Be careful how you drive the rent up!
February 26, 2023 – 2 minute read – by Scott Mitchell
“Tell them there’s another application that is willing to pay more to see if you can get an extra $50 a week”. This is advice that almost every leasing professional has heard from a landlord.
Although this may have been an effective strategy in the past, it cannot be leveraged anymore. The NSW government continues to show preference and advocacy for tenants over owners. As a result, the NSW Property and Stock Agents Regulation 2022 has just been updated to discourage both agents and landlords from soliciting higher rental prices than what is advertised.
Pay attention because ignoring this new framework could be very expensive!
Rental Bidding Is Dead!
Since the early 2020’s families have been fighting tooth and nail against each other to secure a home. This has been getting harder and harder with agents putting pressure on parties to increase their offers and putting a premium on rental returns rather than good quality tenants.
New South Wales regulatory bodies have observed this trend affect these renters negatively, with prospective tenants missing out on properties, having to move lesser priced suburbs and the market becoming more competitive. With this in mind, changes have been made to Property and Stock Agents Regulations 2022 to restrict this behaviour. The key changes are below:
- Properties must be advertised with a fixed price.
- Properties cannot be advertised with wording such as “offers from” or “by negotiation”.
- An agent or landlord cannot disclose other offers made to obtain the property and create a “bidding style” of system
Importantly, whilst the above has changed, if a potential tenant voluntarily makes an offer above the asking price without any pressure from an agent… the landlord/agency are able to accept it. Due to this, our recommendation would be to actively promote that the property is in high demand to draw out unsolicited offers. There are a few ways to do this:
- Only hold open homes and no private inspections so that numbers are boosted –This creates a buzz around the property and shows interest is high.
- Use wording such as “Leased at first inspection when it was available last” at the top of the advertising copy.
- Have excellent advertising material of the property showing its worth – for instance Property Providers use an internal process to score ads before they go online, only once they score 80/100 or more will they be listed.
- Highlight all the key features and benefits of the property in the copy.
- Think about what you can do to appeal to high quality, executive tenants who are likely to pay more, especially if the property is furnished. Having this option is a great way to maximise profits. Check out our blog on ‘Attracting Executive Tenants’ for more information.
- Go pet friendly! Through the almost 2 years of Covid-19, pet ownership is at an all time high. Making your property “pet friendly” is a sure-fire way of attracting more people to opens and is an easy way to have a higher priced listing.
- Consider other avenues such as executive short-term rentals which is governed by a different legal framework. Look at our ‘Licensing Vs. Leasing’ blog for further insights.
This new set of regulations is a tricky one to navigate. However, landlords and agents must remember that not complying and continuing to advertise properties with a price range, or no price at all is now illegal and doing so will incur hefty fines. Individuals can receive a fine of up to $5,500 and agencies up to $11,000. It is worth bearing this in mind when starting your rental listing journey.
For more information and working scenarios please refer to the link below to NSW Fair Trading’s website.
Property Providers is Sydney’s most flexible residential rental agency. Our core purpose is “To Help People Live Better” by providing long-term luxury leasing, super-luxury holiday homes and executive rentals for extended stays. If you are interested in listing your property please contact us at +612-9969-7599, or if you are looking for a tenant or guest who is looking for a hand-picked home, please visit our website or brief us here
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British born and raised in London but currently enjoying all Australia has to offer. Living and breathing Sydney’s Manly Beach and forever promoting SUPball to all who’ll listen.