NSW Fair Trading representatives will begin attending rental inspections from late March to ensure compliance with new rent bidding laws, the government has confirmed.
In a statement provided to Elite Agent, NSW Fair Trading confirmed it would be stepping up enforcement efforts from the end of the month.
“NSW Fair Trading will be escalating its enforcement approach from the end of March 2023, carrying out increased compliance operations, which will include attending open homes to monitor how agents are interacting with potential tenants on price,” a spokesperson said.
NSW Fair Trading has received a total of nine complaints about solicited rent bidding since new regulations banning the practice applied to all new listings from 17 December 2022, the spokesperson confirmed.
They also confirmed that recent media reports of warnings being issued to agents were in relation to falling foul of new advertising standards.
“As part of NSW Fair Trading’s compliance program, inspectors reviewed 12,000 online rental ads last December, of which around 1000 were found to be in breach,” the spokesperson said.
“Since that time, more than 300 real estate agents have been issued warnings for breaching the new laws.
“Advertisements for rental properties must now include a fixed price and can no longer be advertised within a price range, or with text such as ‘offers from’ or ‘by negotiation’.”
Rent bidding was outlawed in NSW late last year, bringing it into line with Victoria and Western Australia.
The new rules mean agents can’t “solicit or invite an offer of rent that is higher than the advertised price for a residential rental property”.
The changes don’t stop prospective tenants from offering to pay a higher rent than what has been advertised, so long as they are doing so of their own free will.
Breaches of rent bidding laws may result in the issuing of an on-the-spot fine of $1100 for a corporation and $550 for an individual.
The maximum penalties a court can award for breaching regulations are $11,000 for a corporation or $5500 for an individual.
How should I be answering questions about rent bidding?
The NSW Fair Trading website details how agents should be responding to questions from renters at open for inspections to avoid falling foul of the new laws.
If a prospective tenant asks an agent whether they should offer a higher rent, or what other applicants have offered, an agent should respond as follows, Fair Trading advises:
“Agents should advise that they are not permitted to solicit or invite a person to offer more than the advertised rent,” the website said.
“Agents can advise that the tenant should make their own decision about the rent they wish to offer.”
The site details a number of scenarios, and how an agent should respond:
Scenario: A prospective tenant asks if anyone else has offered more than the advertised price of $650 per week.
NSW Fair Trading guidance: The agent states, “Under NSW real estate laws, agents are not permitted to solicit or invite a person to offer more than the advertised rent. I encourage you to make your own decision about the value of the property and the rent you wish to pay for it.”
The agent’s response is clear and specific and complies with the new rent bidding laws. By not providing a specific answer to whether there have been higher bids, the agent has not suggested that the prospective tenant should offer more than the advertised amount.
Scenario: A prospective tenant approaches the real estate agent and asks “Can I offer you $100 above the advertised fixed price for the property?”
NSW Fair Trading guidance: The real estate agent responds, “Yes, you can. I will let the landlord know.”.
This complies with the new rent bidding laws because the prospective tenant offered a higher rent amount without any prompting or suggestion from the agent. The offer is made voluntarily and freely.
Scenario: A prospective tenant asks a real estate agent, “If I offer more rent, would I have a higher chance of securing the property?”
NSW Fair Trading guidance: The agent responds, “Under NSW real estate laws, agents are not permitted to solicit or invite a person to offer more than the advertised rent. I encourage you to make your own decision about the value of the property and the rent you wish to pay for it. Applications are judged on multiple factors and rent offered is not the only criteria used when evaluating an application.”
This response complies with NSW’s new rent bidding laws.
Further details on how the laws operate can be found on the NSW Fair Trading website.