' Rent bidding' - how does it affect you?
What is rent-bidding?
When tenants are being encouraged by landlords and property managers to offer more than the stated rent in order to secure a rental property, they are effectively being lured into entering into the practice of ‘rent bidding’.
Is rent bidding legal?
Rent bidding comes in two forms:
- Parties are invited to make offers as to the rent payable (sort of like a rental auction)
- Tenants are encouraged to bid within a certain range or above the advertised price (‘rent bracketing’)
Rent bidding is legal in some countries, and even in some states of Australia, but it is not legal in Queensland. In Queensland, rent bidding is illegal and expressly prohibited. Under section 57 of the Residential Tenancies and Rooming Accommodation 2008 (Qld), landlords and agents must advertise properties at a fixed price. They cannot advertise a rent range or put a property up for rent auction or ask for offers.
How will rent bidding affect you?
Rent bidding may seem like it gives tenants more power – it is marketed using words like ‘transparency’ and ‘fairness’, however, tenants are already the weak party at the negotiating table because they cannot ignore their need for a place to live. So how can rent-bidding, which essentially allows prospective tenants to bid how much rent they are willing to pay to live in a property against other people, possibly be favourable for tenants?
How do rent-bidding apps work?
Rent-bidding apps essentially allow prospective tenants to bid how much rent they are willing to pay to live in a property against other people and offers. These apps pit tenants against each other, further tipping the balance of power in favour of landlords, making it even harder to get a house.
There are several different rent bidding apps, and they all work in different ways.
‘Live Offer’ asks prospective tenants to fill out forms and these are then ranked for the landlord to choose. The prospective tenants can see where they are in the rankings, in real time.
‘Rentberry’ is more of a real-time auction site. Prospective tenants submit bids, can see what the current highest bid is and how many bids there have been.
With Rentwolf, prospective tenants set up extensive profiles, as they would with AirBnB, and then apply for properties through the marketplace.
Is rent-bidding fair?
Rent-bidding might work for people who can afford to offer ‘a little bit extra’ to secure a property, however it is not fair for people on lower incomes, and in environments where vacancy rates are low.
Rent-bidding also puts landlords in a poor light because it leads people to believe that all landlords are greedy and only care about the highest possible rent for their property. However, this is not true. Many landlords are fair. They want a fair amount of rent for their property and put equal, if not more, weight on rental applications where tenants have a history of looking after their properties, and who are likely to stay for a longer term.
Is rent-bidding fair? Let’s put it into context. The practice of advertising one price but only accepting higher offers is not acceptable in other consumer transactions (such as purchasing goods in a shop), so why is it tolerated in the rental market?