Sneaky loophole in big rental rule change

PHOTO: From Saturday, December 17, the controversial practice of ‘rental auctions’ will be banned across NSW

Huge changes are coming for renters in one Aussie state, but a hidden loophole means thousands could still lose out under the new ban.

NSW is just days away from banning a hated rental tactic used by real estate agents, but a hidden loophole means renters could still lose out under the changes.

From Saturday, December 17, the controversial practice of ‘rental auctions’ will be banned across NSW.

This means it will be illegal for real estate agents and landlords to advertise a property for rent with a price range, to have offers open to negotiation or ask for offers over a certain price.

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The change, which was announced on Monday, brings NSW into line with Victoria, Tasmania and Queensland where rules have already been put in place to combat this dodgy tactic.

However, there is a loophole in the new rule that means thousands of renters will continue to be priced out of the already competitive market.

Under the new rules, “unsolicited proposals” will still be legal, meaning applicants can still offer a rental price higher than advertised in order to beat out other renters.

Minister Customer Service Victor Dominello said he knew there was “no perfect solution” for the problem, but the ban coming into effect on the weekend was about “taking the hard edge off”.

There is a loophole hiding in the NSW’s government’s new rental bidding ban. Picture: NCA NewsWire / Gaye Gerard

He said the government also had to take into consideration the needs of investors who may be struggling to pay their mortgage following months of rate rises.

“We also have to balance the fact that a whole lot of people went into the market last year, bought a property as their nest egg, interest rates are going up and they need to service that,” he said.

Renter advocacy organisation, Better Renting, hit out at the new rules, claiming rent bidding will continue to happen behind the scenes.

“NSW government getting attention today for ‘banning’ rent-bidding. In fact they will keep rent-bidding, only banning *solicitation*,” the business said in a Twitter post.

“It’s not nothing ⁠- but to make a real difference, governments need to stop lessors from accepting rent bids.”

Leo Patterson-Ross, the head of the NSW Tenants’ Union, told The Guardian that just banning the soliciting of rental bidding is not enough, and the government instead needs to ban real estate agents from accepting higher rent offers all together.

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“If we only address the [soliciting], the experience from these other states and territories tells us that we have not addressed rental bidding and it will continue,” he said.

“We’d really like to see a restriction on accepting a rent over the advertised price so you can negotiate down if you’ve pitched too high but you can’t bid up.”

From Saturday, if any prospective tenant is encouraged by an agent or landlord to up their rental offer then they can report it to NSW Fair Trading.

Fines for breaking the new rental bidding rule range from $5500 for an individual and $11,000 for a corporation.