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NSW estate agents use loopholes to get more money for rentals after bidding was banned

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How money-hungry real estate agents and landlords are using a loophole to circumvent the ban on ‘rental auctions’

  • Owners find a sneaky way around the ban on asking for more
  • They can wait for prospective tenants to make an offer.

Landlords have found a sneaky way around the ban on asking for offers above the advertised rental price: they can simply wait for prospective tenants to make an offer.

The loophole allows NSW estate agents to get more money than the advertised listing, as they are not breaking the law enacted last December.

The state government had tried to regulate the rental market and make it fairer for tenants by banning ‘rent auctions’.

A prospective tenant can still make an offer higher than listed, as long as the landlord or real estate agent does not request it.

Landlords have found a sneaky way around the ban on asking for offers above the advertised rental price: they can simply wait for prospective tenants to make an offer (shown, people queuing to view a rental property)

The loophole is being used by people desperate to secure a roof over their head in the tightest rental market in more than a decade.

The rental vacancy rate in the greater Sydney area dropped to 1.4 per cent last month and the lines of people queuing to view properties have doubled.

Rent increases in the continental states in the last 12 months

State Monthly increase Annual increase

WA $180 $2,160

QLD $177 $2,124

VIC $169 $2,028

HS $158 $1,896

New South Wales $142 $1,704

But even offering a premium above the advertised price isn’t a guarantee of getting a lease — there’s always the chance someone else will offer even more, leading to auction-like conditions.

One of those whose offer to pay more hasn’t panned out so far is Ryan Donachie, who has seen more than 20 rentals on Bondi Beach in the past month.

He and his partner are looking for something under $1,000 and have regularly found 20 or more people on tours.

Despite offering to pay up to $25 per week above the asking price and being willing to pay several weeks’ rent in advance, they keep looking.

“I imagine others are doing the same, but there are so many applicants that it seems to be first come, first served,” he said. The Sydney Morning Herald.

Leo Patterson Ross, of the New South Wales Tenants Union, said that while the new law has had some impact, it has not achieved its goal of restricting the price.

“It’s really entrenching an auction-style approach, which is quite foreign to how we deal with other essential services,” he said, adding that allowing agents to accept higher rental offers was “taking advantage of people’s desperation “.

In the two years to December 2022, advertised rents rose an average of 9.6% in capital cities and 10.3% in regional areas, the Reserve Bank of Australia reported.

The NSW government’s Fair Trading department has increased enforcement of the new laws by reviewing listings and dispatching staff on tours who can issue on-the-spot fines to owners who ask for more than the advertised price.

A loophole allows NSW estate agents to get more money for a rental as they are not breaking a law enacted last December if someone makes the offer without being asked (file image)

A loophole allows NSW estate agents to get more money for a rental as they are not breaking a law enacted last December if someone makes the offer without being asked (file image)

Fair Trading said it had analyzed 12,000 online advertisements since the law changed in December and found that around 1,000 of them broke the law.

So far, despite having the power to do so, no fines have been issued, but more than 300 officers have been sent ‘educational letters’ about the law.

With pre-voting already underway for next Saturday’s NSW state election, opposition parties are using the state’s rental crisis as a potential source of votes.

Labor wants to ban secret rent auctions, and rising offers must be revealed to all applicants so they have a chance to match them.

The Greens want a complete ban on rent bidding, meaning the advertised price would have to be the price charged, and they also want an immediate rent freeze and rent controls in the state.

Home ownership rates in Australia have fallen from 70 percent in 2006 to 67 percent in 2021, according to census figures.

The fall has been even more dramatic for young people. In 1971, 64% of people ages 30-34 owned a home, but that dropped to just 50% in 2021.

For people ages 50 to 54, home ownership rates fell from 80 percent in 1996 to 72 percent in 2021.

What to do if your landlord tries to raise your rent

1. Before agreeing to a raise, compare other rental prices in your area. If you think a raise is too high, ask if it can be lowered or negotiated. If not, you may want to look into something more affordable.

A For Rent sign is displayed outside a house

A For Rent sign is displayed outside a house

2. Be aware that there are local laws that landlords must follow if they increase your rent. If the proposed increase is not in accordance with your lease and local laws, it may be voided.

3. Always get agreements in writing as it covers you in case of ongoing disputes. If discussions happen in person, always send an email to recap what was said.

4. Decide if it is worth paying more in rent or if you would save by moving. Keep in mind that there are often costs associated with the move, such as moving fees, cleaning fees, and power disconnection fees.

Jackyhttps://whatsnew2day.com/
The author of what'snew2day.com is dedicated to keeping you up-to-date on the latest news and information.

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