The Property and Stock Agents Amendment (Solicited Rent Bidding) Regulation 2022 (NSW) (Rent Bidding Regulation) has taken place in December last year, and many queries have been sent for REINSW to answer due to this change in legislation. REINSW have provided many of the frequently asked questions from landlords, agents, tenants, and the general public and have responded to clear up any misconceptions about this newly implemented regulation.
To avoid any misinterpretation of misinformation, we have copied information provided by REINSW.
The FAQ include:
Q1)
The rent bidding regulation does not apply to landlords, what happens if a landlord decides to attend an open inspection and negotiate a higher offer of rent?
A)
"If an agent and landlord attend an open inspection together, and the landlord solicits higher rental offers from prospective tenants, then agents would need to be careful that they comply with their existing obligations - such as the obligations in the rules of conduct to act honestly, fairly, and professionally with all parties in a transaction; exercise reasonable skill, care, and diligence; and not mislead or deceive a party in negotiations or a transaction.
The new rent bidding laws applies to real estate agents. The new laws do not apply to landlords who self-manage their rental/s. Consideration may be given as to whether this rule should be extended to self-managed landlords through the residential tenancies legislation."
Q2)
What are the impacts (if any) for tenant representatives who have an obligation to their client to negotiate with the agent to secure a property?
A)
A tenant, or their representative, can voluntarily offer a higher rent for a rental premises.
Q3)
Where a prospective tenant applies for a 12-month lease at an advertised price of $500 per week, is the agent able to offer the property to the prospective tenant for $500 for the first 6 months, and $550 for the following 6 months with this increase written in the lease?
A)
The advertisement for the rental property should refer to both amounts, as required by Schedule 1, clause 22(1) of the Property and Stock Agents Regulation 2022, as it is the fixed rent payable for the property. For example, the property could be advertised at '$500 per week ($550p/w after 6 months)'. The price in the advertisement should not appear as a price range.
NSW tenancy laws also require that increases to rental amounts in fixed-term tenancies of under two years must be clearly outlined in the tenancy agreement, and that the rent payable under a periodic agreement may not be increased more than once in any period of 12 months – see sections 41 and 42 of the Residential Tenancies Act 2010.
Q4)
How does a tenant know whether what they offer is enough to secure the property? The Rent Bidding Regulation does not prevent tenants from offering over the advertised amount at their own initiative – simply that agents cannot solicit or invite a higher offer. The lack of negotiations or feedback between the agent and prospective tenant means that some tenants are making offers significantly over that of the price advertised to ensure they secure the property in a competitive market (therefore defeating the objective of the Rent Bidding Regulation to increase rental price transparency).
A)
Tenants would become aware of the success of their offers once advised of the outcome of their application. It is the tenant's decision to make an offer based on the advertised price, what the property is worth and what they are prepared to pay for the property.
The new laws clarify acceptable practices for agents and prevent agents soliciting offers above the advertised rental amount. They also aim to increase transparency as a fixed price will need to be advertised, giving prospective tenants a clear idea of the rent payable and whether they can afford the property.
Q5)
An agent places an ad at a fixed price and has approximately 50 people enquiring about the property, without anyone seeing the property or applications being submitted. The agent realises it is under-priced and wants to amend the advertised price to a higher amount. We assume this scenario is acceptable and the agent's actions is compliant because they are not soliciting any tenant to increase an offer and no rental auction is involved. They have simply changed the asking price. However, please confirm our view is correct.
A)
Yes, your view is correct, the amended advertised price will give prospective tenants an accurate idea of the rent payable for the property. Agents should take instructions from the landlord to amend the advertised price. As you are aware and as mentioned above, agents have obligations such as obligations in the rules of conduct, to act honestly, fairly, and professionally, and not mislead or deceive a party in negotiations or a transaction.
Source: REINSW
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