With rent prices increasing, drastic measures are being taken to secure a suitable home, such as rental bidding. Many Australians believe rental bidding will only become illegal with recent rental reforms, when in fact, explicit rental bidding is already banned under Australian Consumer Law. 

Whilst unethical and illegal, rental bidding still takes place as it’s hard to monitor from the outside, but there are ways you can legally offer more rent in order to secure that house you love. 

Rental bidding is illegal under Australian consumer law 

New reforms slated for 2020 are set to ‘crackdown’ on rental bidding but unbeknownst to most, rental bidding is already illegal, falling under Australian Consumer Law. The current law states that a person must not engage in conduct that is misleading or deceptive or is likely to mislead or deceive. 

So why do people still engage in it? Rental properties experience high demand, particularly in February, which is the busiest period of the year. It’s not only beneficial for the tenant in assisting them to secure a high-demand rental, but it’s also a way to get the ‘best’ result for the landlord amidst a competitive rental market. 

Overall, the practice is difficult to police since it is hard to prove if an agency is explicitly misleading applicants with deceptive conduct and relaying messages back and forth. 

If a tenant believes they are experiencing rental bidding, they can go to the Australian Consumer Affairs with their case to ensure the agency is arraigned. 

A tenant needs to ensure they have evidence by recording communication and confirming correspondence in writing in order to be able to distinguish between rental bidding and simply offering more money. 

Tenants can offer more money but agencies cannot ask for more 

Offering more money for a property is different from rental bidding. Tenants can legally offer more for a rental property and landlords are allowed to accept an additional sum on top of the original weekly rent. 

Property managers are allowed to inform the landlord of an offer, but they can not go back to the prospective tenant to ask for a higher amount. 

A 2016 Consumer Affairs Victoria report estimated that one in five tenants offer to pay more than the advertised rent, but offering more money is not the only way to secure a property.

Prospective tenants from overseas have been known to offer up to 12 months rent in advance in order to secure a particular property, which offers stability and peace of mind for both the tenant and the vendor. 

Agencies can ask for applicants to submit their best offer 

There are ways that an agency can navigate through offers from the applicants in order to please both the tenants and the landlord. 

A property may be popular and have a number of offers that are equally appealing. In this instance, a property manager can give applicants an idea of what the vendor will accept and present applicants with the opportunity to make their best offer. 

But this needs to be done right from the beginning in order to make it fair to all prospective tenants at the same time, while still complying with the current regulations. 

For this to be done within rental laws, the property manager cannot suggest it to landlords but rather advise them that they will advertise the property at a specific price and will inform the prospects to put their best offer forward. 

In no circumstance should a property manager treat a rental property like an auction, encouraging prospective tenants to keep putting up their offer in order to secure the tenancy. 

Rental bidding can be instigated by tenants, property managers or landlords however it is the responsibility of the property manager to ensure that all procedures are followed, laws are not breached and all parties involved get the best outcome. 

Related reading:

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