With the residential vacancy rate in Victoria at a twenty year low, considerable pressure is being placed on both prospective tenants and estate agents for rental properties.
Some prospective tenants are using certain tactics to help improve their chances of successfully applying for a residential tenancy agreement. The most common tactic for a potential tenant is to offer an amount greater than that advertised. This is practice is known as rent bidding.
There is nothing to stop a prospective tenant from doing this.
However, the agent must follow certain procedures to ensure the process is ethical transparent and lawful. These procedures are set out below.
· The REIV does not approve of advertising a rent range. A professional estate agent should be able to determine a market rate.
· A property cannot be advertised at a figure that is unrealistically low or for a price at which the property would never be let. This would constitute bait advertising, and would be misleading and deceptive conduct which is a breach of the Trade Practices Act and Fair Trading Act.
· An estate agent cannot initiate a bidding process for a rental property. It would be unlawful for an agent’s response to an enquiry to say, “It’ll go for more than that – what are you prepared to pay?”
· An agent can say, “We already have one or a number of applicants who we believe would be satisfactory tenants.” If the applicant responded with, “I am prepared to pay higher than the advertised rate, and would like to offer $XX”, the agent should record the details of that offer (person, date, time and amount offered) and relay that information to the principal. It is also important to ensure that an offer of higher rent is not being employed to disguise or obscure a poor rental record or some other matter that may have later consequences.
· The agent should inform other applicants, deemed suitable following reference checks, that their application is likely to be unsuccessful because a higher offer has been passed to the principal. If the applicant responds with a counter offer then that should be recorded and passed to the principal. The distinction between receiving an offer and soliciting an offer needs to be recognised.
· All prospective tenants must be treated with decency and courtesy.
· Once a tenant has been informed their application is successful a counter offer for that property must not be accepted.
Regards
Warwick Brookes
Director
Domain Property Advocates
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