Bad Landlord: Rent Bidding: A Zero Tolerance Approach

Rent bidding occurs when tenants are forced to bid against each other for properties. There are two forms. Rent bidding occurs when parties are invited to make offers as to the rent payable (‘rental auction’). It also occurs when prospective tenants are encouraged to bid within a certain range or above the advertised price (‘rent bracketing’).

This occurred in the last post when the landlord encouraged Giselle to make a counter-offer. Whether or not the landlord was truthful is another matter. Tenants are also offering more than the advertised price just to secure a rental property.

The reality is that desperate tenants are pitted against each other. As a group, rent bidding is detrimental to the interests of tenants. But individually, tenants benefit if they are able to secure housing appropriate to their needs. Rent bidding is an immoral and exploitative practice. It should be outlawed in all states and territories.

In Queensland, rent bidding is illegal and expressly prohibited. Under section 57 of the Residential Tenancies and Rooming Accommodation 2008 (Qld), landlords and property managers must advertise properties at a fixed price.

I looked at the Residential Tenants Authority website, it states, ‘Rent auctions are illegal but could occur in isolated incidents’. I found this really interesting. They could have said, ‘Rent auctions are illegal and will not be tolerated’. One does not say, murder is illegal, but it happens.

Section 57 also has a weakness. It doesn’t stop requests or offers as to the amount of rent being paid in advance. I have heard of people offering 6 months rent in advance to secure a house. But what if you don’t have savings? What if you don’t have a well-paying job?

On the other hand, rent bidding is not specifically legislated against in the Australian Capital Territory, New South Wales, Tasmania, Western Australia, Northern Territory, and South Australia. I was really surprised to find that all these jurisdictions have not dealt with this practice. The Tenants’ Union of Victoria is however currently campaigning for rent bidding to be outlawed. God bless.

Even though rent bidding is not specifically outlawed in these states, it probably comes under the auspices of federal law. Section 18 of the Australian Consumer Law provides persons must not in trade and commerce engage in conduct that is misleading or deceptive. I think it is misleading and deceptive to advertise properties at a fixed price but then later ask for more money.

Rent bidding is just another example of how consumers have better protection under law than tenants. The problem is that tenants usually don’t want to sue their landlords. Depending on the statute of limitations, tenants could recover the difference after the lease has ended. Tenants could also sue real estate agencies direct via some kind grouped proceeding.

Rent bidding is highly unethical. If a property manager engages in rent bidding, they might be breaching their code of conduct. In the Australian Capital Territory, there are rules of conduct. They are contained in Schedule 8 of the Agents Regulation 2003 (ACT). Property managers must act fairly, honestly, and professionals with all parties. They are not allowed to mislead or deceive any parties throughout negotiations, or engage in high pressure tactics. Codes of conduct, however, do not apply to landlords.

There are a whole bunch of reasons rent bidding should not be permitted. It is reasonable for tenants to expect properties will be available at the advertised price. Tenants lose time and money applying for and inspecting properties they cannot afford. Rent bidding makes it even harder for low income tenants to secure affordable housing. We know market forces don’t work by themselves otherwise we would not have such a big homelessness problem.

Some argue rent bidding should be permitted because it is acceptable for owners to sell properties by auction. But in the consumer market, it is not acceptable for businesses to sell goods and services to consumers for more than the advertised price. The difference is not between a nice house and nicer house, it's between a house and the streets. Rent bidding is just another way to push low income tenants out of the housing market. If the government does not address the housing crisis, housing is going to be the preserve of the wealth and privileged. That's not the kind of society I want to live in.

Rent bidding was controversial around 2006. The media was making noise about the practice right across the nation. But then it disappeared off the radar. The heat slackened off and governments didn’t deal with the issue. It is now making a reappearance. Let’s hope we get results this time. Rent bidding should not be tolerated full stop.