NSW government rental bidding ban backtrack

The Minns government has announced it will “press pause” on a proposed law that would have required real estate agents to notify all rental applicants if someone offers above the advertised rent.

Introduced to Parliament in May, the proposal was met with strong opposition by advocacy groups that argued it would “legitimise” rent bidding and lead to “unintended consequences” in a rental market that is already stretched thin.

The government said the decision to scrap the section of its proposed legislation around rent bidding came after “constructive engagement with advocacy organisations and crossbench members” during a parliamentary inquiry in the previous week.

Chief executive of Real Estate Institute of NSW (REINSW), Tim McKibbin, told the inquiry the plan would not deal with what he said was the root cause of the rental crisis — a lack of supply — and urged the government to let natural market forces take their course.

“It’s an old saying that says the market never lies and the market does what the market will do. If we interfere with that, then there will be adverse outcomes,” he said.

The committee also heard from renters’ advocates and peak bodies that reiterated their concerns that the changes would result in a worse outcome for tenants.

A letter from Homelessness NSW and the Tenants’ Union of NSW, which was signed by the St Vincent de Paul Society of NSW, the Redfern Legal Centre, Shelter NSW, and the Older Women’s Network NSW, asked the government to scrap the rent bidding section of its laws after they were proposed.

Tenants’ Union CEO Leo Patterson Ross said that while his organisation acknowledged “positive intention” expressed through the bill to “provide renters with greater transparency during the application process”, he also voiced concerns that the rental bidding ban reform will “unintentionally sanction and entrench rent auctions as an acceptable rent setting measure in the private rental sector”.

“We understand this reform is not intended to be an affordability measure, but nor should we risk worsening affordability,” Mr Patterson Ross stated during the inquiry.

Notably, the group called on the government to outlaw the practice entirely by not allowing real estate agents to accept any offers above the advertised price of a property.

Upon reaching the conclusion that “section 22B (rental bidding) would not pass the upper house in its current form”, State Premier Chris Minns said dropping the proposal will make it easier to pass the rest of the rental reforms through Parliament.

“We have been upfront: the minority Parliament won’t support every bit of every bill and we’ll be pragmatic working through that,” he stated.

“This decision means we can get on with the rest of our rental reform agenda, including ending ‘no-grounds’ evictions.”

The amended bill includes changes to allow bonds to be transferred from one property to the next or the portable bond scheme and closes the loophole in this state’s current rent bidding law, so it applies to property owners, not just real estate agents.

Better Regulation Minister Anoulack Chanthivong said getting other reforms through quickly was important, given the housing crisis affecting the state’s 2 million renters.

“Being an Australian-first reform, we understand there are questions about how a ban on secret rent bidding will be implemented,” he said.

“We can’t let that put a handbrake on areas where there is broad agreement.”

But the rental bidding ban proposal has not been scrapped entirely. Instead, it will undergo a thorough review by the incoming NSW Rental Commissioner, with interviews for the position scheduled to commence this week.

Renting and housing advocates welcomed the decision that “reconsidered” the contentious part of the legislation, stating the course of action showed the “NSW government is listening”.

“This is an excellent outcome progressing an important debate and showing the value of consultation. We welcome the coming process of reforms and working with the NSW government and rental commissioner to prevent the harms of this renting crisis,” Mr Patterson Ross stated.

While the changes have been lauded by renting and tenant advocates, Dr Chris Martin, senior research fellow in the City Futures Research Centre at UNSW, voiced his criticism of the amendments made to the rental reform bill.

The expert said dropping the rent-bidding element of the legislation would not effectively prevent rental bidding from occurring.

“The bill wasn’t going to encourage rental bidding — that already happens, especially in tight rental markets. And the withdrawal of the rental bidding parts of the bill is not going to stop rental bidding from happening,” he commented.

“Applicants will keep making higher offers, especially when markets are highly pressured, as now.”

He explained that the disclosure requirement might have worked as a “bit of a disincentive to applicants to make higher offers”.

“It would be a shame if those reforms did not go ahead,” he added.