Bidding Wars Between Would-Be Tenants

[Author – Tim ODwyer]

Queensland’s Courier Mail newspaper has reported that tenancy advocacy groups are warning that bidding wars between desparate tenants are causing havoc in the Queensland rental market. This fiercely competitive market, the groups claim, has been hit hard by low vacancy rates and high property prices.

Bidding Wars!

Queensland Shelter’s Adrian Pisarski told The Courier’s housing reporter, Amanda Horswill, that a shortage of properties was forcing would-be tenants to compete.

There were, he said, more and more open houses and “auctions for rental properties”. Mr Pisarski explained that, just like in regular property auctions, agents were opening houses for prospective tenants to inspect before they put in their private bids or applications to the agents. As a result, he said, some families with young children were forced to live in tents and caravans.

One rental property manager said that while she did not accept offers above the asking price, it was becoming more popular for renters to offer above that price.

“It’s like a dutch auction, ” she said. The lower end of the market was being “pushed out”.

Community housing service, Brisbane Boarders, confirmed that those on the “lowest rung…haven’t got a chance”.

“You’ve got a rising rental market, less stock and therefore real choice for landlords,” its CEO added.

Some agents insist on an application fee, at times as high as a week’s rent, without a guarantee the fee will be returned if the application fails, reported The Courier Mail.

Mr Pisarski said agents were looking for a commitment “even from the application stage”, otherwise there is nothing to make an applicants take the property.

He described this practice, which he personally had experienced, as disgusting and had complained about it but was since told it was not strictly illegal.

Tenants Union of Queensland co-ordinator Penny Carr told The Courier that she had many recent reports of estate agents advertising properties for particular rents then telling applicants that someone else had offered a higher rent. They were then asked to make a higher offer.

“The agent could go back one, two, or three times asking for a different rent amount,” Ms Carr said

Housing advocacy group National Shelter told The Courier that some rental applicants in Queensland were finding themselves gazumped. The Courier described this as a “disturbing trend” when a tight property market and long waits for public housing had fuelled a “homeless crisis”.

Real Estate Institute of Queensland managing director Don McKenzie, while agreeing that rents would inevitably be forced up when the demand for rental properties exceeded supply, said it was illegal for agents to require application fees from prospective tenants. “But,” he explained to The Courier, “a holding deposit may be required as some applicants make simultaneous applications on properties with a number of real estate agents”.

Meanwhile Queensland’s Sunday Mail has reported that bidding by prospective tenants is, in some cases, leading to a doubling of the original asking price for rent. The paper found a real estate agent in Rockhampton advertising “open house” for a rental property and urging people to make an offer. In one case in Brisbane, the rent for a three-bedroom house in West End went up $90 in one hit. Some tenants, according to The Sunday Mail, have resorted to offering to pay 12 months rent up front just to secure a home.

Real Estate Institute of Queensland chairman Peter McGrath denied that rent bidding was a problem, and told the paper, “The number of complaints is negligible.”

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