When Sydney renter Seamus was looking for a home in 2021, he applied for a two-bedroom apartment with a major real estate agency in the inner western suburbs.
The property was listed at $750 per week online, but after Seamus applied, the real estate agent called him and asked if he would be willing to go to $800 to secure the property.
It's called rent bidding, where renters are either encouraged by real estate agents or decide on their own to offer more money than a property is listed for in a bid to secure a place to live amid a severe shortage of available housing on the market.
"It was frustrating and it made me distrustful of the agent and the system. It was just sort of happening in a kind of 'wink wink nudge nudge' way instead of being completely explicit," says Seamus.
Seamus says he no longer trusted the agent and decided to take his property search elsewhere.
"This was a big real estate agency, so it makes you think it must be happening all the time," he says.
New reforms, modest penalties
Three years later and, despite legislative change in New South Wales, another Sydney renter, Oliver, had an almost identical experience to Seamus. This time it was illegal.
In 2022, New South Wales outlawed real estate agents or landlords encouraging or asking prospective renters to offer more money on a rental property.
"The agent said they had received an offer of $790 per week and we should put in another one at $800 if we wanted the property," Oliver says.
Oliver says he thought the agent was bluffing and kept his offer at $750, the price originally advertised, which the agent then accepted.
Oliver says he decided it wasn't worth reporting his agent and souring the relationship he had to maintain with them as managers of the property he would be living in
"It's pretty annoying. You feel like you've got no choice but to bid and the agent has all the power and information to use against you. You don't want to participate in the (bidding) system, but it's so competitive," he says.
Oliver says he looked online for information about the penalties real estate agents face for encouraging rent bidding in New South Wales – a maximum infringement notice of $1100 – and decided it wasn't worth reporting his agent and souring the relationship he had to maintain with them as managers of the property he would be living in.
Courts can order larger penalties of up to $5500 for an individual, however it isn't clear when an agent would be taken to court rather than issued an infringement notice.
Rental markets remain very competitive in many areas of Australia.
Around the country
Most states and territories in Australia have made an effort to outlaw rent bidding. But the strength of the legislation varies among jurisdictions. Some have significant loopholes, and the penalties vary from mild to significant. The result is that rent bidding still persists
Queensland and the Northern Territory have banned both the offering and accepting of offers above the advertised price. Victoria will follow suit shortly, with a ban on accepting higher offers expected to come into effect in November 2025.
South Australia says the assessment of an application can't be based on the offer of higher rent.
New South Wales, Western Australia, Tasmania and the Australian Capital Territory have banned real estate agents from encouraging or telling prospective renters to bid higher, but haven't banned agents or landlords from accepting unsolicited offers above the advertised price.
Okay to offer but not to ask
Leo Patterson Ross, chief executive officer of Tenants Union NSW says his state is lagging behind other jurisdictions and the so-called ban on rent bidding hasn't been effective.
"Rent bidding is a symptom of a really tight rental market. If you've got a situation where the law says people are allowed to bid, it just can't be solicited, then you haven't really stopped rent bidding," he says.
"All the time I hear of agents saying 'I can't tell you to bid, but it might be in your best interest', or 'I've had a lot of interest in this property, you need your application to stand out'."
"They are being sly about it," says Ross.
Ross says that the penalties in NSW for a real estate agent or landlord who solicits a bid aren't high enough to act as a deterrent.
In South Australia the penalties go up to $20,000.
Leading the way
Tenants Queensland CEO Penny Carr says reforms in her state, which ban both asking for and accepting higher offers, have proven more effective.
"Speaking to our workers, no one is really hearing about rent bidding now. It seems like the reforms have been fairly successful," she says.
"You need to just make it a blanket ban on accepting higher offers so you can enforce it," Carr says.
CHOICE looks for a rental
CHOICE mystery-shopped five real estate agents located in Melbourne, Sydney and Brisbane respectively to see if they were complying with laws governing rent bidding.
In Brisbane, we asked agents with listings on realestate.com.au whether they would be willing to accept higher offers for five properties listed in the suburb of West End. In each instance the agent either declined the offer for a higher rental amount or didn't directly respond.
In Sydney and Melbourne, the real estate agents we mystery-shopped (in Newtown and Northcote respectively) left it open to us to bid higher, but most stopped short of directly asking or encouraging us to do so.
"It's up to you if you would like to offer more," one Sydney real estate agent said.
"Happy to submit any offer with your application," one Melbourne real estate agent said when we asked if we should bid more.
Another Sydney real estate agent encouraged us to bid higher when we asked directly if we should bid more to secure the Newtown property. "If you offer higher offer (sic) absolutely you get more chances to secure the property," the agent said.
Messages between CHOICE and a Sydney-based real estate agent.
More work to do
Bernie Barrett, deputy CEO of the rental advocacy group BetterRenting, says more work needs to be done around the country to strengthen rent bidding bans.
"You've got to think that people who are looking for new rental properties, because of the scarcity of rental properties, are in desperate situations," she says.
"We want the cost of rent to be reflective of what the property is actually worth and we want it to be fair and equitable for all people who are trying to find a home," Barrett adds.
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Stock images: Getty, unless otherwise stated.
