Rental auctions

What is your opinion about Rental Auctions?
Are they unfair? Unethical? Greedy?
Should rents be capped now that vacancy rates are low in most cities?

How would you justify rental auctions?
We all adapt our rent to what the market is willing to pay- but is the auction putting too much pressure on the tenant to ‘overindulge’?
Will they be able to afford the rent they bid for? It’s, for some people, easy to get carried away in an auction when the demand is high and ‘they really want it’.

I don’t think I like the idea of pressuring people into paying more than a fair rent.

What do you think?

http://www.news.com.au/dailytelegraph/story/0,22049,20675346-5001024,00.html#

Rental auctions on the horizon
October 31, 2006

RENT auctions may soon hit Sydney as tightening vacancy rates lead to tough competition for properties.

In what is believed to be a world-first, a Canberra real estate agency has announced plans to trial the concept. Other agents are tipped to follow suit if it proves successful.

Real Estate Institute of ACT president Peter Blackshaw said unofficial bidding for rental properties had been taking place for years, but it was becoming more common as vacancy rates plunged.

He said holding formal auctions had become a necessity as they were more transparent.

“The great thing about an auction is that you can see a real person is bidding against you that’s legitimate and registered,” he said.

Mr Blackshaw said high state and territory government land taxes which put off investors across Australia were to blame for the current rental crisis leaving agents with no alternative.

“It’s devastating for low-income earners because they’re the ones that are being pushed out of the market and having to double-up or live at home with their parents,” he said.

“It’s also making it much more difficult for first-home buyers to save a deposit.”

Mr Blackshaw said rental auctions would work the same as auctions for houses being sold, with tenants registering to bid.

They would also have to provide all the usual application forms.

Mr Blackshaw said he had one investor who wanted to test the concept as soon as their property was ready.

Bresic Whitney Estate Agents Darlinghurst director Ivan Bresic said he was against formal auctions because they would create more work and could upset people.

“We haven’t conducted that as yet but I have heard of some instances where tenants have outbid each other in an office situation,” he said.

“The property manager has handled it.

“Making it like a sales-type situation could deter some tenants. I think keep it simple.”

NSW Fair Trading Minister Diane Beamer said she was concerned auctions could be emotive and people could end up paying more than they could afford.

“We would advise extreme caution if any agents were planning to undertake such auctions,” she said.

“They would have to be very, very careful they’re not breaching any fair trading conditions relating to misleading or deceptive conduct.”

Real Estate Institute of NSW president Cristine Castle said some real estate agents already advertised properties without a price to see what the market was willing to pay.

“It’s concerning and we don’t condone it,” she said.

“It’s disappointing that we have got to this.”

Celivia