The controversial practice of rental auctions is set to be banned in NSW from this Saturday.
NSW Premier Dominic Perrottet and Fair Trading Minister Victor Dominello have announced that the state will outlaw rental bidding, a move that has already been implemented in Victoria, Queensland and Tasmania.
Under the changes, property managers will have to advertise a rental property with a fixed price and not “by negotiation”, “inviting offer” or a “price range”.
However, it will still be legal to accept “unsolicited offers”, whereby a renter can offer an amount higher than the asking price.
NSW Premier Dominic Perrottet said the changes will be in place by Saturday, December 17, and will help renters.
“Auctions are over when it comes to the rental market,” Mr Perrottet said.
Minister for Customer Service, Victor Dominello said the government is trying to help both renters and investors.
“I accept that there is no perfect solution; this is about taking the hard edge off,” Mr Dominello said.
Mr Dominello said the government had taken into consideration the needs of investors who may be struggling to pay their mortgage as interest rates spike.
Laing+Simmons Chief Executive Officer, Leanne Pilkington said the move to outlaw rental auctions is not likely going to make any difference to the rental market given the chronic lack of supply.
“When I talk to my property managers they tell me that tenants are so desperate that they are asking ‘if I pay X, will I get the property’,” Ms Pilkington said.
“I don’t know how many agents are actually encouraging an auction.
“I certainly wouldn’t support any agent that is encouraging a rental auction, but that’s not the way that I’m hearing it out in the field and it’s more about desperate tenants just trying to find a roof over their heads.
Ms Pilkington said that instead of focusing on rental auctions, governments at all levels need to address the fundamental reasons behind the tight rental market.
“The issue is about supply,” she said
“We need to have more investors and the reality is that 27 per cent of our population live in rental accommodation.
“90 per cent of that is owned by private investors and all the government seems to be doing, and the media, is just pitting the tenants against the investors and that doesn’t solve anything.
“If it wasn’t for private investors we would be in a lot more trouble than we’re already in.”
According to Ms Pilkington, there needs to be more private investment in the residential property sector.
“The fastest way to fix the rental crisis is to get more private investors to buy investment properties.
“To suggest the government incentivise investment is not a popular thing, but if we could incentivise people to buy their first investment property in an area where the crisis is really being felt at a price point that is affordable, then surely that would have to be a good thing.”
Ms Pilkington said the federal government ramping up immigration to record levels is also increasing the problem.
“It’s crazy,” she said.
“I understand why they need to increase immigration because all of us that own businesses are struggling to get staff members, but we have to have somewhere for them to live.
Ms Pilkington said none of the suggestions that are coming out of government will have an immediate impact.
“We need to get supply into the market as quickly as we can and private investors are better placed to do that at speed than the government is.”