The South Australian Government has announced plans to make “rent bidding” illegal under proposed changes to the Residential Tenancies Act. 

Property investors will no longer be able to advertise properties with a rent range, put properties up for rent auction, or solicit offers over the advertised rental price. In addition, any rating or assessment of a prospective tenant cannot be based on an offer of higher rent. 

According to the Minister for Consumer and Business Affairs Andrea Michaels, rent bidding is a contributor to the recent rising costs of rents in South Australia.

I understand how tough the rental market is for South Australians with rental prices continuing to rise and Adelaide having one of the lowest rental vacancy rates in the nation. 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. 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.

Michelle Lensink, Member of the Legislative Council of South Australia

But in an exclusive interview with Pizza & Property’s Todd Sloan, the shadow minister for housing Michelle Lensink said “Speaking to the stakeholders, that’s certainly their advice is that there’s not a lot of this practice that goes on at the moment,”

I don’t think that this particular proposal will have a huge impact on the rental market, I think that is something that’s not considered the best practice in the world, and there’s not a lot going on at the moment anyway.

Michelle also highlighted that the move to regulate how landlords advertise prices for rentals, may backfire with landlords choosing to hike up prices and await offers below the marketed price in a reverse auction.

…some of those [landlords] are also saying ‘What we’ll do instead is we’ll maximize the price that we advertise for and see if somebody meets us at that particular price’ because they may have preferred to engage in this rental bidding process.

Data by SQM Research shows that nationwide there are only 31,000 rental properties available with vacancy rates now at record lows, and Adelaide weekly rents sky-rocketing up 17% year on year to $514, while implied gross rental yield remains relatively stable at 5.7% for units (up only 0.1% year on year) and 3.7% for homes (flat year on year).