Rental bidding under investigation in NSW as Sydney’s property crisis grows

Despite being illegal in other states, NSW’s rental crisis has sparked a trend which is making it almost impossible for applicants to find a home.

Both Labor and Liberal politicians have backed calls to reform NSW rental practices, as the property crisis deepens amid rising rents and dwindling stock.

Rental bidding in particular has been highlighted as a major issue, despite the practice being banned in Victoria, Tasmania and Queensland.

However, in NSW, agents and landlords can advertise properties without a fixed rate, or list a range. The practice can create a situation in which applicants can opt to pay a higher rent, pricing out those who aren’t able to.

This comes as vacancy rates have dipped to levels not seen since 2003, while prices have increased by 3.2 per cent, recent PropTrack data revealed.

NSW’s rental crisis has sparked a trend in which desperate applicants are going above and beyond asking rents. Picture: NCA NewsWire/ Jeremy Piper

Speaking toThe Daily Telegraph, Fair Trading Minister Victor Dominello said the Department of Fair Trading have begun steps which could lead to reform.

“This is obviously an area where vulnerable people are exposed and needs reform,” he said.

“I have asked my agency to investigate and come back with recommendations.”

Speaking to Mr Dominello on Monday morning, 2GB’s Chris Smith claimed “dodgy real estate agents” were part of the reason NSW residents are having to spend so much on rent.

Mr Dominello said that while some landlords have been forced to increase rents due to rising interest rates, the underlying issue comes down to a lack of rental properties being offered.

“That’s the heart of it. It’s supply and demand,” he told Smith.

“If there was an avalanche of stock available you wouldn’t have these bidding wars.

“But properties are at an absolute premium and that’s what’s caused the heat in the market.”

Shadow Minister for Water, Housing and Homelessness Rose Jackson also condemned the trend and welcomed a review into the practice.

“It isn’t fair that agents are encouraging that practice and taking advantage of people when we have these historically low vacancy rates and double digit rent increases,” she told the Daily Telegraph.

“Everyone who is participating in the rental market in Sydney right now knows that.”

A review into potential reform has been welcomed by both sides of government. Picture: NCA NewsWire/Jeremy Piper

On TikTok, Sydney woman and CEO of swimwear label Siempre Golden, Sophia Kim, said the Sydney rental market was a “dog-eat-dog world”.

While she has now found a property, she realised people had pre-filled in applications and were returning them immediately after the first inspection.

“I’ve never had to fight this hard for something in my life. Trying to find somewhere to rent in Sydney is wild,” she said.

“Starting to realise real estate agents are just trying to create bidding wars/competition for renting,” she wrote in one video in September.

Sophia Kim found the Sydney rental market ‘wild’. Picture: TikTok

She said agents were trying to create ‘bidding wars’. Picture: TikTok

Previously speaking to NCA NewsWire, 27-year-old Loran Mamo made the decision to move back in with her parents after an unsuccessful months-long search for an affordable rental. While applying for listings, she said she received calls from every single real estate agent asking her if she “wanted to offer a bit more”.

“I thought it was a normal thing; I thought that they were just doing it to get me to pay more, but if it’s true that the competition is so high, then maybe people are buckling and offering more,” she said.

Loran Mamo (left) said she consistently faced rent bidding when searching for a new home. Picture: Supplied.

Although NSW legislation doesn’t prohibit the practice, in 2021 the Tenants’ Union of NSW argued it breached practices set out in the Property and Stock Agents Regulation 2014, and the Real Estate Institute of NSW Code of Practice. These codes state agents must act “honestly, fairly and professionally” and “not mislead or deceive any parties in negotiations or a transaction”.

Tenants Union chief executive Leo Patterson Ross said that as it stands “the application process is nearly unregulated, with no guidance and no clear structure”.

“It puts this real distress and frustration into the process because people have gotten all these documents together,” he told NewsWire.

“Then to be told that, actually, you have to come up with even more money to even be in with a shot; people are very worried and feeling the pressure.”

Although Mr Patterson Ross said the ultimate solution would be an “abundant supply of affordable housing,” the Tenants’ Union also highlighted additional measures like standardising rental application processes and strengthening minimum accessibility standards to create more options for applicants with disabilities.