Renters to enter app bidding war

BY JOSHUA KINDL

Sydney’s already overcrowded property market is set to become even more daunting for Australian rentors, as a number of controversial rental-auction apps have launched into the Australian property market.

United States-based Rentberry, as well as Australia-based LiveOffer and Rentwolf, are set to launch throughout Australia, beginning in Australia’s largest cities.

Member for Sydney, Alex Greenwich, says these apps pose a considerable threat to rent affordability in Sydney, especially amongst an environment of rising rent prices.

“Rent-bidding apps risk further eroding affordability in Sydney’s already dire rental market.

“The average household spends nearly 30 per cent of income on rent and lower income households are being squeezed to the fringes of the city where there are fewer services and transport and job options,” Mr Greenwich said.

Much has been made of housing affordability in Sydney, with the Demographia International Housing Affordability Survey, released earlier this year, finding that Sydney was the “second least affordable [housing] market’ in the world, trailing only Hong Kong.

The report also found that housing prices in Sydney were almost 13 times higher than median household incomes in the city. As a result, buying and renting in Sydney has become considerably more difficult and expensive, with no letup in sight.

And now, with traditional Australian rental systems seemingly in jeopardy, some are concerned that rent-bidding actions encouraged by these apps will contribute negatively to rental affordability within the nation’s largest cities.

Tenants Union for NSW Senior Policy Officer, Leo Patterson, says an environment of rising rents in Sydney makes it a fertile one for rent-bidding apps such as these to negatively affect further inflationary pressures.

“We should be aware that landlords and real estate agents are already setting rents at the highest rate they think that potential renters will pay for that property.

“Rent-bidding apps effectively formalise a process which we know happens informally when there is intense competition for homes as desperate applicants either offer higher rent than the listed price,” Mr L. Patterson said.

Data accumulated by the Domain Group in early 2017 found that weekly rents in Sydney rose by approximately $25 from 2016-17, with indications that inflation was likely to continue.

This data comes on the heels of a 2016 report into Australian rental conditions, with researchers finding that almost half of all long-term renters in Australia found it difficult to consistently pay their rent due to a lack of funds.
Not to mention recent reports showing that Sydney homelessness levels have increased to almost 5000 people, which Mission Australia CEO James Toomey partly blamed on a NSW housing market that has “seen some of the most significant price rises.”

Darren Patterson, Executive Director and CEO of Property Connect, which owns and administers LiveOffer, discounts this perception that rents throughout Sydney are currently rising.

“I don’t think rents are rising at all.

“I think it’s the great urban myth of today”, he said.

Mr D Patterson added that the benefits of rent-bidding programs, such as LiveOffer, offer consumers a more efficient and more transparent renting process than is available through traditional real-estate agents.

“[Agents] don’t tell you where your application is in the process, there’s no visibility of what the rentor is thinking… [LiveOffer] gives you control over that process,” he said.

However, Mr L Patterson disagrees with the assessment that greater transparency is what’s needed in today’s rental marketplace.

“Is knowing how badly you are getting done over really a good thing?”

Instead, Mr L Patterson says that greater regulation of technologies such as LiveOffer will be crucial in maintaining sensible rental-rates throughout Sydney and wider Australia.

“If we are going to have rent-bidding apps, then they really need sensible regulation.

“Current laws around property auctions won’t apply, and while it won’t work to simply add rent auctions to those current laws, there are protections against poor behaviour for buyers which should be considered,” he said.

MP for Sydney, Alex Greenwich, agreed with this sentiment and stated that the state government would be held to task over rental regulation matters.

“I understand rent-bidding apps are being regulated in Victoria and I have asked questions in parliament about the need for reform here,” he said.

Property Connect recently announced that the LiveOffer service has been on-boarded by Melbourne-based real estate agent Direct Property Group, following similar recent transactions with Sydney-based McGrath and Western Australian offices of Century 21.

This comes following news that the United States city of Seattle had placed a one-year ban on rent-bidding apps throughout the city, citing fears that the programs could lead to a jump in housing prices.

Mr Greenwich believes the possible implications of further proliferation of these rent-bidding apps could be costly for an already desperate renting public, both in Sydney and the rest of the nation.

“Rent-bidding apps could add to housing stress with many renters forced to bid beyond their means in order to secure a home,” he said.

Representatives from Rentberry did not respond to request for comment.