A ban introduced in December prevents NSW real estate and property agents from soliciting offers to pay more than the advertised rent to secure the lease – but this does not stop them from accepting offers above the asking price.
Inspections for rentals are attracting more than double the prospective tenants than last year,as thousands of the city’s renters continue their search for a place to call home.
The rental vacancy rate last month dropped to 1.4 per cent across greater Sydney – the lowest in more than a decade – and inspections for rentals in Sydney’s inner and eastern suburbs have seen more than double the number of hopeful tenants compared to the same time last year.
The Sun-Herald attended multiple rental inspections over the past two weeks to.
Ryan Donachie at a rental inspection in Bondi.Supplied
Ryan Donachie has viewed more than 20 rentals in the past month. Searching for somewhere near the beach in Bondi,he and his partner are looking for accommodation for under $1000.
“It’s been tricky,” he said. “A few weeks ago,I went to six viewings and there were 20 people at each property on average.”
The pair have offered to pay up to $25 a week more than the asking rental price where they could afford to do so,and have offered several weeks’ rent upfront. But so far,it hasn’t worked.
“I image others are doing the same,but there are so many applicants,it seems to be first come,first served,” he said.
Tenant’s Union of NSW CEO Leo Patterson Ross said renters felt exposed to the loophole.
“The new law has been impactful but not ultimately effective,” he said. “It’s really entrenching an auction-style approach to things,which is pretty foreign to how we deal with other essential services.”
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Allowing landlords to accept higher offers for rent,Ross said,was “leveraging people’s desperation”.
Advertised rents have increased by 9.6 per cent in capital cities and 10.3 per cent in regional areas in the two years to December 2022,according to the.
NSW Fair Trading announced this month it would escalate its enforcement approach for rental bidding requirements by reviewing online listings and attending open homes with on-the-spot fines to offenders.
It said it had reviewed 12,000 online ads since December,finding about 1000 to be in breach of the laws. More than 300 agents were given “educational letters”,though no fines have been given.
In NSW,a landlord can’t increase rent more than once every year for those on fixed-term leases of two years or more,or those on ongoing leases.
But rental bidding laws do not stop landlords from increasing rents to keep up with interest rate hikes.
And for those on fixed-term leases of less than two years,a landlord can increase the rent if the agreement sets out the increased amount,or how the increase will be calculated.
“Some people[on six-month leases] are seeing quite rapid rate increases. Previously,they would have probably left,but now they don’t really have the option to,” Ross said.
The Australian government does not collect data on lease type,however,a found 8 per cent of NSW renters were on a fixed-term lease of six months or less.
Queensland had the highest rate of short fixed-term leases at 12 per cent. Almost 9 in 10 Australians who rented in 2018 were on leases of a year or less.
Impact Economics and Policy lead economist Angela Jackson said rising house prices meant there would be an entire generation of renters.
“For those who are not on above-average wages and don’t have a significant inheritance or wealth transfer,it is going to be impossible to enter the housing market,” she said. “They’ll have to rent their entire lives.”
The showed homeownership rates have decreased from 70 per cent in 2006 to 67 per cent in 2021. Rates have decreased more for young people – while 64 per cent of 30 – 34-year-olds owned homes in 1971,that’s decreased to just 50 per cent in 2021.
But home ownership rates have also decreased among those aged 50 to 54,dropping from 80 per cent in 1996 to 72 per cent in 2021.
And things are not going to get easier for inner-city renters anytime soon,Jackson said.
“[In the past year] vacancy rates dropped,markets started growing very fast and that will flow through to inflation,” she said.
“Rent or mortgage payments are the biggest part of household budgets,so when costs rise it hits hard and will put a number of households under significant financial stress.”
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