Al-anwar Newspaper English news in Australia
There are concerns Australian renters are being lured into paying more for overvalued properties through the practice of “rent bidding”.
According to Tenants Union chief executive Leo Patterson Ross, rent bidding is similar to “creating an auction” where tenants offer more than the advertised price or to pay a large portion of the rent in advance to secure a property.
“At the moment as things get very tight, many people are looking for a property and there is only a limited number available, which means the incentive that people feel to make a successful application grows,” he explained.
“It puts this real distress and frustration into the process because people have gotten all these documents together.
“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.”
Real estate agents are even calling potential tenants applying for a property and asking them if they want to offer more.
That’s something Loran Mamo experienced after spending months looking for an affordable rental property.
“Every single time I’ve applied, the real estate agents have called to ask if I’ve wanted to offer a bit more,” Ms Mamo said.
“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.”
The 27-year-old has had to move back in with her parents due to not being able to find an affordable rental property.
“If I didn’t have a place to stay, I’d probably pay what they ask and I’d be spending my whole wage on rent,” Ms Mamo said.
Median weekly advertised rents have skyrocketed by a historic amount, rising 10.3 per cent in the past year, according to the PropTrack Market Insight report.
The latest data means Australia is now experiencing the “tightest rental market we’ve ever seen” according to PropTrack director of economic research and report author Cameron Kusher.
Australia’s median weekly rent now sits at $520 for houses and $460 for units – jumping to $640 for a home in Sydney after a price rise of 12.3 per cent in the past year.
For those without the support of family or friends, or those facing a no-grounds eviction, the pressure can mount.
“People ask themselves, ‘Will I be sleeping in my car? Will I be couch surfing with my kids?,’” Mr Patterson Ross said.
“They start making compromises, either by offering more and competing or compromising on location or the quality of the home.”
Real estate agents can use other methods to try to prompt rent bidding; common tactics include advertising “offers from” rentals or putting a price range on an ad, according to City Futures senior research fellow Dr Chris Martin.
“By advertising a range, you’re basically misleading people,” he said. You get all these people interested in a $400 a week property, but really what the agent wants is $440 a week.
“By getting more people interested, it makes people think there is high demand for a property and you can even get people bidding above the advertised price.”
Dr Martin said agents calling and asking potential tenants for higher offers – a practice which seemed “normal” according to Ms Mamo – is legally murky. “The law is not very clear around it, which is not great for tenants,” he said.
