Major change to the rental market will save tenants money from this weekend – here’s all the details on how it will work
- Perrottet government will ban ‘rental auctions’ in NSW from this weekend
- Changes require real estate agents to advertise a property for fixed rental price
- However ‘unsolicited proposals’ from prospective tenants will still be legal
A controversial practice used to rent out properties will be banned in NSW by this weekend, though there is one catch.
The Perrottet government has promised to regulate the rental market by prohibiting ‘rental auctions’ by Saturday, December 17.
The proposed changes require real estate agents to advertise a property with a fixed rental price.
However, ‘unsolicited proposals’ will still be legal – the ban will not prevent renters from offering a higher price to that advertised to beat out competition for a property.
‘Rental auctions’ will be banned from from Saturday but the regulation will not prohibit ‘unsolicited proposals’ from prospective tenants
‘I accept that there is no perfect solution; this is about taking the hard edge off,’ Customer Service Minister Victor Dominello said.
He said the government had taken into consideration the needs of investors who may be struggling to pay their mortgage as interest rates spike.
‘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.
Still, the government’s move aims to tackle soaring rentals across the state, where massive increases have become widespread in response to soaring interest rates.
‘Auctions are over when it comes to the rental market,’ NSW Premier Dominic Perrottet told reporters.
SW Premier Dominic Perrottet (pictured) said ‘auctions are over’ when it comes to rentals
NSW Labor has backed the proposal, but criticised the Coalition for not moving to tackle the practice sooner.
Victoria, Queensland and Tasmania each have their own version of the regulation.
Mr Dominello said the ban will include a prohibition on rental property advertised ‘by negotiation’, ‘inviting offer’ or a ‘price range’.
Renters can report unlawful rental auctions to Fair Trading NSW.
Median weekly advertised rents have skyrocketed by 10.3 per cent in the past year, according to a report by PropTrack Market Insight.
A home in Sydney now rents for a median weekly price of $640 – compared to the median national rent of $520 a week.
FACT BOX TITLE
Real estate agents in NSW will no longer be permitted to instigate bidding wars between prospective renters wanting to secure a lease on a property.
What is rental bidding?
Rental bidding occurs when one or more tenants are encouraged by an agent, verbally or through advertising, to offer to pay rent higher than the advertised price.
Rental bidding will still be permitted without encouragement from an agent – where a tenant sees an opportunity to secure a lease by offering to pay more than the advertised price.
Why is it an issue?
Rents across NSW have been steadily increasing, with the state’s median rent increasing from $386 to $420 a week between 2016 and 2021.
What is the government doing about it?
Real estate agents in NSW will be banned from soliciting rental bidding from prospective tenants from Saturday.
Under the new regulations, tenants encouraged to up their offers will be able to report that agent to the Department of Fair Trading.
Offending agents will be subject to fines of up to $5500 for an individual, and $11,000 for a corporation.
Regulations stop short of banning unsolicited offers from prospective tenants – meaning people at inspections can still offer a higher price to secure the lease – so long as the agent does not entice it.
What are the other major parties doing about it?
NSW Labor has prepared legislation to end secret bidding, which would require agents to disclose when one party has made a higher offer on a property.
The opposition has also promised to introduce a portable bond scheme between rentals, and to establish a rental commissioner to advocate for renters.
NSW Labor is committed to ending no grounds evictions – where a renter can be evicted without reason at the conclusion of their lease.
The NSW Greens are calling for an end to no grounds evictions, as well as a freeze on rents to ease cost of living pressures.