Debate grows as Victoria announces crackdown on rental bidding

Debate grows as Victoria announces crackdown on rental bidding
Debate grows as Victoria announces crackdown on rental bidding

Rental bidding apps such as Rentberry, Liveoffer and Rentwolf, which aim to implement the property auction process to renting, could soon face a crackdown in Victoria.

The announcement was part of the Labor government’s policy push to make “renting fair” through a package of tenancy reforms.

Victoria’s Minister for Consumer Affairs Marlene Kairouz said that as more people are renting than “ever before and for longer – that’s why tenants need a fairer deal”.

“These changes will crack down on rental bidding, make it easier and faster for renters to get their bond back, and will better hold landlords and agents to account for their actions,” Kairouz added.

Academic Garrick Small from CQUniversity Australia had noted recently in The Conversation that in a market already tilted in favour of landlords, renting apps could further push up rents.

Small summarised each of the apps: Live Offer, Rentberry and Rentwolf

"Live Offer asks prospective tenants to fill out forms and these are then ranked for the landlord to choose," Small said.

"The prospective tenants can see where they are in the rankings, in real time.

Debate grows as Victoria announces crackdown on rental bidding

"Rentberry is more of a real-time auction site.

"Prospective tenants submit bids, can see what the current highest bid is and how many bids there have been. 

 Debate grows as Victoria announces crackdown on rental bidding

"With Rentwolf, prospective tenants set up extensive profiles, as they would with AirBnB, and then apply for properties through the marketplace."

Debate grows as Victoria announces crackdown on rental bidding

Domain reported earlier this year that the controversial Silicon Valley start-up, Rentberry that lets tenants bid against each other for rental properties will launch in Australia this year.

Elite website editor Sarah Bell recently listed some ‘thinking points’ about rent bidding apps in the Elite Agent.

While she said that the apps encourage a free and open system, rewarding those who compete and are bold, a roof over our heads is a basic necessity and bidding will only increase the stress of renting.

Also, the ‘market price’ for rentals won’t necessarily be dependent on the features of the accommodation as much as it will turn on the availability of the accommodation. 

Bell suggested making available data on recently leased comparable properties so that tenants can make an informed decision about market value, as opposed to market value being whatever a tenant is prepared to pay. 

Rental bidding creates an uneven bargaining power between tenant and landlord, she said.

“There is a danger that as the economy cycles and rental accommodation becomes more scarce, the non-property owning class – some of whom are the most vulnerable people in our society – will feel the impact most sharply.”

The rental bidding apps should try to address the imbalance of power between landlord and tenant. 

The highest possible market price could punish a tenant through the term of a lease and the hassles involved where a tenant cannot afford and ceases to pay rent can dwarf a theoretical windfall from an inflated rent bid.

Limits on bidding based on affordability were needed to protect those most vulnerable to over-bidding, she suggested.

Bidding simply makes price the most important factor in choosing a tenant, rather than other factors such as the tenant’s rental history, stability and others that make a good tenant.

Rental bidding can eventually backfire if tenants feel it is unfair. Collectively, tenants could vote with their feet and simply refuse to rent properties in a rent-bid scenario – essentially driving their corrective action on a perceived power imbalance, she says.

Tags: 
Victoria Rental Rates Rental market

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