picture: NCA NewsWire / Kelly Barnes

According to the Tenants Union, rent bidding refers to a situation where applicants under pressure to compete against each other for a property in a tight market are encouraged – often by agents or landlords – to make an offer to pay rent above the advertised price in order to secure a listed property.

Agents are not allowed to solicit rent bidding and are no longer allowed to advertise properties with a price range, however they can accept higher offers for a property if they are freely offered by a potential tenant.

The government said the decision to scrap the section of its proposed legislation around rent bidding came after “constructive engagement with advocacy organisations and cross bench members”.

A letter from Homelessness NSW and the Tenants Union of NSW and signed by St Vincent de Paul Society of NSW, the Redfern Legal Centre, Shelter NSW and the Older Women’s Network NSW called on the government to scrap the rent bidding section of its laws after they were proposed.

Those organisations have welcomed the news that the government has “reconsidered” the part of the legislation, with Tenants Union chief executive Leo Patterson-Ross saying his organisation had been “on board with most of the bill but this one part”.

The rental crisis has meant that huge lines outside of rental inspections are now commonplace. Picture: NCA NewsWire / Nicholas Eagar

“This is a really good outcome from the inquiry (into the law) shows the government listened to the concerns raised and is going to engage in the process of proper consultation,” he said.

“The issue with rent bidding is it takes advantage of a competitive market, it puts pressure on people to pay more, not because it’s a fair process but because they are very worried about if they are going to find a home and keep a roof over their families heads.”

The Tenants Union, among other organisations, is calling on the government to outlaw the practice entirely by not allowing real estate agents to accept any offers above the advertised price of a property.

Agents are not allowed to solicit rent bidding and are no longer allowed to advertise properties with a price range, however they can accept higher offers for a property if they are freely offered by a potential tenant. Picture: NCA NewsWire / Jeremy Piper

“We would like to see a complete abolition of rent bidding, we would like things to be transparent in that the price advertised is the price a property costs,” Mr Patterson-Ross said.

Sydney MP Alex Greenwich said the move to ditch sectopm 22B was a sign of “good and consultative government”.

“The Government has a clear mandate to proceed with reforms to improve transparency and fairness in the rental market, a key component of this is the appointment of the Rental Commissioner to consult on any such reforms,” he said.

That idea has been backed by Greens MP Jenny Leong.

“From the moment we saw the details of this legislation, we knew that this provision would exacerbate the rental crisis and it’s why we’ve worked to expose, and put a stop, to entrenching rental auctions,” she said.

“We heard clearly throughout this inquiry that no one was asking for rental auctions to be entrenched in NSW - not tenants advocates, peak bodies, or the real estate industry.

“Now that we have dealt with this distraction, we can get onto the job of desperately needed rental reforms - that means working with the government to deliver portable bonds and end unfair, no grounds evictions.”