South Australia becomes latest state to target rental bidding

Under the reforms, landlords will no longer be allowed to advertise properties with a rent range, put properties up for rent auction or solicit offers over the asking price. 

If greenlit, any assessment of a potential tenant cannot be based on an offer to pay more than the asking price if third parties are involved in the application process. 

The raft of proposed changes came after the government received feedback from tenants, landlords and other stakeholders, following its extensive review of the state’s tenancy laws, which was launched last November. 

Housing stakeholders, including tenants, landlords and involved organisations were called on to provide their input until 16 December on the reforms that were up for proposal, including renting with pets, shared housing and the practice of rent bidding.

Consumer and Business Affairs Minister Andrea Michaels said the rental market was ‘tough’ on South Australians, with rental prices continuing to rise.

“The practice of rent bidding unfairly drives up prices and is contributing to the current rental crisis by making it more and more difficult for South Australians to find affordable rental accommodation,” Ms Michaels said.

Currently, the cost of rental accommodation in Adelaide is at a record high, averaging $450 a week, while the city’s 0.6 per cent vacancy rate is among the lowest in the nation.

“That’s why we are cracking down on rent bidding because I want to make the system fairer for South Australians looking for a home,” she added.

In a bid to further provide support for tenants who are doing it tough in today’s current market, the South Australian government also announced the expansion of the eligibility criteria for the state’s Private Rental Assistance Program, which covers the cost of bonds and up to four weeks’ rent over two years. 

The expanded guidelines now allow households with cash assets up to $62,150 to be eligible for the program, up from the previous limit of $5,000 and increase the weekly rent limit from $450 to $600. 

It is estimated that an additional 400 households will be eligible for the program as a result of these changes. The level of assistance provided is dependent on the tenant’s income and situation, with qualified tenants able to receive a maximum of $4,800 in aid.

Currently, landlords can claim a bond worth up to six weeks’ rent where the weekly rent is greater than $250.  

Following the changes to the threshold, the government estimated that renters will save between $500 and $1,600 in upfront costs when they rent a property, with a renter of an average-priced house in Adelaide shaving $930 off their bond costs.

The planned rental reforms and increased financial support for tenants were positively received by several real estate and housing stakeholders. 

Real Estate Institute of South Australia (REISA) chief executive Cain Cooke said the banning of rental bidding was “consistent with our code of conduct”. 

“These provisions will ensure clarity and transparency for tenants and enable them to lodge an application with certainty as to their capacity to meet the rental affordability of the property,” he stated. 

Shelter SA executive director Alice Clark said that in an environment of increased rents and a lack of availability of rental housing, it is unsurprising that people who are in need of a home are taking “desperate measures” to put themselves ahead of other potential tenants, including practising rental bidding. 

“It is encouraging to see Minister Michaels adjust the legislative levers that can improve an aspect of affordability and prohibit practices that take advantage of applicants who cannot secure a home,” Ms Clark said.

She stated that Shelter SA welcomes the “modernisation of rental laws”, lauding the proposed improvements to prohibit rent bidding, advertising rent ranges and legislating against the conduct of rental auctions. 

If the proposed reforms are ratified, South Australia will fall in line with other states that have already outlawed the practice.

In December, the NSW government outlawed rental bidding through urgent changes to regulations under the Property and Stock Agents Act 2002, which took effect on 17 December.