As the rental market gets tighter in many areas, renters start to wonder what it takes to get the keys in their hands and their foot in the door. Rent bidding has become a popular road for many people desperate to get into a property. But what exactly is rent bidding and is it even legal in your state? More importantly, do you need to take part in this practice to secure a rental property?
In tight rental markets, there is a rise of both tenants offering more money to be approved for a property, and in some instances, a rise in agents calling potential tenants asking if they would be willing to pay more than the advertised price to be approved.
Unlike an auction where you can clearly hear what people are offering, when it comes to the rental market, it often isn’t as transparent. Potential tenants may submit a letter to the agent with their application indicating their willingness to pay more. They could also include a note on their application, or they may use one of the rent bidding apps now on the market.
While people often feel as though the agent or landlord is behind the push for encouraging this behaviour, more often than not, it comes solely from tenants who are desperate to get into a property. Unfortunately, rent bidding can make the rental market even more unaffordable than it already is in some areas and make it harder to get into a property.
Is it legal?
In Queensland, the law does not prevent an applicant from offering a higher price. It does, however, prevent agents and landlords from asking tenants to make an offer or advertising a rental property without a price. Similar rules are on the way in Victoria.
However, many other states including New South Wales, Western Australia and South Australia do not have legislation in place preventing rent bidding from occurring. However, it is seen as unethical and may contravene the rules of conduct for real estate agents. In some cases, rent bidding may even come under Australian Consumer Law section 18, where “a person must not, in trade or commerce, engage in conduct that is misleading, or deceptive, or is likely to mislead or deceive”.
What can you do?
As a renter you can protect yourself from needing to take part in rent bidding by applying for properties that you can afford. Using the “30% formula” that many property managers use, work out what 30% of your income is and try to stay around that price. For example, if you have a weekly income of $1000, you’re more likely to get approved for a rental property at the $300 mark than the $450 mark. You may need to consider sharing a property with a friend or family member to get through the door.
Another tip is to ensure you fill in the application form in full and provide all requested documents. Many property managers will want to see your income in the form of pay slips and bank statements, and may wish to see previous rental ledgers etc. If you are self-employed, be prepared with a letter from your accountant stating your financial position and yearly income.
If you need to move from your current rental property, always check what your current agent has available. If you have a good working relationship with your currently property manager, and they know what you are looking for, you are more likely to be considered for other properties they have available.
The best way to get approved for a property is to be prepared with everything you need, be polite, dress well and show up for inspections that you scheduled. If you can be flexible with move in dates and have your bond and up-front rental payment ready to go, you’re more likely to be placed at the top of the list.
